5th March, 2010
If you have the cost advantage, you don’t really have an advantage
Posted by Navin Harish - 1 Comment
If the USP of your business is lowest price, you can be assured that sooner or later someone will challenge your position.
The IT, Telecom and a lot of other businesses are flourishing in India because we are able to do it much cheaper, not essentially better. One of the biggest requirements for these jobs is command over the English language. It is easy to find people with the skills for the job AND knowledge not just English but in the accent you want.
If your business depends on lowest cost, it is time for you to find a more sustainable business model.
The reasons all these jobs are in India and not in a country that can do it even cheaper like China is largely English. An average American or Brit would rather speak to an average Indian than an average Chinese. You may argue there are issues like human rights and hacking but that has not stopped companies from opening offices in China so far.
China is aware of the challenge and the huge opportunity and they are working towards a solution. An article I read recently mentioned that the quality of English education in Chinese schools is much better than Indian schools. A few years later you will have a large work force ready with English skills as good as Indians if not better and rates even more competitive than ours. Who do you think will be opening STPs then?
You can survive on lowest cost for some time but not for ever. With call rates as low as 1/2 paisa, the telecom companies are a good example of that. Sooner or later the smaller ones will have to wind up. If your business depends on lowest cost, it is time for you to find a more sustainable business model.
Tags: business model, china, cost, it, telecom india, usp
Filed under: flossing, marketing, positioning
1 Comment
Prateek Sinha
March 6th, 2010 at 12:59 pm
I have known companies who have been operating on the low cost model. However, when the competition becomes tough, they have to change their offerings. I know of one companies that went from being a web design agency to a software company to a Microsoft vendor in a period of 4 years. All because of low cost
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