Nov 6, 2007

Indian firms outperform US firms

According to a study by McKinsey:

"top 25 per cent of Indian companies perform better than the average US firms in management practices. 'Our study shows top 25 per cent of Indian companies outperform many US firms in management practices due to the advantage of highly educated workforce and labour arbitrage,' McKinsey principal partner Stephen Dorgan said here Friday at the 15th Quality Summit, organised by the Confederation of Indian Industry (CII). The study also revealed the best managed Indian firms grow three times more and 80 per cent faster to compete and increase its share of pie in the global market."

Hmm, so what happens when labour arbitrage goes away? Based on anecdotal evidence on conversations with friends, people like to work in Indian organizations because they get a chance to actually build and implement a process from scratch. There are less opportunities in MNC firms to do that. That's because most of them are much older than Indian firms. Even in younger MNC firms implementing a process just for the Indian entity needs a lot of influencing skills and buy in from the headquarters and people lose enthusiasm and energy if the go ahead signal takes time to come through.

Where MNC firms do score is paying salaries at a higher level than the Indian firms :-) However, as the experience of GE and now the rumors of Dell are showing, maybe it's not such a great idea.

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