For the past six months, I have been waiting for this. A sign. A sign by a big company questioning the efficacy of having/building “an India development office”. Apple has closed its 2 month old office (software development and support operations) in Banglore and has laid off 30 folks. Apple’s office was small and quite new, but still. The reason quoted by an Apple spokesperson – “We have re-evaluated our plans and have decided to put our planned support center growth in other countries.”
One of the major reasons companies seek India operations is cost reduction. Another is liquidity of talent. Having spent the last two months in India trying to get my company’s India operations going, I can assure you that ground reality is quite different. When you factor in all aspects of work, having an India operations can be quite overbearing on overall efficency.
Here are some ground realities:
* There is an amazing number of applicants available for jobs. The response I have received on Naukri.com (an Indian job site) was very good in terms of quantity, but the quality was extremely poor. I shortlisted less than 2% of applicants for the first round of interview. Yes, there are good technical talent out there, but they don’t go to job sites. They primary use word of mouth (no wonder there are so many recruiters on LinkedIn). The cream of the talent pool is hard to find, and demand extremely good salaries (30%-60% of the US salary, and in rare cases going upto 100% of the US salary). Personally, I think a good tech. worker is worth their weight in gold, but you won’t find them easily, plus, many of them are already in US or in the process of coming to US.
* Even if you find good talent, it is extremely difficult to keep it. With so much of hype about India operations, there are dozens of (American) companies offering even-better salaries. This has over inflated the market, and tech. workers often use a better job offer from a different company as a bargaining tactic to increase wages/compensation in their current company. This practice of bullying your employer is quite common. The market is so over hyped that an yearly bonus of 20% and an annual raise of 10-15% is expected by tech. workers.
* Property rates have escalated enormously in the past decade. The boom in retail market (with opening of malls, shopping centers) is a big part of it. You can expect to pay a comparable fee, if not more, for renting/leasing an office in Delhi as you pay in US (I am talking with respect of Pittsburgh, not NYC or Bay Area.)
* While the infrastructure has made tremenduous improvemenets but it still leaves a lot to be desierd. When you enter the Indian market, small things like Air Conditioning, Power, Bandwidth, Security, Cleaning become major items. In US, we tend to take them for granted, it is quite different in India. Small issues take an extremely long time to get fixed.
* While the (complementary) time difference between India and US works to a great advantage for Customer Support, it works poorly for software development teams. If Tom (who works 9-6 EST in US) wants to communicate with Kumar (who works 9-6 IST in Delhi), then there is no time overlap! Meaning, one of them has to come early or stay late for telephone conversations or they use email for most of the communication. Communication problems direcly affect efficiency and attitude.
Apple had set itself a hiring target of 600 by year-end. I am sure that they realized that it would be impossible to meet it while maintaining good quality standards. This made them question their overall India strategy and look elsewhere. This sets the ball rolling, lets us see which other companies follow Apple’s footsteps.