India: No Longer Only Labor Arbitrage
Dan’l Lewin writes a must read article for AlwaysOn entitled, “Is India At The Tipping Point?” He writes about the rise of the Offshore Product Development company (OPD) building “whole products for their clients at about one-third the cost.” It’s not just about building products though — it’s about domain expertise. The labor arbitrage game is a no brainer bet — you always double-down when the dealer has a 6 showing and you have 10.
Dan’l also says that “I believe that OPDs are the breeding ground of future software entrepreneurs and will impact the local software ecosystem.” I agree that this will be a future trend because I am doing it right now along with others. There were brief moments when I thought about setting up my own Indian subsidiary, but why bother with what amounts to minimal cost savings when the basic hassles of running a business won’t contribute to my core competency: building disruptive software. Plus, the bureaucracy involved for a Non-Resident Indian (NRI) to setup and own an Indian business is a nightmare. Running an HR department and having to bribe people to get an internet connection sooner than later is for the birds
. At the end of the day, the fully burdened cost of running your own show in India is comparable to using an OPD. So why subject yourself to pitfalls that could be serious show stoppers? Mitigate risk early on and give your startup a chance….