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Shorenstein APARC's Senior Research Scholar, Rafiq Dossani, invited to participate in an online debate on indian outsourcing

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Shorenstein APARC's Senior Research Scholar, Rafiq Dossani, invited to participate in an online debate on indian outsourcing.

Pro: Not as Tempting

by Sabrina Siddiqui, intern, BusinessWeek, and a senior at the Medill School of Journalism at Northwestern University.

There is no doubt that over the last decade, India fortified its rule over the shared services and outsourcing (SSO) sector. Access to low-wage yet skilled workers allowed local global technology services giants Infosys (INFY), Tata Consultancy Services (TACSF), and Wipro (WIT) to employ tens of thousands of Indians to do work for such multinational corporate clients as Bank of America (BAC), Microsoft (MSFT), and Ericsson (ERIC).

But a recent study by Frost & Sullivan consolidates the idea that India's outsourcing has already peaked, and there are a number of factors to blame:

The Rupee Riddle. Earlier this year, the Indian rupee appreciated 8.4% against the U.S. dollar and touched 41.14 to the dollar, its highest rate in nine years. A significant reason for concern for the outsourcing sector, the upward value of the rupee continues to put a squeeze on earnings. By April, 2007, it had cut margins by about 2.5 percentage points.

Cost (In)Efficiency. Companies looking to outsource have long seen India as their most cost-efficient vehicle. But with wage inflation running 15% to 25% per year, India can no longer use the siren song of its labor being the cheapest. Competitors like China can offer their services at a lower cost, while firms like Infosys are stuck recruiting from outside the country, because the comparable Indian staff is growing too expensive.

That Age-Old Infrastructure. As much as the economy continues to boom, how long can it sustain its position when IT operations spend considerably on backup systems to fight regular blackouts? And the 300,000 engineering students who graduate each year may be short of the level needed to support modernization of infrastructure and industry growth. (Not to mention that the peculiarly accented "Doug Smith" on the computer help desk is a little too hard for U.S. callers to comprehend.)

So if you assume you're being rerouted by tech support to a call center in Bangalore, guess again. It seems India's grasp on the SSO market is at long-term risk, and it just so happens that your call might be answered by someone in Shanghai.

Con: Plenty of Spice Left

by Rafiq Dossani, Stanford University and Martin Kenney, University of California, Davis

Notwithstanding the occasional news stories about companies returning work earlier offshored to India, the logic behind offshoring and its financial impact (both on outsourcing firms operating in India and their American clients) remains intact. First, the logic: A fresh engineer costs $8,000, including benefits, on average in Bangalore. Even a "Google-quality", presumably equivalent to the best Google can hire anywhere (in fact, Google offers its India recruits the option of working in Silicon Valley if they so desire) costs $30,000. These wages are much lower than in the U.S. and will remain that way for at least a decadeespecially if the ambitious graduation targets of Indian education policymakers are realized.

Of course, there are problems in doing work long distance: Coordinating the work of global teams is costlier than coordinating such work locally. The intellectual property issues could be important. But offshoring is now tried and tested enough, and large corporations are deeply committed to it.

By 2010, many large multinational corporations like IBM (IBM) will have their largest workforces in India. This is creating a relatively rich ecosystem in a number of Indian cities, especially Bangalore.

Already, for a number of these firms, their Indian operations are being declared global centers of excellence, whose value goes well beyond just cost savings. Undoubtedly, some smaller firms have faced high initial costs, but even they, particularly the technology firms of Silicon Valley, have committed to Indian operations. Firms such as Infinera (INFNO) and HelloSoft have substantial Indian operations that are critical to their success. For them to retreat would require a major reorientation of their business strategy.

The appreciating rupee will, like rising wages, affect offshoring decisions. However, the Indian system integrators such as TCS, Infosys, and Wipro, which are also being squeezed by costs, have experienced profits rising at about 35% a year for the past decade and enjoy margins in excess of 20%. This provides ample room to absorb rising costs.

There can be little doubt that the Indian ecosystem is maturing. However, the growth of offshoring to India has not peaked.

Reprinted by permission from BusinessWeek.

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Democratic or Demagogic? "People Power" Reconsidered -- in the Philippines and Elsewhere

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Unarmed mass uprisings, celebrated as "people power" revolutions, have ended authoritarian regimes in various countries. But have these movements ushered in polities that fulfilled democratic expectations? The record is disappointing, and especially so in the Philippines after the ouster of President Ferdinand Marcos. Why? Much of the answer lies in the ability of elites to ride, hijack, and redirect the trajectories of "people power" movements. Such elites take advantage of the tension between the regular politics of stable institutions and the irregular politics of extraordinary moments. The large mobilizations associated with "people power" cannot be sustained for long periods. The masses will soon delegate power to, and rely on, their leaders, who will represent them as the polity settles down to the business of normal--institutional--politics. The very minute the new regime is inaugurated, it ceases to be revolutionary and starts to be conservative. It has a country to run, and state power to defend and consolidate, for its enemies are not likely to have given up. The institutional technology of popular rule has yet to be developed beyond grand first principles and banal motherhood statements. The supposedly revolutionary leaders of the new regime lapse into using the already well known methods of minority or elite rule. But recourse to such stratagems may in time trigger the formation of new "people power" movements against these self-entrenched incumbents--prolonging the cycle and preventing the conversion of contingent power into legitimate authority.

Amado Mendoza's current research is on the political economy of organized crime and anti-state violence in the Philippines. His many writings on that country include a book-in-progress on tax reform and two edited volumes, Debts of Dishonor (1992) and From Crisis to Crisis: A History of BOP [Balance of Payments] Crises in the Philippines (1987). He has been a visiting scholar at Tufts University, the Jean Monnet Institute, the University of Turku (Finland), and the Amsterdam Insti¬tute for International Relations. In addition to pursuing his academic career, he has worked as a business journalist, a merchant banker, a stockbroker, and on development issues for an NGO.

Daniel and Nancy Okimoto Conference Room

Amado M. Mendoza, Jr Associate Professor in Political Science and International Studies Speaker University of the Philippines
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Not What It Seems: Muslim Governance in Malaysia Today

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Tectonic shifts have underscored the gradual Islamization of mainstream politics in contemporary Malaysia. This is so despite popular media representations of the country as an epitome of moderate and progressive Muslim governance -- a portrayal regularly belied by the actions of its leaders as well. Recently, these shifts have been expressed in heated debates over apostasy, religious freedom, and constitutional rights. Insofar as the media have acknowledged Islamization, they have attributed it to the Islamist opposition party (PAS). Prof. Liow will show, however, that the ruling party (UMNO) has proven no less strident in expressing its own Islamist predilections, with significant implications for the dynamics of UMNO-PAS relations and, beyond them, the country's political future.

Joseph Chinyong Liow is head of research at S. Rajaratnam School of International

Studies, Nanyang Technological University, Singapore. His books include Muslim

Resistance in Southern Thailand and Southern Philippines: Religion, Ideology, and Politics (2006); The Politics of Indonesia-Malaysia Relations: One Kin, Two Nations (2005); and (as co-editor) Order and Security in Southeast Asia (Routledge 2006). He is associate editor of Asian Security, and guest-edited "Internal Conflicts in Southeast Asia: The Nature, Legitimacy and Changing Role of the State," a special issue of that journal (2007). He has published numerous articles on Malaysian politics and the conflict in Southern Thailand. His PhD is from the London School of Economics and Political Science.

Daniel and Nancy Okimoto Conference Room

Joseph Chinyong Liow Associate Professor Speaker S. Rajaratnam School of International Studies, Nanyang Technological University, Singapore
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Can Democracy Reach the Poor? A Presidential Perspective on Education, Poverty and Democracy in Latin America

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Dr. Alejandro Toledo was democratically elected President of Peru from July 2001-July 2006.

He was born in a small and remote village in the Peruvian Andes, 12,000 feet above sea level. He is one of sixteen brothers and sisters from a family of extreme poverty. At the age of six, he worked as a street shoe shiner and simultaneously sold newspapers and lotteries to supplement the family income.

Thanks to an accidental access to education, Dr. Toledo was able to go from extreme poverty to the most prestigious academic centers of the world, later becoming one of the most prominent democratic leaders of Latin America. He is the first Peruvian president of indigenous descent to be democratically elected in five hundred years.

He received a BA from San Francisco University in Economics and Business Administration. From Stanford University, he received a MA in Economics of Human Resources, a MA in Economics, and a PhD in Economics of Human Resources.

Larry Diamond is a senior fellow at the Hoover Institution; a Stanford professor of political science, and sociology by courtesy; and coordinator of the Democracy Program at the Center for Democracy, Development, and the Rule of Law (CDDRL). A specialist on democratic development and regime change and U.S. foreign policy affecting democracy abroad, he is the founding co-editor of the Journal on Democracy.

He has written extensively on the factors that facilitate and obstruct democracy in developing countries and on problems of democracy, development, and corruption, particularly in Africa. He is the author of Squandered Victory:The American Occupation and the Bungled Effort to Bring Democracy to Iraq; Developing Democracy: Toward Consolidation; and Promoting Democracy in the 1990s.

He received a BA, MA, and PhD from Stanford University, all in Sociology.

For more information about this event, please refer to the article in The Stanford Report.

Cubberley Auditorium (School of Education)
485 Lausen Mall
Stanford, CA 94305

Alejandro Toledo Speaker

Larry Diamond

CDDRL
Stanford University
Encina Hall, C147
616 Jane Stanford Way
Stanford, CA 94305-6055

(650) 724-6448 (650) 723-1928
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Mosbacher Senior Fellow in Global Democracy at the Freeman Spogli Institute for International Studies
William L. Clayton Senior Fellow at the Hoover Institution
Professor, by courtesy, of Political Science and Sociology
diamond_encina_hall.png MA, PhD

Larry Diamond is the William L. Clayton Senior Fellow at the Hoover Institution, the Mosbacher Senior Fellow in Global Democracy at the Freeman Spogli Institute for International Studies (FSI), and a Bass University Fellow in Undergraduate Education at Stanford University. He is also professor by courtesy of Political Science and Sociology at Stanford, where he lectures and teaches courses on democracy (including an online course on EdX). At the Hoover Institution, he co-leads the Project on Taiwan in the Indo-Pacific Region and participates in the Project on the U.S., China, and the World. At FSI, he is among the core faculty of the Center on Democracy, Development and the Rule of Law, which he directed for six and a half years. He leads FSI’s Israel Studies Program and is a member of the Program on Arab Reform and Development. He also co-leads the Global Digital Policy Incubator, based at FSI’s Cyber Policy Center. He served for 32 years as founding co-editor of the Journal of Democracy.

Diamond’s research focuses on global trends affecting freedom and democracy and on U.S. and international policies to defend and advance democracy. His book, Ill Winds: Saving Democracy from Russian Rage, Chinese Ambition, and American Complacency, analyzes the challenges confronting liberal democracy in the United States and around the world at this potential “hinge in history,” and offers an agenda for strengthening and defending democracy at home and abroad.  A paperback edition with a new preface was released by Penguin in April 2020. His other books include: In Search of Democracy (2016), The Spirit of Democracy (2008), Developing Democracy: Toward Consolidation (1999), Promoting Democracy in the 1990s (1995), and Class, Ethnicity, and Democracy in Nigeria (1989). He has edited or coedited more than fifty books, including China’s Influence and American Interests (2019, with Orville Schell), Silicon Triangle: The United States, China, Taiwan the Global Semiconductor Security (2023, with James O. Ellis Jr. and Orville Schell), and The Troubling State of India’s Democracy (2024, with Sumit Ganguly and Dinsha Mistree).

During 2002–03, Diamond served as a consultant to the US Agency for International Development (USAID) and was a contributing author of its report, Foreign Aid in the National Interest. He has advised and lectured to universities and think tanks around the world, and to the World Bank, the United Nations, the State Department, and other organizations dealing with governance and development. During the first three months of 2004, Diamond served as a senior adviser on governance to the Coalition Provisional Authority in Baghdad. His 2005 book, Squandered Victory: The American Occupation and the Bungled Effort to Bring Democracy to Iraq, was one of the first books to critically analyze America's postwar engagement in Iraq.

Among Diamond’s other edited books are Democracy in Decline?; Democratization and Authoritarianism in the Arab World; Will China Democratize?; and Liberation Technology: Social Media and the Struggle for Democracy, all edited with Marc F. Plattner; and Politics and Culture in Contemporary Iran, with Abbas Milani. With Juan J. Linz and Seymour Martin Lipset, he edited the series, Democracy in Developing Countries, which helped to shape a new generation of comparative study of democratic development.

Download full-resolution headshot; photo credit: Rod Searcey.

Former Director of the Center on Democracy, Development and the Rule of Law
Faculty Chair, Jan Koum Israel Studies Program
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The Third Annual Globalization of Services Conference

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The Third Annual Globalization of Services Conference will explore the following questions:

  1. The changing geography of system integrators: The incumbent system integrators (SIs) are building up their developing nation service provision capability through acquisitions and internal expansion. The thrust of their expansion is to add capacity quickly. Can they manage it effectively? At a slower pace, the Indian SIs are doing the same in developed and developing nations: adding low cost workforces in developing countries, buying relationships in developed countries. Can they manage it effectively. Will growth rates and margins converge; if not, why not? What are some of the interesting differences between firm strategies?
  2. The changing business models of system integrators: The Indian system integrators appear to be driving a new, metric-based quality model that is driving price compression. Is this strong enough to provide a permanent advantage? IBM and others are responding with a combination of superior technology, client relationships and domain expertise, drawing upon their established strengths while also expanding in India and other low-cost developing countries. Are we witnessing a convergence to a common business model? Is there a European perspective? Is it different and does it make a difference?
  3. Product firms' globalization strategies (separate sessions on established and new firms): The IT product firms have to balance several additional factors that service firms like the SIs do not face when they globalize; among them, intellectual property protection, business development, managing innovation, research team coordination and marketing. How is this working, and what business models are they experimenting with? What are the differences between an established firm versus a startup?

All participants will receive a copy of Dr. Dossani's newest book India Arriving: How this Economic Powerhouse is Redefining Global Business. Details of this can be found through the link below. Provided through the generosity of Arada Systems.

Details about the previous two events can be found at:

Globalization of Services

The Second Annual Globalization of Services Conference

Conference Sponsors:

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Bechtel Conference Center

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Globalization of Services Conference

Min Zhu seminar and SEN launch kick off SPRIE's fall quarter

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SPRIE kicked off the fall quarter with two special events: first was a seminar on October 9 presented by Min Zhu, co-founder of WebEx, who spoke on "Beyond Beijing and High Tech: Chinese Entrepreneurship on the Edge." Min discussed the entrepreneurship scene in China and suggested that Silicon Valley venture capitalists investing there may be heading for trouble. John Boudreau covered the talk in the "Tech Notebook" section of the San Jose Mercury News.

Then, on October 10, Martin Eberhard, Tesla Motors' Co-Founder and President of Technology, spoke at the launch of the Stanford Entrepreneurship Network (SEN), a federation of organizations, including SPRIE, that focus on entrepreneurship acrosss the Stanford campus. Eberhard spoke of taking Tesla from the beginning stages of a start-up and formulated six lessons he learned from the experience. For more information about the SEN, visit the Stanford Entrepreneurship Network.

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Taiwan and the New U.S. Strategic Environment

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This is a CDDRL's Special Event within our Democracy in Taiwan Program.

Dr. Jaushieh Joseph Wu arrived in Washington, D.C. on April 15, 2007 to assume his responsibilities as Taiwan's chief representative to the United States.

Representative Wu began his government career in 2002 as Deputy Secretary-General to President Chen Shui-bian, a position he held until May 2004. From 2004 to April 2007, Representative Wu was the chairman of Taiwan's Mainland Affairs Council, a ministry-level organization that coordinates and implements Taiwan's policies toward the People's Republic of China.

Prior to his government career, Representative Wu held a number of academic positions at his alma mater, National Chengchi University, including the chairmanship of the First Division of the Institute of International Relations, an adjunct research fellowship at the Election Study Center and an adjunct professorship in the Department of Political Science.

Dr. Wu received his undergraduate education at National Chengchi University in Taipei. He did his graduate work in political science at the University of Missouri in St. Louis in 1982, obtaining a master's degree in Political Science, followed by a Ph. D. in the same field from Ohio State University in 1989. His areas of specialization include Taiwan's political development, cross-strait relations, international relations, and Middle East politics. Among Dr. Wu's academic publications, he has authored Taiwan's Democratization: Forces Behind the New Momentum (Hong Kong, Oxford University Press, 1995), and edited Divided Nations: The Experience of Germany, Korea, and China (Taipei, Institute of International Relations, 1995) and China Rising: Implications of Economic and Military Growth of the PRC (Taipei, Institute of International Relations, 2001).

Oksenberg Conference Room

Joseph Wu Representative Speaker Taipei Economic and Cultural Representative Office in Washington, D.C.
Seminars

Ethnofederalism and the Mismanagement of Nationalism

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Philip G. Roeder (Ph. D. Harvard University, 1978) is professor of political science at the University of California, San Diego. A specialist on the politics of the Soviet successor states, Roeder has focused his recent research on the design of political institutions for countries torn apart by secessionist movements. He is the author of Where Nation-States Come From: Institutional Change in the Age of Nationalism (Princeton) and Red Sunset: The Failure of Soviet Politics (Princeton). He is the co-author of Postcommunism and the Theory of Democracy (Princeton) and co-editor of Sustainable Peace: Power and Democracy After Civil Wars (Cornell). His articles have appeared in such journals as the American Political Science Review, World Politics, and International Studies Quarterly. He is currently working on two longer-term projects:

  1. Alternatives to Independence (What are the consequences of various institutional arrangements designed to avoid granting independence to secessionists?) and
  2. The Tenacity of the Nation-State (Why do states almost never relinquish sovereignty willingly?)

CISAC Conference Room

Philip Roeder Professor of Political Science Speaker University of California, San Diego
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A theory of the origins of coercive enforcement by the state: Insights from Colonial Mexico

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Encina Ground Floor Conference Room

Luz Marina Arias

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CDDRL Hewlett Fellow 2007-2008
Llumi.jpg PhD

Luz Marina Arias was a graduate student in the Department of Economics at Stanford University before coming to CDDRL. She was born and raised in Mexico City and completed her undergraduate studies in Economics in Mexico, at ITAM. Her research interests lie at the intersection of economics, political science, and history. She is interested in the impact on economic and political development of institutions that organize and coordinate economic and political behavior. Her current project focuses on one such central institution, the state, and studies the factors that lead to the emergence of the state as an entity centralizing coercive power. She studies Latin American history and in particular the experience of colonial Mexico in the transition to such a form of state.

Luz Marina Arias CDDRL Hewlett Fellow Speaker Stanford Department of Economics
Seminars

Muslims in Europe

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Dr. Gilles Kepel is a professor at the Institut d'Études Politiques in Paris and a research director for CNRS Paris. A prominent French scholar and analyst of the Islamic and Arab world, he is the author of several books and articles: Jihad: The Trail of Political Islam; The Revenge of God; Muslim Extremism in Egypt; Allah in the West and his most recent book The War for Muslim Minds: Islam and the West.

Dr. Kepel is fluent in French, English, Arabic, and Italian. He holds doctorate degrees from the Institut d'Etudes Politiques de Paris in political science and sociology

Richard and Rhoda Goldman Conference Room

Gilles Kepel Speaker Professor, Institut d'Études Politiques, and Research Director, CNRS/CERI Paris, co-sponsored by the Abbasi Program in Islamic Studies
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