Friday, June 26, 2015

Why Are Indian Owned IT Companies Cheap

I received some e-mails on this topic, but I had been ignoring them. Now it's time to talk about it. Some people were venting about working for Indian managers or Indian owned companies. More specifically, they had stories about how cheap they were when it came to American standards.

OK, so to give you an example of the types of e-mails I receive about Indian companies, the following is one pertaining to travel.

Reimbursement After I What?

One follower writes that their IT American based company owns another IT location in India.  They utilize those workers to save money, which makes sense because a lot of companies outsource to save money.  Instead of outsourcing, their company was smart enough to set up shop in a cheaper country to handle more American based projects.  The owners of the company are the actual day-to-day managers.  An Indian owned company based in America with an office in India. Awesome.

At some point the India team starts performing badly on a project.  Management decides they need to travel to India to address the issues.  For some reason, a simple conference call or e-mail won't do.

It's an internal problem - right?  The staff of the IT firm is screwing up, so they need to fix it, but management forces their PM (project manager) to write a proposal to the client stating that they need to travel to India to better service their project. And they want the client to pay for it...

The client should NOT have to pay for this, but somehow they convinced them to agree on sending a team of four to India.  Even with endless amounts of money, there's no way in hell I would have paid for another company's problem on a project I'm already paying them for.  That indeed is being very cheap and the nerve to even ask of such a thing is mind-numbing.

For medium to massive projects, clients pay in installments.  Companies performing the work will receive a set amount every week or biweekly.  For massive projects, they receive large amounts monthly instead, which was the case here.  Sometimes that installment will be increased for legitimate purposes or for unforeseen issues with the behavior the client requested.

OK, get ready for this.  Apparently the installment agreed upon was so low that management didn't account for any reserves.  Reserves on a project are crucial.  Especially on large projects because shit will happen.  Basically, management was bringing in just enough to cover salary costs.

OK, so without reserves, how will they pay to send four people to India including their hotel stay?  The client certainly isn't going to rush over money because they pay on a schedule and can't afford to break that cycle.

The company does the unthinkable... They have the four employees pay for their own plane ticket and hotel stay with the promise to be reimbursed from the next installment...


No... really... WHAT THE HELL IS THIS???

These plane tickets are well over $1,000 (USD).  Not all employees used credit cards, so management told them to use the credit cards of those that had them...



You never know what type of financial situation a person has.  Just because someone seems as though they're well-off or should have money, that doesn't mean it's true... To ask employees to pay for such a thing is unthinkable. The nerve...

For this particular follower, there are other countless acts of cheapness, but I'll save you the details.  It's a lot.

What Should Have Happened?

What should have happened was management solving their issues for free using Skype, Google Hangouts, the phone or by e-mail.  They should have set aside reserves to pay for unforeseen issues.  They should have never asked the client to pay for their internal management problems.

Are All Indian Companies Like This?

ABSOLUTELY NOT! It has nothing to do with being an Indian company.  There are a lot of IT companies around the world that are this cheap.  In certain cultures, however, that's just the way it is.  In this case, the managers were raised by a particular culture in India that are extremely frugal.  Their class of Indian were very poor, but learned how to rise to the top by being frugal.  Even when they're wealthy, they still have a frugal mindset when it comes to business.  It is not their fault.  That's their culture.

The clash is that American business travelers are used to certain perks and that's our culture.  At the root of American culture, a company is supposed to take care of their employees.  If we're traveling international for you, then our flight better be First Class and our hotel room better be decent.  American business travelers are even given a daily allowance for food, so they don't have to use their own money.  That's our culture and it's not our fault.

So Who's Right?

When you visit another country, common sense tells you to adhere to the way of life in that country.  If you're supposed to wrap your head, then you do so.  If you're supposed to where pants, then you do so.  If you're supposed to bow for greeting, then you do so.

If you're going to set up a company, then you'll be well served to adhere to the common culture of that country if you want to be truly successful.  Being frugal is great, but it is very limiting.  At some point, every cheap company will hit a wall and the business will fail with no means to escape.

If you're greedy and don't take care of your employees, word will spread.  Eventually, all the high quality employees will find a better company.  Even the mid or junior level employees will find better companies.  Once word gets out that you're a terrible company to work for, people stay away.  The employees you do manage to keep are just there for a paycheck and care nothing for your business because they don't respect your methods.

Unfortunately, there is no right or wrong. You either want to be a great company in the eyes of your employees and the public or you don't.  My advice is to research what the standards are and adhere to them.  If you see a way to surpass those standards, then go for it.

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