Categories
Thoughts

Productivity

Apple with 21,000 employees can generate an annual revenue of over 25Billion USD
Microsoft with 79,000 employees generate a revenue of 51 Billion USD

While Infosys with over 90,000 employees generate a revenue of just 3 billion USD.
Similarly Wipro and TCS have more than the workforce of Microsoft, yet they generate only 5-6% of the revenues which this software giant generates.

Now for these companies to reach the size of Microsoft or any other technology giant, need to generate atleast 20 times the revenue. And going by the past trends, the only way they can achieve that is by hiring 20 times the workforce.
i.e. hiring 1.8 million employees each. Staggering numbers, isn’t. Even at current levels these companies find it hard to hire. I wonder if it is feasible to ever reach 1.8 million workforce.

The other approach might be to make the workers work 20 times harder… i.e. instead of a regular 8 hour shift, make them work 160 hours shift. Unfortunately a day has only 24 hours. Also almost everybody from Indian IT industry that I meet is swamped with work. They already put in long hours and I doubt if making them work any harder would benefit at all.

Ever wondered how can a country of a billion souls be short in labor?
Why is it that all the industries are finding shortage of manpower?

So the answer lies in productivity. The companies need to work smarter, cut the flab, inefficiencies and need to start respect employee’s time and efforts. Only after they start doing that, can they get the most out of an employees.

If you look at farmer suicide, the reason is not availability of loans or bad monsoon. The fundamental reason is low productivity. The average per capita income of a farmhand is couple of dollars per day of manual labor. On top of that if you add the fact that urban labors are paid either daily/weekly/monthly, while a farmer earns his bulk of income during harvest which happens 2-3 times a year, poverty is inevitable. The only way around would be to increase productivity. Either by encouraging surplus labor to move to cities or by opening up more and more rural industries. However productivity is never a key word whenever I hear about India’s grand plans to beat the West in development.

I took TCS, INFOSYS and Wipro as an example. Primarily because these are believed to be the most modern of Indian companies. Also it is easier for IT companies to enforce the best business practices than the legacy Brick and Mortor industry.

 

street, Bengaluru South, Karnataka, India

21 replies on “Productivity”

Ankur,

Probably you can also enlighten us about the value of INR and USD.

In spite of the huge Information Technology sector that we have, shouldn’t the value of INR and USD also be taken into account?

Assuming that these Infosys and Wipro are situated in U.S, how would the situation look like?

Of course, as you said, Productivity is important too.

Voracious Blog Reader

Ankur,

other than the difference in USD and INR I think the flaw in your argument is that you are comparing apples with oranges. Both Apple and MS are product companies, selling their product to a large number of customers worldwide. On the other hand all the Indian companies you’ve named are services company. Their business and revenue models are completely different from a MS or an Apple.

I agree that productivity isn’t the buzz word you hear around here…that definitely is true. Specially in the rural agricultural sector.

I agree with Roshan. Apple and Microsoft are product based companies. while the others are consulting, services based companies.
productivity in India is less, I agree, much of these are coz of
1. lack of planning…..
many projects start off with no plan, and it takes hell lot of time for the programmer to figure out what he needs to do.
2. bad management
bad management is one reason, they take in more ppl to the project, work is not alloted properly and there is chaos. some do extra work, while some idle out.
3. Too many freshers.
Many freshers are taken in for future projects. one reason would be to cut costs. But many idle out on bench for months.
well these are some of the reasons.

Some IT folks spent more than 12 hours in office, but they arent productive for 25%of the time they spend in office.
In india many managers consider ppl who spend more time in office as ‘hardworkers’ while the reality is many are just too lazy or not smart enough to get the work done.

@vbr…
contrary to popular perception, the currency difference does not matter much.. for example 120 yen is worth 1 USD, but that does not make Japanese industries more competitive. Similarly 1 million Zimbabwean dollars is worth 1 Dollar.. and that is only killing the local industry and helping no one.
infact currency devaluation only harms the general population (and helps only the government and the rich)

what matters is PPP (Purchasing power parity) i.e. how much more goods and services can you buy from 1 USD in america, compared to 1USD equivalent local currency in the local country.
now coming back to your question, 1 USD spend in India gets you about 4 times more goods and services.. INFY and WIPRO business is to enable US companies to benefit from this PPP disparity….
often currency devaluation is coupled with high inflation, hence the PPP remains more or less unaltered…

@Roshan and Xylene…
what is the ultimate goal of Microsoft or services company?
to develop and maintain products that solve genuine needs of the customers. You will be surprised to know that in both kinds of companies, the same kind of software is developed, the same tools are being used… in spite of all the pages about how services are different from Product (and why services companies should move up the ladder by developing products) the work is exactly the same.
However yes, the revenue model is different. low productivity seemingly helps the services company because it allows them to inflate the billing and hence make more profits, while product company, like any other business wants to maximize profits with minimum resources. http://enagar.com/2006/11/20/profits-of-mnc/
but how would it change things?

INFY is just an example, you can pick up any other sector u want…. India does not have excess resources, so just imagine what we can achieve if our output per unit efforts simply doubled

@xylene…
i agree with the points u listed…. we indians have a tendency to slack during our office hours. and compensate it with working extra, and then screw up our work life balance.

we indians have a tendency to slack during our office hours. and compensate it with working extra, and then screw up our work life balance.

I’ve seen plenty of slackers here in the US too…. 🙂

narayan murthy had a good lectures for bachelors who did nothing productive while they sat overtime..

ankur though i get ur gist, ur still comparing the star bucks with the coffee producers somewhere or potato growers with lays chips manufacturers

@Xylene : You just hit the bull’s eye. I can write a book thicker than War and Peace on that. “The Chronicles of a sufferer.” 😀
@Ankur : I think the Rupee-Dollar ratio do play a part. Initially the work was outsourced to the companies here in India because of this reason only.

well if you have gone through my calculations, then you would have realized that an employee in service industry generates only 1/20 of the revenue his counterpart in a Product company generates.
I agree that over a thousand engineers sit on bench, but that still does not explain why there is a 95% drop in productivity.

@amit and VBR,
in layman terms you can say Rupee dollar ratio is at work, but read this technical link http://en.wikipedia.org/wiki/Purchasing_power_parity

technically outsourcing works because of difference in PPP between 2 counties.
eg: US Dollar is the main currency (officially/unofficially) of many countries. but that does not mean that since there is not Ruppee-dollar exchange difference, outsourcing work won’t be profitable….

similarly, many people I know get their furniture made, hire maids from their home village where labor cost is lower… isn’t that out outsourcing? inspite of being just a few hundred km away?

@Xylene : The sufferer in question is Me, Moi, myself. 😀 I was at the recieving end last year because of the factors 1 and 2 you have mentioned in your first comment. And believe me, I was nowhere near to unproductive. 😐
@Ankur : I read about the PPP. But isn’t it a little bit controversial? I mean, the markets of USA and India are quite different. And also I must add that the concept of PPP is quite new to me, so I might be wrong.

hey guys life is to learn…. we all make mistakes, learn from them, correct it and go ahead. so in our suffering also we are learning.

@Amit…
PPP is simple:
the same 100/- has more value in a poor village then in a metro/big city. and PPP is a scientific way to quantify how much is the difference.

BTW: you can thank me to teach you a new concept 🙂 and i won’t mind if you want to post some guru dakshina too 😉

I think Roshan & Prax hit the nail. The kind of business Apple/MS do is not the same as that of Infy, Wipro or TCS. And moreover the work culture is so bad here. People slog their brains out, which is bad whereas in US, most work is outsourced for lesser pay (and which is why outsourcing was such a hit here). I think there are lot of other factors than just blaming it on productivity.

you are trying to compare apple with oranges.

“apple” and “microsoft” develop products such as hardware and software, while software companies like wipro, infosys etc just develop some codes in fortran or java according to client requirement. I have not heard of single software that were originally developed by wipro or infosys which is used at large by scientific or similar community like matlab etc. these software companies will only write some codes, compile them, and demonstrate it to their client. they never “develop” software and so the name software company is a misnomer.

@ravi…
can you name some more?

@srivivasa…
i am sure the job profile of most of the engineers in mocrosoft and infy r the same…. and if you do not know, wipro and HCL have a huge hardware division employing a few thousand VLSI and DSP engineers.

Leave a Reply

Your email address will not be published.