Bridge the Gap

Biodiesel Crops in India

Interesting video from today's Journal about jatropha.  This crop can be grown without requiring a large amount of land and water and can then be processed into biodiesel relatively cheaply.

Grad School Days

I just uploaded a group of papers from my days at Johns Hopkins SAIS.  These were on my old personal website and people seemed to enjoy them.  If you have some time, you can check out some ramblings on politics, economics, and defense issues related to China, India, Japan, Korea, and Mexico by following the links in the Grad School Days section on the right side of the page.

The Rise of KPO

Just back from an India trip and laid up with the flu.  Not so bad though, given that Shanghai is beset by tourists and most everyone who lives here is out of town for Chinese New Year.  BTW, 新年快乐 (Happy New Year) to all of you.

The trip was interesting and I was in Bangalore most of the time.  Most of the major technology companies have set up shop there by now.  But I have to say that I was particularly impressed that Siemens and D Link had facilities in Goa, near the beaches I visited last weekend - nothing like being able to go to the beach after a day at the office!

Bangalore is still a sleepy town, but over the course of time it and the rest of the tech centers in India are just going to become more important players in board rooms across the world.  Much has already been written about outsourcing, but this usually refers to business process outsourcing, or BPO.  BPO  is the outsourcing of basic business functions, e.g., support call centers or medical transcription services.  This is a huge industry and India will continue to  lead its aggressive growth.

The other emerging area of outsourcing is knowledge process outsourcing, or KPO.  It is KPO that should be setting off alarm bells in Washington and London (for it is English speaking countries that will be most affected).  KPO involves areas such as financial modeling and writing research reports for Wall Street, doing biotechnology research,  or building advanced databases that can be used, e.g., in managing the hiring process for an HR department - in short advanced business functions that require strong expertise and process knowledge in an area.  India is already the leader in KPO, and as the industry grows ferociously during the next five years, amazingly, India will only become more dominant in KPO. 

Now I don't think that the Bush administration should throw up protectionist barriers to combat this issue; indeed, I think that if they did it would be futile.  However, they need to  understand that every business function that can be done remotely will likely get outsourced within the next decade.  What to do?  The answer is not simple, but has to focus around two areas: 1) aggressively supporting research and services that are geography dependent, much in the same way that the US has to help manufacturers that are geography dependent as it faces the China threat; and 2) fund as much as possible advanced research areas such as nanotechnology and energy research that by their natures cannot be easily outsourced.  Now the US is already doing this (as is the UK) with nanotechnology initiatives.  In addition, in the State of the Union speech earlier, Mr Bush pledged more support for clean energy research.  Now one can argue about definitions - I for one have a problem with nuclear energy being classified as clean, although I do think it is a valid path to develop energy supply - but I do not believe that we can overfund these areas. 

India is well placed with outsourcing picking up steam - and this is a good thing as it is helping thousands if not millions of Indians lead wealthier, more productive lives.  At the same time, the US and other English speaking countries have to move aggressively to provide training and research funding for areas that cannot be outsourced, if they are to retain their dominance in research and development and the service industries.

Long Time No Speak

Apologies for being silent for so long but hope you all are having a great 2006 so far.  I've been busy with a new job doing strategic planning for Intel.  It's a pretty sweet opportunity, as I continue to be based in Shanghai and am now focused on all emerging markets, not just China.  Have been super busy so no time for major insights, but promise to write more soon.

For now, take a read of Sam Porteous's op ed in the Journal from this past Tuesday.  Have spoken with Sam in the past and he always has well thought out arguments.  This one is an insightful take on the balance between national security and economic issues.

Also, stay tuned for commentary on the Indian outsourcing industry, as well as the overall continued economic development in India.  Although I've been to India before, I arrived in Bangalore for the first time yesterday.  Impressive to see the 20 somethings sporting their Tier 1 IT MNC badges and acting like kings and queens of the world.  Am here for ten days, and throughout my stay will try to post observations on what is happening in the capital of the Indian IT industry.