Sustainable Business Transformation

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Posts Tagged ‘India’

Case Study in Social Entrepreneurship: Grassroutes

Posted by Hemant Puthli on March 15, 2010

[Content sourced from Inir Pinheiro, the social entrepreneur behind Grassroutes, and edited by Hemant Puthli]

India’s remote villages are now attracting city dwellers who are eager to step away from the stress zones of their office cubes and the complexities of urban life, in search of clean air and a simpler, earthier way of life – if only for a few days.

The village of Purushwadi is 140 miles (220 km) away from Mumbai city, the hub of international business and the financial and entertainment capital of India – a hot, grimy, polluted, noisy and crowded metropolis of at least 20 million people living in the greater metropolitan area. But in a few short hours, inhabitants of the “Maximum City” can reach a different world, where they can swim in the crystal clear waters of a river, help farmers thresh wheat, chop wood with a long handled axe, and eat home–cooked meals with peasants in the dim light of their rustic homes. Purushwadi is perched high above mean sea level, in the jagged hills of Maharashtra. Life for the locals has hardly changed for several centuries. These simple farmers live in mud-brick houses with dried cow-dung floors and earn their income from the cultivation of rice, wheat, millet and pulses. There is no electricity or running water and the day revolves around hard work in the fields under the harsh rays of an unforgiving sun. As a tourism destination, this is not exactly a beach resort with plenty of five-star properties to choose from, each with a world-class spa to rejuvenate yourself. Villages like Purushwadi offer you rejuvenation of a different kind — deep hands-on contact with raw, authentic rural Indian life in its natural habitat. Tourists to Purushwadi say that their journey has been worth it, just for getting a refreshingly different perspective on life away from the daily routine of making money and climbing the career ladder.

About 70% of India’s population of 1.1 billion lives in the villages. As mega-cities like Mumbai expand, fuelled by the country’s economic boom, the gap between the urban rich and the rural poor widens as never before. It is not difficult to see how this could result in the making of a socio-economic time-bomb. Responsible rural tourism is one of the most effective ways in bridging this gap and bringing these disparate communities together. Responsible rural tourism involves, for example, bringing city slickers and urban youth groups from places like Mumbai to villages like Purushwadi for a weekend. These tourists are keen to experience the poetry of the earthy life in rural India, of being in touch with nature and of spending a couple of days with people who live by modest means through simple farming. Grassroutes is a responsible rural tourism movement that is building a network of village tourism destinations across India, wherein the tourism model is owned, managed and run by local village communities. Grassroutes has made it possible for people to get into such villages and realize the true beauty of rural India. Their idea is to get communities to connect. The revenue generated through tourists trips is used to supplement the income of the villagers – and more importantly, encouraging and enabling them to stay back and continue with their lifestyle instead of heading to the city to look for work. According to Grassroutes, the poor and marginalized do not need charity or sympathy — they need opportunities to provide for themselves. And Grassroutes’ mission is to provide them with precisely those opportunities, while also providing urban dwellers a chance to experience something unique and special.

Grassroutes’ vision entails the conservation and promotion of local lifestyles, knowledge systems, environments, economies and traditions by enabling and empowering local communities to access sustainable opportunities. Grassroutes recognizes that lack of access to opportunities is one of the greatest challenges facing rural India. And this in turn leads to exploitation of already over-stretched natural resources, migration to larger towns and cities, which in turn leads to congestion in those urban centres. At a more intangible level, this also results in erosion of local culture, traditions, lifestyles and sense of community. The Grassroutes model has three key aspects to it: (1) facilitating the development of the village as a tourism destination (2) marketing and product development of tourism in the village and (3) quality control and monitoring of tourism in the village.

Grassroutes selected responsible rural tourism as a means of creating sustainable opportunities keeping in mind the fact that tourism is one industry that represents the greatest multiplier effect in economic development. Tourism also provides a platform for interaction that facilitates cultural osmosis and exchange of thought and understanding. These factors, coupled with the fact that entry costs are relatively low, make responsible tourism a very attractive opportunity for social entrepreneurs looking to engage in sustainable development. Historically, tourism has also been the greatest exploiter of local communities and responsible rural tourism is a model that reverses that trend. Responsible rural tourism places the local community at the epicentre of the tourists’ journey while also giving a great experience to the tourist, thereby mitigating the down-side of tourism. The ultimate aspiration of Grassroutes is to create sustainable opportunities in rural India which would give local communities the impetus needed to maintain and celebrate their unique way of life, leading to conservation of local lifestyles, traditions, knowledge systems, biodiversities and local economies.

For more information please visit http://grassroutes.co.in or drop them a note in the comment box below.

[Disclosure: HPA is assisting Grassroutes through mentoring and advisory on strategy and general management issues]

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Posted in Economics, Environment, Society | Tagged: , , | Leave a Comment »

Towards Customer-centric Design

Posted by Hemant Puthli on October 11, 2009

When it comes to customer interaction, the Indian business culture – specifically in the B2C space – seems to be remarkably insensitive to spam, unsolicited messaging and over-communication. Perhaps this is due to the absence of strong privacy laws, or perhaps it is the culture that explains why such laws are absent, to begin with. A few years ago, I had blogged about telemarketing spam and though things have somewhat improved (thanks to the TRAI-mandated ‘DND’ discipline) since then, the problem in essence has not gone away, but merely taken a slightly different form.

In the case of almost all of the service providers that I am a customer of (particularly those in the financial services, media/ entertainment and telecom industries — the relatively more buoyant sectors of the economy), I find that giving them your mobile number and/ or email address is like inviting a boorish bore to your house — you wish the incessant and at times tasteless chatter would stop and that you could focus on just that fraction of the conversation that is meaningful to you. These service providers take contact information from customers based on a legitimate reason: to alert customers about important information pertaining to their account, which is why customers like me part with such information in the first place. But they then use that as a licence to pump all sorts of completely irrelevant information (mostly cross-selling and up-selling messages) through those channels. Quite often such messages are badly timed as well, which is even more annoying. In the case of a specific service provider, I regularly receive text alerts on my mobile at odd hours of the morning or night. Then there is the problem of over-communication. In the case of one specific bank, where I have registered for an auto-pay bill payment facility, I get 3 text messages and 3 emails for every bill presented and paid — one text message and one email each: when the bill is presented, when the due date is approaching, and after the auto-pay transaction has been executed. I need only one post-facto email and no text messages, but there is no way on earth I can get them to change this. I do need that one message and my preferred medium is email, but I could do without the other five. Not only are redundant alerts annoying, but they’re also a waste of resources.

Several of these Indian service providers represent the local operations of reputed global brands and I am quite sure their operations in other markets are far more rigourously controlled in terms of privacy norms. So why don’t they do that here? I can’t believe they are new to permission marketing/ opt-in marketing and other techniques. It is really not difficult to set-up a web-page at their site, where a customer can check relevant boxes that specify what kind of messages they would like to receive, through what medium and at what time of the day and/ or day of the week. Several web-based free services do it. Social networking sites like facebook, for instance, allow you to spell out with pin-point precision, your choices in terms of why and how you would like to be contacted, if at all you do. If these service providers really mean to be as customer-centric as they claim to be, and if they really care about not inconveniencing their customers, they should make the right moves in this regard.

To my mind, this is an excellent opportunity for a brand to demonstrate maturity and leadership, by respecting customer privacy even in markets where the regulatory framework does not require them to do so. Sadly, I am not sure any of them sees it that way.

Posted in Operations, Strategy | Tagged: , , , , | 1 Comment »

Staying On Top: The Challenge to India’s Leadership in Off-shoring

Posted by Hemant Puthli on August 28, 2009

In a recent (August 2009) article in the McKinsey Quarterly (accessible by clicking here, and then clicking on the shortened URL link mentioned in the archived tweet), Noshir Kaka et al. suggest that Innovation will be a critical success factor for India to maintain a leadership position in the globalized business / technology services industry. Here’s an extract from that article:

Indian business and technology services companies needn’t stand by passively and watch their global market share decline. Innovation will be the key to maintaining and even expanding their market share. Business models that continue to focus on low labor costs won’t suffice.

While it is true that “business models that continue to focus on low labor costs won’t suffice”, in August 2009 this cannot be a epiphanic revelation! This is yesterday’s news, not thought leadership. Most companies foresaw this many years ago, and (as the McKinsey article suggests) turned to Innovation (among other strategies), hoping to leverage it to create a sustainable competitive advantage for India as a destination. All Indian ITO/ITeS industry majors have been chanting the Innovation mantra since then. (Show me one Indian company of some standing in the global business / technology services space that does not lay claim to ‘Innovation’ as its key differentiator at its web-site or in its brochures.) Several companies have been relentlessly trying to institutionalize Innovation in everything they do, in a bid to maintain their market share in the face of competition — from within the Indian market as well as from companies based in the other BRIC countries (and their corresponding regional neighbours in Latin America, Eastern Europe, Asia / South Asia / South-East Asia) and also emerging destinations such as Egypt (and, potentially, other West Asian / African countries). However, the very act of institutionalization makes it a replicable commodity, just like any other ‘best practice’. Which means others can do it too.

My comment to the article (not visible at the site at the time of writing this post) is reproduced here below, and what follows subsequently is an elaboration of the rationale behind my argument and an elucidation of my point of view on the subject.

India’s competitive advantage (beyond wage arbitrage) has always been scale and process maturity. Other destinations simply cannot match the ability of Indian companies to offer large pools of talent to dip into (in terms of breadth as well as depth), or to ramp-up their teams quickly. Besides, a lot of non-Indian companies are still struggling with the challenges of managing process quality in very large projects. However this is not a sustainable competitive advantage. China has the potential to match and surpass India’s strengths in terms of both scale as well as process maturity, given the size of their literate population and their culture of rigour and discipline (which is being applied even now, for example, to learning English as well as learning large scale process management). But other than China, there aren’t too many countries that represent a real threat to India. Innovation is a buzz word, in my opinion, and though this may sound counter-intuitive, it is a fairly commoditizable and replicable attribute. It does not represent a sustainable competitive advantage. Talent pools from the countries / cultures that presently constitute off-shore destinations (or aspire to join the club) are equally good or bad at learning, practising and delivering on the promise of innovation. There is nothing unique about Indian ingenuity that makes Indian talent intrinsically and significantly more innovative than the average knowledge worker in, say, China or Egypt or Eastern Europe or even Latin America!

Clients based in North America and Western Europe (the predominant ‘buyer’ markets) have been tapping into India as a destination for well over a decade, and by now have a good understanding of the issues and opportunities that India represents. They know where the trade-offs are: while on the plus side, as I have argued, India offers a wider range of skills, better scale and better process quality, the down-side comes primarily in the form of higher attrition, greater geographical distances and time-zone differences, cultural incompatibility and to some extent lack of infrastructural robustness. Attrition can be a major problem for clients who have invested time, cost and energy in transferring knowledge. Secondly, while it is true that India enjoys the advantage of a large educated and English-speaking resource base, one must also remember that cultural compatibility is not just about being able to speak a common language (which itself is debatable in the first place, since a lot of the knowledge workers who originate from smaller towns in India cannot really boast of fluency in English, not to mention American colloquialism). Thirdly, while time-zone differences of up to 12 hours do offer the advantage of having someone, somewhere, working on a project 24×7, they do not solve the problem of logistics (when professionals on either shore need to travel great distances to the other shore) and the problem of disrupted daily routine (when professionals on either shore need to be on conference calls at odd hours in their work day).

Comparatively, Central and South American destinations are closer, by way of both time-zone compatibility (in terms of virtual meetings / conferences) as well as geographical proximity (in terms of travel) for North American clients. The same goes for Eastern Europe in the case of European clients. Also, clients find better cultural compatibility in dealing with teams in those destinations, and business communication between client and provider teams is relatively easier and smoother. Language barriers are not significantly higher than when dealing with India, and in many cases may even be lower. Also, attrition is comparatively much lower in most of these destinations. The only disadvantages these destinations have are: skill mix, scalability (especially in terms of ramp-up time) and process maturity. And that is where India has been scoring. Of all competing destinations, China is the only one that has the capability (not to mention the will!) of outstripping India on these fronts. Through concerted efforts in strengthening infrastructure (power, telecoms, etc.), in fighting attrition, in broadening and deepening the pool of trained and qualified professionals, and in imparting cross-cultural and soft-skills training to its resources (a la finishing schools), India can hope to keep the No. 2 slot if / when China overtakes India (may just be a matter of time). Perhaps this is a more pragmatic goal for India as an off-shoring destination.

That said, the opportunity for Indian companies to maintain their leadership position lies not in trying to fight the up-hill battle of keeping India as the most preferred destination. In fact, it lies in not confining themselves to India as a destination. Again, this is not an epiphany — in fact it is not even news. Most of the top-tier India-based service providers (including those founded by entrepreneurs of Indian origin) have already started the process of building (or in some cases, consolidating) ‘near-shore’ hubs in Central and South America, Eastern Europe and other regions. A few have done this through organic growth, but most have done so through acquisitions of stake in local players, to whom Indian companies offer stability, scale, leadership in process maturity and access to other markets, in return for a better presence in the local / regional market, a ready local client base, and the ability to provide a multi-locational offering to their global clients. Leading Indian companies have already figured out that globalization is no longer about staying in India and offering ITO / BPO type of services to the world, as clients have increasingly started demanding lower attrition rates and flexibility in terms of location and time-zones, over and above range of skills, scalability and process maturity.

India as a destination will lose its leadership position in a few years — at the very least, the gap between India and other destinations will start closing rapidly (it already is) as they ramp-up and start competing. Innovativeness is not a special gift that is unique to India-based talent pools and believing that it is so can at best be termed as misplaced patriotism (at worst, it is a kind of jingoistic denial of reality) on the part of Indians. Innovation is a great value proposition and I am not suggesting that it should be abandoned altogether (especially because others will start offering it too!) The smart thing to do, for service providers of Indian origin, is to focus on developing a global delivery footprint (not just sales offices) and the ability to provide the right mix of capability, capacity (i.e., scale), team stability and cultural compatibility, and process excellence, at locations preferred by the client — on-site/ off-site/ near-shore/ off-shore. And as the adoption of globalization shifts to the mid-tier client base, focus on forging strong partnerships with clients to achieve the distinction of becoming an extended team of the client organization. Cultural compatibility and responsiveness to changing client needs are key. Innovation will just be a hygiene factor.

Posted in Operations, Organization, Strategy | Tagged: , , , , , , , | Leave a Comment »