Service Vs Manufacturing for mass job creation in India

[SriKumar]

.Once built , the service indutry will then use this to earn mega bucks and create lots of jobs.....but the manufacturing folks will then be sitting idle for the next airport to be put on the block by the service........In fact, buildign is considered in service sector only. So it is all service jobs here and small amount of manufacturing jobs to help machines produce the widgets....

OK. So building/construction is service industry now? So, the chinese who are making metros in Bangalore and Chennai are in service industry, as are GVK and GMR. This (re)classification is interesting, normally one would put building/construction under infrastructure. On a related note, putting a new label on an activity does not change its fundamental nature or its importance (or un-importance). You call a variable 'x' or 'alpha' makes no difference. What does that 'x' or 'alpha' represent is what is important. I hope you agree. When you pointed out how the service industry would build the buildings, I merely wanted to point out that the knowledge and content providers who buy the building would only pay for it- they are the customer, as you once put it. The building part would be done by a different industry and it is a different skill set for the people involved- the same kind of industry that makes holes for metros in Bangalore and Chennai.

[subhamoy.das]

Incuding construction in service is not my idea. It is a standard followed by world bank or IMF ( i cannot recall now ) and GOI also classifies it as service since work does not happen in a factory/plant. If a car is made right in the back ward of a prospective buyer then that would be called service but that car is mass produced in a plant then it would be in manufacturing. Manufacturing = plant every thing else is service. There is no sector of economy called Infrastructure. It is either agri, manu or service. And yes, u are right, those CHINESE folks crawling in the hole are providing service and not manufacturing.

[SriKumar]

Incuding construction in service is not my idea. It is a standard followed by world bank or IMF ( i cannot recall now ) and GOI also classifies it as service since work does not happen in a factory/plant. If a car is made right in the back ward of a prospective buyer then that would be called service but that car is mass produced in a plant then it would be in manufacturing. Manufacturing = plant every thing else is service. There is no sector of economy called Infrastructure. It is either agri, manu or service. And yes, u are right, those CHINESE folks crawling in the hole are providing service and not manufacturing.

Construction and building is infrastructure and this is how it is commonly discussed and reported as. Any business magazine or newspaper discusses it as such. The IMF definition seems to be more of an accounting type definition rather than something that takes into account the actual activity involved. What does IMF do other than collect and disburse funds. It is a bank and all they do is hisab-kitab. So, per the IMF definition, the chinese workers in the Bangalore and Chennai metros holes are also doing service. I hope you support this kind of service. I certainly do.

I see your point about having 3 categories: agri/manuf/service and that this is how the GOI classifies it. But I have a slightly different perspective on the categorization. You can always take a large task, categorize its various activities into specific parts and call it one or the other. I think this getting into accounting semantics without any consideration of what is actually involved in putting together a construction or a manufacturing activity and how it benefits an economy. Such a discussion is very limiting where the whole thing revolves around definitions per specific considerations. What would shed light is the larger picture where one understands what is needed to get a specific infrastructure in place, and more importantly, how it benefits a country; whether the task is to construct airports, transmission lines, launch satellites, build cars or write software code. Without that larger context, the discussion is theoretical. I'll grant that I have not provided that perspective but I do want to emphasize there is a larger context (i.e. what does a country need to survive and thrive long-term) which needs to be described and understood first, before one can decide what is more important and which is less so.

[Theo_Fidel]

Got a chance to go into a locomotive engine remanufacture facility and the work there was scary hitech.
Found video that shows the manufacture of trucks in Chennai. Is this manufacturing jobs for the masses?

[RamaY]

^ isn't it good that these factories produce quality products even if it meant more automation and less jobs in these industries?

[VikramS]

Organic Farming is one sector where traditional Indian agriculture has a huge market.
Couple that with modern methods, the farmers in India, the 70% could rise above subsistence level.

[VikramS]

Theo the jobs for the masses come in the supply chain. Further there is the multiplier effect.
India needs balance; economy is too service oriented for a country with such a large number of poor people.

[dhruvM]

I'd like to propose a slightly different narrative. Pitashree has worked with SAIL for +25 yrs as a blast furnaces veteran (core manufacturing sector). In many long winded conversations with him, the biggest constraint we identified was the failure in grooming a sizable number of youth who are skilled in blue collar work. There is a MASSIVE lack of skilled blue collar workers. It is getting difficult for every factory owner, be it ambani, PSUs, SMEs to recruit people who have decent workmanship skills. welders/electricians/machinists(precision engg)/carpenters/masons... you get the drift. Most of his peers who are involved in Indian manufacturing confess that the ITIs have collapsed, resulting in only two streams of people entering the workforce - 5th/10th standard pass who currently comprise the blue collar workforce. With very little training in workmanship/safety/quality control... And the ones who are somehow able to graduate (mostly from shoddy engg colleges) abhorr core manufacturing/blue collar work completely! Getting sucked into the Infy/Wipro/TCS blackhole or the many BPO/KPO type of chutiyapa. This, in turn, dissuades capital investment in Manufactuing. It is impossible to progress as a nation by exporting bits alone. We still do not have a desi BASF,DuPont,Mitsubhishi Electric,Siemens ityaadi.

[Mihir]

the biggest constraint we identified was the failure in grooming a sizable number of youth who are skilled in blue collar work. There is a MASSIVE lack of skilled blue collar workers. It is getting difficult for every factory owner, be it ambani, PSUs, SMEs to recruit people who have decent workmanship skills. welders/electricians/machinists(precision engg)/carpenters/masons... you get the drift.

+1

I used to work in manufacturing about five years ago, and saw that this was a major problem even then. There simply weren't enough skilled workers to go around. We had in-house training programs to bring the workers up to speed on a few things, but it was really no substitute for a dedicated trade school where people with decades of experience mentor young trainees.

At least at that time, expert welders and machinists commanded salaries that would make a trainee Infy/Cogni/TCS munna blush. I know of workers who refused promotion to management roles because it would entail a reduction in pay and loss of union privileges.

Another thing that struck me was that an overwhelming majority of the workers were quite old. And there were no more than a couple of apprentices under training at any point. Most of these workers will probably retire without passing their skills on to a younger generation, and the expertise will have to be rebuilt from scratch.

[Mihir]

the service indutry will then use this to earn mega bucks and create lots of jobs.....but the manufacturing folks will then be sitting idle for the next airport to be put on the block by the service........

Uhh... those "manufacturing" types would still find gainful employment as long as buildings are being built. And it's not just new construction. A building, or any piece of infrastructure for that matter, isn't a one-time project that you execute and forget about for the next fifty years. You have continuous upgrades, renovations, repairs, expansions, etc. going on. As infrastructure becomes ever more complex, the infrastructure industry has to expand to meet the increased demand for these things.

[Prem]

http://www.reuters.com/article/2013/03/ ... K820130326

The end of Indian IT staffing as we know it

Reuters) - India's IT outsourcers are promoting "mini CEOs" capable of running businesses on their own, while trimming down on the hordes of entry-level computer coders they normally hire as they try to squeeze more profits out of their staff.the shift by Infosys Ltd and others is symptomatic of a maturing industry that wants more revenue from its own intellectual property instead of providing only labor-intensive, lower-margin information technology and back-office services.For young graduates who see the $108 billion IT industry as a sure pathway to modern India's growing middle class, the transformation is unsettling."Dear H.R. You were also a fresher... once," read a sign carried by two protesters in a photo in The Hindu newspaper.HCL's December quarter profits and revenues rose while staff numbers shrank - a rare trick in an industry that has long aspired to break the linear relationship between headcount and revenue growth.Slower growth, fewer people leaving, greater demand by customers for experienced staff, and increased productivity through automation and software have put pressure on all recruits, according to HCL, which said it expects to accelerate bringing entry-level staff on board from August."It's not that the demand doesn't exist. It exists for different skills," said Ajay Davessar, HCL's head of external communications."Typical roles which a student thinks, 'I'll just go there and start coding, and have a good life,' are being tested to reality... Any applicant, be it fresher or senior, will have to have flexibility in applying the skills elsewhere."
FEWER 'CODING COOLIES'

Tech Mahindra Ltd, the No.5 player, is naming 100 of what it calls mini-CEOs who will be given broad latitude to run their parts of the business."We're moving towards a situation like the developed economies, where we're asking the people to be more deep," said Sujitha Karnad, who heads human resources at Tech Mahindra."We want more solution architects to be here. We don't want the coding coolies anymore, that's clear," Karnad said, employing a term commonly used in India in association with menial laborers.
India's IT services industry grew in large part because of the availability of cheap skilled labor, an advantage that is eroding as wages and other costs in India rise.In years past, it was cost-effective for IT companies to hire new graduates by the thousands and keep a portion on the "bench" awaiting deployment on a client project.But budget-constrained clients now demand shorter lead times. IT vendors that might have hired people six months in advance of an expected contract are now working with a one- or two-month window, said Surabhi Mathur Gandhi, senior vice president at TeamLease, a staffing consultancy.Traditionally, about 30 percent of Indian IT services industry staff are on the bench at any given time, often in training, as they await deployment to client work.In the December quarter, about 70 percent of Infosys staff and less than 65 percent at No. 3 provider Wipro were deployed on billable projects. At Tata Consultancy Services, the largest Indian IT services company, the figure was 72 percent, within what Ajoyendra Mukherjee, its human resources head, calls the comfort range of 70 to 74 percent utilization."I think we can push it up to 75, 76," he said.Among top-tier companies that are most actively trying to push non-linear growth where revenues are not constrained by the size of the work force, about 70 percent of employees are experienced staff, up from 60 percent in 2008, said Rajiv Srinivas, an associate director at Tech Mahindra, who expects that to rise to about 90 percent in the next two or three years.At Infosys, while the net quarterly addition of employees fell from 4,906 people in the March quarter last year to 977 in the December quarter (excluding an acquisition), lateral recruitment held steady at an average of about 4,300 staff per quarter through December, meaning the percentage of campus hires was much lower."Earlier, the focus was more on career ... You get into a job, you start learning, and slowly acquire knowledge over a period of time," said Sunil Gupta, who joined Infosys as vice president of quality about six months ago from the Indian unit of CGI Group's Logica Plc.
"Today the value of a professional is judged by how quickly you're learning, how quickly you're adapting yourself and changing along with the environment," he said.
For young Indians who saw IT as a ticket into the middle class, the change means that career path is becoming less clear. Those who do break in and build valuable skills will remain in demand, but the days of young IT staffers brandishing five or more competing offers are over.Yet that hasn't necessarily translated into slower wage growth. Mercer LLC expects industry salaries to grow 12 percent this year, the same as in 2012. As India's economy diversifies, graduates have more attractive career options, including at multinationals with a growing India presence, such as Google Inc, which means IT vendors must fight to stay attractive."We see IT companies as a back-up," said S. S. Jayaram, a final-year engineering student in Bangalore who says he chose a job in India with Mu Sigma Inc, a fast-growing U.S.-based data analytics company, over offers from IBM and TCS.

[subhamoy.das]

Theo the jobs for the masses come in the supply chain. Further there is the multiplier effect.
India needs balance; economy is too service oriented for a country with such a large number of poor people.

You cannot manufacture in vaccume. There has to be demand for it and that demand is the export market as the local economy does not have the jobs to drive it. So then we are back to the CHINESE model of contract manufacturing whose days are outnumbered and which is faulty model for 1b+ population country. CHINA, being the worlds largest manufacturer by volume has a very low manufacturing density per capita, 1/8 th of the wealthy manufacturing nations, and that is what matters as far a jobs are considered. Contract manufacturing will ensure that the supply chain lies outside the country and only the plants are in the country.

[subhamoy.das]

http://economictimes.indiatimes.com/mar ... 243218.cms

This is a good indicator how the service economy is growing. 68% growth in demand for office space...

[subhamoy.das]

We need to analyze why there is a shortage of blue collar workers. I feel that that it is market economics rather than blaming it on lack of ITI etc. First the blue collar workers are up againts machines because pure labor can be and has been rapidly been taken over by machines. White collar workers has no competion from machines because mind power cannot be replaced yet by robots. So white collar workers will always have a job security. Secondly blue collar workers have harsh work conditions - heat, sound, light, virbrations, smell .. White colar workers work in silent a/c work places. Third, blue color workers have very repeation type of work. But white color workers have a lot of problem solving challenges. So, in a nutshel, there is no driver for some body to become a blue collar worker. And even if we believe that a welder can demand more pay than a programmer with good domain knowledge purly based on skills, still people would choose for white colar job. This is a symptom of wealthy economies where 60 - 70% of the economy is in the white collar. India has bypassed blue and become white and now we need to raise the job pays to higher level which means we have to climb the value chian in the white collar and focus on high value blue collar to keep our strategic independence.

[subhamoy.das]

And for those who are wondering the definition of service, and see service with the prism of IT, service = jobs in a office and manufacturing = job is a plant.

[subhamoy.das]

http://www.samachar.com/Global-IT-spend ... gdjbf.html

If India can manage 20%, a reasonable target for the world's top IT service provider, of the gloabal IT service pie then IT service alone will be around 800b industry in India and we can image the job effect and boost to economy it will give.

The world IT service market has a huge potential and India is uniquely posied to grab its share.

[subhamoy.das]

http://economictimes.indiatimes.com/tec ... 325113.cms

GOI aims for 10X export on IT service front only.....

[RamaY]

http://economictimes.indiatimes.com/tec ... 325113.cms

GOI aims for 10X export on IT service front only.....

That is 50% of global IT industry. Good goal!
http://www.researchandmarkets.com/repor ... s_20122017

But they cannot achieve it unless they have a monopoly in next gen
- Operating Systems
- Business S/W Products
- Gaming S/W

Perhaps they expect to attract majority of global S/W giants to have >50% of their IT staff based in India.

Good Goal!

BTW - it would employ about 10 million ($1B revenue = 20K employees) people in IT services industry. India in next 5 years would have 450 million people to employ. it would be about 2% of total work force.

[subhamoy.das]

They plan to generate 1.2cr direct and 6 cr indirect jobs by this revenue, so a total of 7cr jobs which will support, assuming 1 job per house hold, 7 cr household which is 28cr people which is 280m heads. Not sure why India needs monoploy in gaming, business, os . We need to be sustaining and developing them,just as we do today, and not aiming for brands. The focus is to move all IT enabled office jobs to India....

[Theo_Fidel]

We still do not have a desi BASF,DuPont,Mitsubhishi Electric,Siemens ityaadi.

I used to work in manufacturing about five years ago, and saw that this was a major problem even then. There simply weren't enough skilled workers to go around. We had in-house training programs to bring the workers up to speed on a few things, but it was really no substitute for a dedicated trade school where people with decades of experience mentor young trainees.

At least at that time, expert welders and machinists commanded salaries that would make a trainee Infy/Cogni/TCS munna blush. I know of workers who refused promotion to management roles because it would entail a reduction in pay and loss of union privileges.

Right there we have the problem. No one wants to hire skilled blue collar at proper wages and union job anymore. Everyone is dangling 2-3 year temp contracts. Is it a surprise that workers are rebelling. Every time I hear this ‘new generation does not want to work’ excuse, my mind immediately tells me this is an euphemism for ‘I want to pay old wages’. At least in Chennai the manufacturing units are having no problem recruiting engineer types to work in car factories. There is an incredible flood of engineering degree types in Chennai area of whom at least 50% IMO are salvageable. They do demand proper wages and an organized work environment. My dads neighbor joined a TVS manufacturing unit at a salary of Rs 3 lakh per annum. His father was a senior bank officer. So folks are willing to do it for the right wage. Ford, BMW, Hyundai have had no problems hiring labor.

The lack of a desi world class champions has more to do with the lack of design and engineering skills in desh. I had all kinds of trouble finding a top level CnC unit that could model a part for me in 3D in Hyderabad. How are they going to manufacture a world class unit of anything without a world class design capability. Best we caqn do is reverse engineer, or cheap copy, rinse repeat...

[chola]

http://www.samachar.com/Global-IT-spend ... gdjbf.html

If India can manage 20%, a reasonable target for the world's top IT service provider, of the gloabal IT service pie then IT service alone will be around 800b industry in India and we can image the job effect and boost to economy it will give.

The world IT service market has a huge potential and India is uniquely posied to grab its share.

Either you do not understand economics or you deliberately misstate the article to "win" points. The story is about IT spending including hardware that the article clearly states by referring to laptops and tablets. Software spending is $270billion, 20% of which makes $60bn which is what our vaunted IT industry is making today with 70% of its revenue from the US/UK.

Das, this pie-in-the-sky does us no good except lead everyone down a fairy tale path of hi-tech mass employment which cannot happen if you know anything about economics.

Service is tertiary. Without products, there will be no need for IT and all the other services attendant in designing, packaging and advertizing them period.

[Mihir]

Theo, you are missing the point. It is not about wages or unions. There is a severe shortage of the skilled labour that forms the backbone of any modern manufacturing facility. To nurture such talent you need to acquire the right tools, set-up a proper curriculum, recruit highly experienced workers to educate the young trainees, set up a system to aggregate and disseminate new knowledge and so on and so forth. If the system breaks down, it is very hard to repair, and may take years, if not decades to set things right again. And that is the fundamental problem today. If the ITIs are so dysfunctional that they can no longer churn large numbers of out well-trained welders/machinists/electricians, then no amount of fiddling with wages or perks is going to solve that problem.

The lack of a desi world class champions has more to do with the lack of design and engineering skills in desh. I had all kinds of trouble finding a top level CnC unit that could model a part for me in 3D in Hyderabad.

More than anything, it is about the lack of technology. Today, I would say that we are at a stage where we are getting very good at systems integration, but lack the technology to design and produce high-tech mechanical/electronic components within the country. For example, we make very good cars - they are largely designed and developed by Indian engineers working in India. But the the little things like microprocessors, actuators, valves, fuel injectors, etc. are all imported. Most of the machine tools are imported. You say you had trouble finding a CNC machine in Hyderabad. A decade back, you would have had trouble finding a locally made torque wrench. One manufacturer even imported torque wrenches from an American company for anywhere between 10,000 and 25,000 rupees a pop.

Anyway, my point is... as these 'systems integrators' grow in size and number, the demand for specialized components and machine tools designed and produced in India will go up as well. That's when you will slowly see companies like Moog, Bosch, Gleason, etc. slowly spring up to meet these needs. Hopefully.

[subhamoy.das]

http://www.samachar.com/Global-IT-spend ... gdjbf.html

If India can manage 20%, a reasonable target for the world's top IT service provider, of the gloabal IT service pie then IT service alone will be around 800b industry in India and we can image the job effect and boost to economy it will give.

The world IT service market has a huge potential and India is uniquely posied to grab its share.

Either you do not understand economics or you deliberately misstate the article to "win" points. The story is about IT spending including hardware that the article clearly states by referring to laptops and tablets. Software spending is $270billion, 20% of which makes $60bn which is what our vaunted IT industry is making today with 70% of its revenue from the US/UK.

Das, this pie-in-the-sky does us no good except lead everyone down a fairy tale path of hi-tech mass employment which cannot happen if you know anything about economics.

Service is tertiary. Without products, there will be no need for IT and all the other services attendant in designing, packaging and advertizing them period.

I did not see the details to figure out that it was sw + hw combined. But I will let you keep on chanting "service is tertiary, service is tertiary.." for next decada and see that India reaches a 10T GDP with 65% service component driving jobs and local manufacturing. You should also look at the GOI road map of increasing service export to 10x. Some times I feel that you have a communist - labor is king kind of mentality - instead of my democratic values which says "the mind and intellect is the king". I am sure u must have heard the old Indic saying "budhii jasha balam tasha...."

I am not interested in copy book economics. I am just observing how the India economy is charting a different course, from the beaten track, and still delivering a good economic model with world leading growth and already 3rd largest in the world.

[subhamoy.das]

http://economictimes.indiatimes.com/new ... 361089.cms

This is the kind of manufacturing we should be doing. But then this came because service created the intial demand and now the surplus is being exported.

[subhamoy.das]

http://www.manufacturing.gov/data.html

The entire US manufacturing employs about 12m direct jobs. Indian IT enabled service provides about 3m direct jobs. And US is top manufacturer to the world.

[chola]

I am not interested in copy book economics. I am just observing how the India economy is charting a different course, from the beaten track, and still delivering a good economic model with world leading growth and already 3rd largest in the world.

You are not interested in economics. Period.

We're the world's 3rd largest economy based on total population size. Our people on average cannot afford the basic things that make your life and my life modern and easy. India consumes far less of everything per average than the other 9 nations in the top 10. By a far, far margin.

Our economic growth model was horrendous until we began accepting foreign investment, especially in the form of portfolio investment.

That is no model off the beaten path. There certainly nothing great about it. The recent success on the growth rate had nothing to do with India being "service based." Every economy in the world has more jobs in service than manufacturing. But services is still tertiary and it cannot create wealth on its own.

The entire US manufacturing employs about 12m direct jobs. Indian IT enabled service provides about 3m direct jobs. And US is top manufacturer to the world.

Manufacturing in the US employs 12m direct jobs. But the wealth that it (and mining, energy extraction, agriculture and other primary, secondary sectors) creates support the rest of the economy. It also support most of the 3m Indian IT jobs.

If there were no factories creating products, you would not need a single IT person. A person with ideas cannot sell anything.

I am employed in the Ivory Tower of ideas myself but I am not stupid enough to believe that what comes out of my brain has any real worth if the farmer or factory worker did not produce things to sell so I can ponder over sales and projections.

Dreamers like many of those newly minted middle class computer wallahs will keep the rest of India poor while they themselves enjoy the fruits of an industry that is built mainly on jobs created by the wealth of the American primary and secondary sectors. Of course, many have have no idea what those terms actually mean so see they will see them as simple "copy book economics" while lamenting about the farmer for wanting to stay in agriculture.

[subhamoy.das]

We're the world's 3rd largest economy based on total population size. Our people on average cannot afford the basic things that make your life and my life modern and easy. India consumes far less of everything per average than the other 9 nations in the top 10. By a far, far margin.

The comaprision is between CHINA ( factory ) and India ( office ) who has the same scale of population. They are both large by abosulte economic output but far down the ranking when consumption per head comes ( CHINA close to 100 and INDIA around 120 ). Period. So contract manufacturing could have lifted the per capita of consumption of small east asia countries but has not done so for 1b+ CHINA and will not do so for 1b+ INDIA also. Just making products OWNED by others and shipping them to the world will not make u rich. In order to get rich u must make the products that u own and then ship to the world. I see no diff between CHINA manufacturing model and INDIA service model. Both work on products owned by others. One in factories and the other one in office. If CHINA would get 10usd on every product exported, India would earn 10usd for every hour exported.

Our economic growth model was horrendous until we began accepting foreign investment, especially in the form of portfolio investment.

That is no model off the beaten path. There certainly nothing great about it. The recent success on the growth rate had nothing to do with India being "service based." Every economy in the world has more jobs in service than manufacturing. But services is still tertiary and it cannot create wealth on its own.

Service, when exported, creates weath, just like products when exported. Oil, which is neither a product, not a service, creates weatlh when exported. We are talking about India where 30% of exports are service and growing. If OPEC can export oil and become rich, why would India not export IT enabled service and be rich? It is on track to do that. Deal with it.

Manufacturing in the US employs 12m direct jobs. But the wealth that it (and mining, energy extraction, agriculture and other primary, secondary sectors) creates support the rest of the economy. It also support most of the 3m Indian IT jobs.

If there were no factories creating products, you would not need a single IT person. A person with ideas cannot sell anything.

I am employed in the Ivory Tower of ideas myself but I am not stupid enough to believe that what comes out of my brain has any real worth if the farmer or factory worker did not produce things to sell so I can ponder over sales and projections.

Dreamers like many of those newly minted middle class computer wallahs will keep the rest of India poor while they themselves enjoy the fruits of an industry that is built mainly on jobs created by the wealth of the American primary and secondary sectors. Of course, many have have no idea what those terms actually mean so see they will see them as simple "copy book economics" while lamenting about the farmer for wanting to stay in agriculture.

U seem to make a trivial of the 100b IT service industry which was built in just 2 decades and growing at 10% a clip and offering 12 core jobs direcly and indirectly and it requires a great deal of intellect, will and dedication to do that rather than be pararite on products. You really make me laugh here. If u are so aplogistic of service job then please quite yours and join PRIMARY or SECONDARY. All this lecture on no serivice jobs with product job can be easily turned around. I can say that product jobs have no future unless it is backed by good service jobs. Take an example of a sw product company like Oracle. It earns more via Oracle service than by selling its product license. The same would be true to atomobiles. Folks buy cars with good after sale service and not the best product with bad after sale service. And all product companies - from American military plane makes, to Eurpoean furnuture makers - are making a bea line to sell their products to this poor service country? I would say service is driving the product jobs and not other wise. Service export along with local manufacturing with surpluse export to other countries is the model that is and will work for INDIA. Deal and live with it. There is no economic theroy here , IT ONLY HAPPENS IN INDIA.

[RoyG]

Why is this a versus thread? We need both for mass job creation. Good thing about India is that most of what we make gets used domestically. We are lagging a bit on the production side especially when it comes to high technology items but this will change once we let private players into sectors like defense and create a competitive university system which churns out quality research.

[chola]

The comaprision is between CHINA ( factory ) and India ( office ) who has the same scale of population.

Why bother bringing up CHINA when it represents exactly the disparity our economy has with the rest of the world top 10?

Do you even understand what you are arguing for or against?

With the same population size, the chinis buy 75000 cars from Jaguar/Landrover every year against just 5000 bought by our compatriots (mostly loudmouthed computer wallahs showing off) in India. These are sales records from a subsidiary of an Indian company.

U seem to make a trivial of the 100b IT service industry which was built in just 2 decades and growing at 10% a clip and offering 12 core jobs direcly and indirectly and it requires a great deal of intellect, will and dedication to do that rather than be pararite on products.

You're talking about an American IT service industry that was built on top of Bell, Xerox, IBM, Apple, DEC, etc. -- a list of hardware firms so long and illustrious that Bangalore wallahs like you born in the virtual world of outsourcing can never comprehend.

Big Blue (IBM) was and is an manufacturing company and it created the machine that gave birth to business computing. Hardware by necessity is paramount, software by necessity must come after.

There is nothing in India that comes close to a HP or Apple that the IT industry can build on. All the scaffolding in your industry comes from the technical manufacturing base in the US. PERIOD.

IT ONLY HAPPENS IN INDIA.

Only the idiot Gandhi clan thought that and it made us poor and irrelevant while the japs, koreans and chinks blew by us. The Clan's idea of exceptionalism left the nation decades behind. And it took their demise to end that stupidity. It was only when Rao and MSingh opened up the nation to the outside world that the current boom had taken place.

[subhamoy.das]

The focus of this thread is mass job creation in India and the prediction of from where it is going to come in the future. Your penchant to prove that office jobs are created from factory jobs is derailing this thread. If you have data points to prove that factories are creating the jobs in India then do post that. This is your last warning other wise i will report to admin.

Meanwhile, by 2015 50% of the fortune 500 companies will setup high tech service delivery offices in India as reported by economic times india online.

[subhamoy.das]

http://economictimes.indiatimes.com/mar ... 469911.cms

Mega office space procured by COGNIZENT and indicates the robust growth in service delivery.

[muraliravi]

The comaprision is between CHINA ( factory ) and India ( office ) who has the same scale of population. They are both large by abosulte economic output but far down the ranking when consumption per head comes ( CHINA close to 100 and INDIA around 120 ). Period. So contract manufacturing could have lifted the per capita of consumption of small east asia countries but has not done so for 1b+ CHINA and will not do so for 1b+ INDIA also. Just making products OWNED by others and shipping them to the world will not make u rich. In order to get rich u must make the products that u own and then ship to the world. I see no diff between CHINA manufacturing model and INDIA service model. Both work on products owned by others. One in factories and the other one in office. If CHINA would get 10usd on every product exported, India would earn 10usd for every hour exported.

So u take stats that are comfortable for you. China's GDP per capita on a ppp basis is approx $8387, while India is $3663. So they are at least 2.5 times better off. So manufacturing has surely done way better than services based economy if one were construe any logic from those numbers. Moreover china and all these SE asian countries which have built their economies around manufacturing also have a robust service sector. They just dont get involved with IT service for export. They have every other god damn service that you speak of in india. Construction is a service according to you and china's construction sector (13% of their $7.3 trillion economy ~ $1 trillion) alone will probably outstrip india's entire service sector. That is what people on this forum have been alluding to you, services will be there in every country, not just india. India just has an extra services aspect which is IT service export and that is just 6-7% of india's gdp. That is why service is tertiary. A country with a huge manufacturing base can also have a huge service sector. In fact more the primary revenue source, larger will be the service sector. China's primary money generator (export based manufacturing) is about 20 times India's IT sector, guess what? that can support a service sector many times India's service sector. What do you think, dont they have a media, construction sector, healthcare services, banking, hospitality, transport...

And gone are those days when China just makes low end products, they make stuff they own and export. Have you heard of extended fiber media for tensile applications (fully researched and developed in china for their own domestic use, but now in demand for fab labs across the world). The last 5 years have seen 1000's of these kind of products from china. Clearly if their gdp per capita (ppp) is 2.5 times with the ratio increasing, they are getting more bang for the buck. Clearly their product mix (if I called them as a export company) has been moving towards a mix with higher unit value and rapidly growing in volume. Infact there is quite a high demand for such products inside china itself.

Next, you say, they export a product and we export a service. The market size for product exports is just way too high compared to the market size for service (specifically IT service export). So we are digging ourself into a hole by just missing the larger pie. And even worse, we will import stuff we cant make and we will never have the buying power to bring down prices on those products to level which we can achieve if we made them ourselves. So by making products, they export and also serve their own needs. And look at the numbers, a 2trillion primary income source through export manufacturing against a 100 bn IT industry. So the services industry in india will always be there and grow quite well as long as the primary money source is there to propel it. So the choice for the money source is between a IT export based economy or a manufacturing base (low/middle level moving to a high end) or a combination of both.

Ultimately it is not abt just the ends, the means also matter. A nation some day needs a strong army to defend itself. That is what history has taught us. They used to make only widgets, and now they are moving up the value chain and grooming more phds and research scholars. Private manufacturing companies hunt for such talent to come up with innovative products and in the end a portion of the talent gets into defence manufacturing. So surely someday they will have their own advanced defence systems. India will never get there if its talent pool keeps moving towards this IT sector. If for 2 generations, you dont groom any engineering talent (even for low end products), you cannot expect them to suddenly make high end stuff.

[subhamoy.das]

We are taking about jobs in a country which needs 10s of millions of them. Factory has not been able to create that kind of jobs for what ever reasons in the past and future, lack of political will, lack of barren land, lack of power, lack of industry risk taking,lack of roads, lack of trained techicians, lack of demand in home etc etc. Service has been the locomotive. India also bypassed the mid-stop of factories and jumped from agri jobs to service jobs. Now what I am betting is that it is these service jobs - more and more IT enabled and delivered from offices from tier I and tier II cities by graduates+ with domain knowledge and skill from a wide variety of domains - engineering, legal, content, hospital, teaching financial..... will be the driver of exports, employment and driver of local manufacturing. Please post data challenging this idea and dumping again and again on economics 101.

Contract manufacturing model is so flawed for a country of 1b+ population can be gauged that even after being the top manufacturer to the world, its GDP per capita is 8000+, where as being 13th service provider to world,the gdp ppp about 4000, and that of the second top manufacturer it is 40,000 ( as it has 1/5th the size ). Do u realize that the top manufacturer has saturated out before the wealth and jobs for its 1b population could be created. Wait for a decade or so, when we become the top service provider, and then we will the figures. U also said that contract manufacturing generates innovation. See google and u will see that gap between top manufactures and 13th service provider to be just 1 position, Italy in between. And yes, in the land of top manufacturer, guess what is the most coveted job - IT - surprised huh! Coming to defense, phds, papers, patents, nukes, sats, aerospace, supercomps, if we filter out the fakes and dupes, I donot think that that the gap would at the order of proportion worthy of the crown of the largest manufactures to the world. So in a nutshell contract manufacturing or manufacturing products of value in $100s has not been a great job shaker in a market of 1b heads. It was a GREAT LEAP forward on the jobs front blindly looking at the west apples, and like the other GREAT LEAPs taken by that country, it also has failed because it did not attain the utimate goal. I am still waiting to see products costing USD 5000+ owned by the top manufacturer and its market share. Till then i will continue to believe that contract manufacturing far worse than contract service for creating large number of well paid jobs.

And a note of value chain. The movement up the value chain means we need to be able to deliver solutions to customers by using components produced by vendors. The value add is at the solution or application level my friend. Who provides the value add to the intel chip - the applications. Who provides the value add to the hundreds of automobile components - the car. I am sure u understand the value chain and will stop here. So service is that movement up in the value chain as it designs these applications of the components produced by the vendors. So far the top manufacturer has just been that - component supplier and no value add at application level. INDIA is moving up the application level and picking the component vendors at will and that is why u will see a beelien of these vendors to INDIA.

[Prem Kumar]

A scathing criticism of Jugaad and our lack of engineering/design focus. A wake-up call, to say the least

http://www.ipfonline.com/IPFCONTENT/art ... ndia-1.php

[Vayutuvan]

Very well put. The above article lays out in the open the bitter truth of Bollywood decadence destroying the work ethic.

[Prem]

Indian PSUs turnover likely to touch $1 trillion by 2020
http://www.business-standard.com/articl ... 186_1.html

Public Sector Units (PSUs) in the Indian economy accounted for $383 billion turnover in FY12 with a revenue growth of 11% since 2009.According to a study on Indian PSU Landscape by Zinnov, a market expansion and globalisation advisory firm, Indian PSUs are expected to witness a turnover of more than $1 trillion by 2020 and a large part of the growth will be attributed to investments in modern forms of IT including cloud, big data & mobility.
PSUs are looking at investing into technology to help address the challenges they faced in early years of transition towards establishing a more transparent and accountable organisation, reduce the cost of production and enhance productivity and customer reach. IT spend accounts for about 2% of total PSU revenues – higher than most other verticals,” the report said.According to the report findings, energy and BFSI are the major PSU verticals for IT investments.Further, the report talks about some of the major challenges, which have impacted the growth of the Indian PSU sector.Presently, the major challenge faced by the PSU sector is the ‘Talent Related Challenges’ resulting in lack of performance incentives in terms of recognition and accelerated growth paths for workforce giving rise to productivity challenges.
In addition to this, other challenges like lack of quantitative benchmarks against domestic private companies or global equivalents is affecting the performance of the sector while broad based decision making structure (stakeholders with overlapping responsibilities) is resulting into the lack of accountability.
Praveen Bhadada, Director – Market Expansion, Zinnov said, “India is a hub of 225 PSUs operating across verticals, with 16 of these companies featuring in the global list of top 2,000 companies. With their growing size and dominance, PSUs have started looking at IT to address the global competition. Examples like SBI, which has done one of the largest Core Banking Solution implementation globally or BPCL which has made early investments in Big data make the segment very lucrative for the technology companies.”The sector gives employment to 1.4 million, with 40% of PSU companies operating in the manufacturing secto

[Prem Kumar]

Very well put. The above article lays out in the open the bitter truth of Bollywood decadence destroying the work ethic.

And a lack of pride & joy in doing hands on design & manufacturing work. Unfortunately in India, the theoreticians and the do'ers dont have each other's skills. In most cases, they come from different strata of society and from different castes. There is a level of mutual disdain as opposed to mutual admiration/curiosity.

[Vayutuvan]

Prem Kumar ji, thanks for posting that article. Forwarded to several youngsters - hopefully some of them will change their mind and instead of going into paper pushing non-core (via the MBA route) will go into more core sectors. But again, the money/asset owning Industrialists of India should step forward and attract talent from our premier institutes by paying salaries on par with IT-vity.

[subhamoy.das]

http://economictimes.indiatimes.com/new ... 646677.cms

Service export - via remittence - will also touch 100b in near future. The actual flow would be many more folds.

[subhamoy.das]

Very well put. The above article lays out in the open the bitter truth of Bollywood decadence destroying the work ethic.

And a lack of pride & joy in doing hands on design & manufacturing work. Unfortunately in India, the theoreticians and the do'ers dont have each other's skills. In most cases, they come from different strata of society and from different castes. There is a level of mutual disdain as opposed to mutual admiration/curiosity.

I donot think it has anything to do with caste.... It is a simply the skill levels required and the demand supply gap of the job which adds value ( read pay ) to the job and it is human instinct to go for the good paying jobs. Take the IT service industry. Why does people want to move to hands off management job because it pays more and has a good future. But u go to IT product company the hands on programmers and architect is the job to be because it is the high paying and has a good future. There are service jobs which are at the bottom of the pile. But in general manufacturing plant jobs which are at the top of the pile.