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Social media is abuzz with reactions to L&T Chairman SN Subrahmanyan and Narayana Murthy’s comments on a 90-hour work week. This essay highlights some of the business model, leadership, and policy failures that have driven some to expect employees to slog non-stop to sustain growth, rather than focusing on these personalities.
The business of labour arbitrage: In 1991, alongside our balance of payments crisis, we faced crises in innovative mindsets, infrastructure, and skilled labour. China had already embarked on a substantial industrial journey through the ‘70s and ‘80s, driven initially by significant labour cost gaps. The Indian industrial leadership, inspired by China, began labour arbitrage under NASSCOM, starting with ITES & BPO.
A business model built around labour arbitrage leverages the labour cost and skill differential between countries. India’s niche was its young, English-speaking population. Upskilling them to a level 1 or 2 computer technician, or to write basic code, still left a huge profit margin. Despite upskilling costs, such labour in the client country would be 15 to 20 times costlier.
Since this model is a no-brainer, the idea stuck around in India, and CEOs kept cashing in on it. Over time, as our competitors improved and demand requirements changed, this model has become unsustainable.
Outcome Driven R&D: Though certainly not representative of the entire Indian corporate landscape, it wouldn’t be an understatement to say that, by and large, our investors and corporations have always been—and continue to be—reluctant to invest in outcome-driven R&D. And why not, when they can thrive in a protectionist regime with the government taking the lead in R&D, albeit poorly?
In my opinion, India has this bad habit of just waiting for technologies to become obsolete and redundant, then purchasing them cheap from others—instead of offering original solutions to lucrative problems and generate technologies ourselves. We aren’t becoming a developed country anytime soon unless our corporate leadership takes the lead and invests in R&D that results in original solutions to global problems. This shortcoming may even end up becoming an existential problem for our republic in the long run.
Perhaps, the time is ripe for us to shift from a “Production” Linked Incentive mindset to a “Solution” Linked Incentive one?
Upskilling: I can almost assure you that I’m not skilled enough to comment on skilling. But anyone, including yours truly, can observe and state the obvious. Upskilling is crucial for keeping pace with the rapid changes in technology and the global economy. Investing in continuous learning and development can make a significant difference in an individual’s career prospects and a country’s economic growth.
One of the arguments for encouraging employment in the formal sector is that this arrangement provides the opportunity for continuous upskilling of the employees. I’ve availed this wonderful opportunity all my life myself, thanks to the policies of my employer—so far. It’s been a win-win for us both.
However, these persistent calls for 90-hour work weeks, which are also contagious in nature, make one wonder how many companies are truly committed to delivering the win-win benefits of formal-sector employment. Perhaps it’s becoming too farcical to remain unnoticed?
For my opinion on the government policies related to upskilling, may I refer you to: ‘The Struggle and the Promise’ by Naushad Forbes, ‘In Service of the Republic’ by Vijay Kelkar, and ‘Breaking the Mould’ by Raghuram Rajan? They, more or less, say the same things and I fully agree with them.
Ease of Doing Business: One reason we find ourselves in this labour arbitrage trap is that, as a country, we still have little to offer apart from cheap semi-skilled labour. On a lighter note, and due to brevity of space, let’s just say, if India had a superior supply chain, high-quality and uninterrupted power supply, optimized regulations, efficient and less-corrupt regulators, an aptly skilled labour force, and optimized but liberal utilization of our mineral wealth, the leaders of our industry might be less interested in the angle and depth with which employees stare at their spouse and invest more time in challenging their global competitors.
Conclusion: A large portion of the Indian industry needs to graduate from a labour arbitrage business model to one that specializes in providing R&D-based original solutions to global problems. Labour-force upskilling is the shared responsibility of the formal sector, the government, and the public comprising the labour force. Despite several reforms, our policymakers seem not to be getting the ease of doing business right. The toxicity in the employer-employee relationship will refuse to wane unless the basics are put in place.
These pieces are being published as they have been received – they have not been edited/fact-checked by ThePrint.