Outsourcing to India: Japan Warms Up

A recent article in the Wall Street Journal described how there has been a significant increase in Japan’s hitherto minimal outsourcing to India.

This increase is in part due to enhanced efforts on the part of Indian service providers to penetrate the Japanese outsourcing market, a consequence of the Indian companies’ falling fortunes from the recession-plagued US market. On the other hand, it is also due to the Japanese noticing that many of their competitors are gaining cost advantages by outsourcing tasks to India, causing them to follow suit to maintain market share.

Examples of projects being outsourced are car navigation systems, automated securities trading systems and medical scanners.

The article mentioned how, in two very well-known Indian software companies, the very small teams dedicated to Japanese projects of a few years ago now teams with thousands of people. And these companies are predicting steady growth in the future due to the fact that very few new engineers are being produced in Japan.

Traditionally, cultural barriers, such as language and business conventions, have not permitted India’s outsourcing business with Japan to grow rapidly. So Indian companies are teaching their engineers the Japanese language and Japanese business customs.

An issue which has to be addressed is the difference in the Indian and Japanese product development strategies. The Indians believe in building , testing and delivering a product quickly then fixing any late-emerging bugs in the field as and when they occur. The Japanese, on the other hand, expect flawless performance from the moment of delivery, even if it takes longer to deliver the product. The article does not comment on whether the Indians have a solution to this, but judging how things have evolved in the past, it won’t be long before such a solution emerges.

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