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Why is competition from India & the Phillipines, etc. not stronger?

8:44 pm on Nov 9, 2009 (gmt 0)

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So..a couple of days ago I saw the movie slumdog millionaire ;-) which inspired me to ask this question:

It seems there are some developing countries, where A LOT of people can speak fluent English (Im not necessarily thinking India, but also the Phillipines, Indonesia, Thailand).

The cost of living in income in such countries is often way lower than in the US or Europe.

My guess would be that poor people (as in not spoiled) are hungry (I mean it as in eager to change their situation).

So, this makes me wonder: Why isn't there way more *strong* competition from India, the Phillippines, etc.? Do most of them not have access to the www (b/c of internet cafes being too expensive maybe) - something that could change and significiantly increase the competition in the English-language markets?

It seems that most of the time I hear someone mention an Indian SEO, they complain about a strange sounding link request they got from them.

Is (a very good grasp of the) language the main problem that keeps them from totally flooding the market? (I had the impression that in some developing countries the level of English is *really* good, but maybe Im wrong?)

12:16 pm on Dec 27, 2009 (gmt 0)

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Hello , Nice discussion.

As a non-English tongue, and with my little experience in under-developed countries (I'm an economic researcher interested in development in some poor countries close in preferences to India some how) i would like to make some comments:

Let us concentrate to the main question, why Webmasters from such countries cant compete?

1- There is a time gap between internet access in the USA and other developed countries and a country such as India, you gained internet years before, this lead to some results:

A- Developed countries webmasters are more experienced with search engines algorithms, they started together, understanding an equation of 1 variable and watching it growing to 1000 variables is much more easier than understanding a big 1000 secret variables.

B- Tech infrastructure available in developed countries, i seen many here saying, take your servers within a drive from your home, I'll pay double to get such an option :).

C- Accumulative knowledge, you may meet, learn from, live with or marry a person who was one of the web creators in those countries, while in less-developed countries, all what you have is what you read on Webmaster world (what experienced webmasters find safe to share!).

2- International organizations count the internet users per 100 population, no one care for quality, with a bad quality dial-up connection you are counted as an internet user, with such type of customers im sure you will find your self another job than being a webmaster.getting a fast internet connection is still an issue in more countries than you can imagine.

3- People in less developed countries do not trust electronic business yet, not because they cant understand it, but because its hard to trust the real physical business with such weak law institutions they have.

4- If you think deeper, you will find a big portion of goods or services your trading in or making an online business for, are new invented goods and services that reflect a leisure life style, a big portion of people in less-developed countries think how to eat before education or entertainment.

I tried to concentrate on the main question (the Webmasters) for sure things are much more complicated.

12:20 pm on Dec 27, 2009 (gmt 0)

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Another problem is that some of the better Indian IT companies are charging higher rates now. In some cases they are asking for $15 USD per hour. That is not a lot in the USA but it's getting on for £10 GBP per hour. There are graduates in the UK who don't earn much more than that.

$15 USD per hour is big, big money in India. Add the communication problems and risks involved and it's not worth taking the chance in my opinion.

1:34 pm on Dec 27, 2009 (gmt 0)

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I read thru. the various posts critical of India and as a patriotic guy, it hurts.

There is some truth in the comments that tradition/old thinking/and outdated ways of working can and does restrict growth and innovation. Infrastructure bottlenecks in small town and cities also hurts..Bigger towns and cities are catching up fast.

However, there are many untold successful stories and many 'entrepreneurial' initiatives being taken by Indian software designers/ engineers and other specialists. If it was not so, President Obama would not talk about work being 'Bangalored'..

My wife who works at a senior position in one of the medium ssized software companies.. ( employee strength apx.. 5000 ) just made jobs at a major American company redundant. 80 Americans will be fired in Jan end. Tell them , that Indians are idiots and you guys will get back your jobs soon, .. that ain't happeniing.. These are not low end jobs we are talking about..

The call centre Industry is low tech. , in terms of skill sets required. But it has given employment to hundreds and thousands of graduates in India, and raised their standard of living. This has fueled economic growth and will drive incomes and living standards in smaller cities also. It is upto the employee themselves to upgrade their skill sets and grow. Not all will grow, but some will .. isn't this true with any organization.. Come to think of it, these stupid low tech jobs just a few years ago were being done by Americans and European themselves. Does this mean they were idiots or lacked brain power..

Not to forget that companies like Adobe, Microsoft, S T Microelectronics, Accenture, IBM etc all have major Indian presence..

Competition in the internet space in terms of individual web entrepreneurs is limited. However this is not because of lack of entrepreneurship or skills etc..It is so, because of lack of knowledge about the POWER of the Internet. When that realization hits big time, then you will see some major competition in the fight for SERPS and web presence.

Oh, and I get enough SPAM from American SEO companies offerring to improve my SERP position , others, trying to entice me to join their affiliate prgrams, offering to redisign my sites and what not..

2:48 pm on Dec 27, 2009 (gmt 0)

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This is one of those "long" threads that I'm glad hit the front page on a Sudnay morning, when I had the time to read through absolutely everything.

I think vik_c nailed a lot of good points talking about the cultural aspects that are holding back a lot of people in the region.

We have to remember, also, that SEO and web design are things that really depend on cultural subtlety. It's the little things that separate the merely "good" from the "great" in both these fields. And as has been mentioned, it's tough to grasp the nuance of some of these subtleties unless you grow up in a given culture. I can read about the culture of, say, Brazil, watch their TV and movies (Brazil is a good example here, because they have a fairly well developed entertainment industry), read their newspapers and magazines. Do all this for years, and I will never "get" what it means to be Brazilian, or truly grasp the subtleties of their language and idiom.

And we've seen a progression in North America and Europe over the past while. A "good" website doesn't really cut it any more. There are enough skilled people in our home countries producing "great" work, that it's become the standard. I'm kinda stunned sometimes by the beautifully written, sumptuously designed, websites that even small companies can now acquire for relatively little money.

And cultural issues aside, the state of the IT infrastructure in much of the developing world is abysmal, both internally and due to external factors.

Where I'm working now, we work on a stunningly complex "fat pipe" corporate IT application. Our data centre is in North Am, and we serve up to... well, everywhere (NA, Eur, SA, China, India, Aus, etc...) While India and China represent a tiny % of our overall business (less than 5%), they cause about 50% of our support issues. This is because the fat pipe links to India, and to a lesser degree China, just plain suck.

Try running traceroute (or for you Windows types, tracert) to an Indian ISP, versus an ISP of comparable distance somewhere else in the world, and just watch the ping responses fall off a cliff as soon as that signal starts crossing the trans oceanic links to India. From where I am, I can ping Eastern Europe with a latency of 100 to 150ms. India? 450 to 600ms, or worse. Run bandwidth tests and you'll see similar results.

And that's to the ISPs, let alone the last mile bottleneck from the ISP to the end user, where experience has shown me it just gets worse.

So, I believe we have a while before we see real competition from some of these countries in many fields. The cultural differences mean that they simply don't "get" the subtleties needed to really compete ins design fields. And the fact that these areas have really poor access is going to hold them back from a technical standpoint. Both of these problems are fairly substantial, and not easily fixed.

7:00 pm on Dec 27, 2009 (gmt 0)

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Great post Makaveli2007.

I don't live in India but in Central América and I could share some points directly related to this.

1. Limitations by country
Many services won't allow certain countries to join, to participate or to even receive payments. This is a direct problem and it doesn't matter if you have a great website. The solution is to travel and to get an address elsewhere or a foreign bank account.

2. Service Quality
Not every public service is great and sometimes even shipping can be a problem. Yes, there are alternatives but the price goes up. This represents a problem to compete. Service quality might involve problems with internet connection too or the price being too high.

3. Networking problems
Connections, knowing the right people! very often conferences serve as a great opportunity to meet people and make deals or even exchange links you wouldn't get online. The location might mean higher prices to get to the places where this conferences take place. I know this is my case. This also increases costs.

Is not the same to travel from Miami to Cuba, Houston and Canadá or even Europe than traveling from Argentina to a US based conference.

Yes, I have websites doing fine and having a good income this way but after the years I really see a great value on being there (online is not the same) to make deals, get to know other people and grow. Networking is real.

I could go on with smaller issues, but the idea is as everything has a solution, it usually increase costs and when you do the map, is not a great business anymore.

9:05 pm on Dec 27, 2009 (gmt 0)

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@vik_c: I am also from mumbai and agreed 100% of what you have said. Doing business in india is really difficult due to its culture. And building a successful business on internet is more difficult as there is very less faith in internet business or goods you get through the website.

Check out ebay india site and see how many customers are complaining about the sub standard goods sold to them by vendors. Here I am not saying anything against ebay india but I am saying that due to this attitude people in india genearally dont use internet for online purchases as much as in the west. people here prefer to check out the goods or service by visiting the shop and once they are satisfied then only they tend to purchase the things. Also many people dont have credit cards so they dont purchase through net. So most of the webmasters are either targetting US or European traffic and trying to make some money but dont get very successful due to lack of the knowledge of these markets.

3:48 am on Dec 28, 2009 (gmt 0)

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@vik_c: Thank you so much for your posts, they are incredibly interesting.
4:42 am on Dec 28, 2009 (gmt 0)

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Competition? They will spam every forum or blog ever created for $4 :).

But as others have pointed it out: it takes time and ambition to compete with big sites and not enough devote their energy there.

7:10 am on Dec 28, 2009 (gmt 0)

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Just a few points to add :-

1) Indians generally are a satisfied lot. Not necessarily looking at big picture. TCS which is the biggest IT company in India, started off with data entry jobs. Same with companies like Infosys which used to develop financial apps for clients. They had the brains to apply for Intellectual property of their apps and start licensing their software. Hence Indian companies generally start off with outsourcing projects and then gradually move on to high level jobs. this transition takes at least 5 years or more. Then if the company does not wind up, and if they are intelligent they start thinking of intellectual property. Compare this with most US/ European companies which do this very early, if not from day 1.

2) In terms of website related stuff, I have seen some pretty cool web applications (in web usability, web analytics etc) being outsourced to india. Annawala was right when he said Indians work better when given a framework and not necessarily think creatively.

3) In my exprience Americans and Europeans do a better job of marketing their software / expertise.

$15 USD per hour is big, big money in India.

Actually $15 USD per hour is not what it used to be. 4 to 5 years back $15 per hour would be big big money. Not any longer. You have to be in right place to attract right talent in india. which means having a shop in one of the major cities. The cost of real estate in cities like Mumbai and Delhi are comparable to that of New York. Also if you read UK Digital Agency rate card survey for 2008 then the average rate of a junior SEO/ PPC is GBP 50+ per hour. So there is still an arbitrage opportunity.

Complaints about link spam :- Yes, I think many people are hiring indians for link spam. I think many US based seos and clients are hiring link guys in india.

@vik_C - I agree to many of your points, but I also disagree with some.

@Makaveli2007 - I know a few years back, there was a buzz about learning german language because of great opportunity for IT guys in germany :)

And I think there are many successful Indian websites on the web. Its just that not many realize the indian connection. The smart guys stay under the radar and the dumb ones get caught in link spam.

8:42 am on Dec 28, 2009 (gmt 0)

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Actually $15 USD per hour is not what it used to be. 4 to 5 years back $15 per hour would be big big money. Not any longer.

That's exactly what I mean - you may have missed my point. Indian rates for IT workers have risen sharply meaning that they are losing the competitive advantage they had four or five years back.

Having said that, because of the cost of living $15 USD per hour is still massive money to most Indians.

10:18 am on Dec 28, 2009 (gmt 0)

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Many folks here forgot that many talents are, in 1.3 bn Indians. However, in every society there are ups and downs and issues remained untacled. Many Americans do not know who is their president or foreign sec. Again many countries cannot stand without the help or spending by Americans. The world is nothing but a typical playing ground. All suspect that power is being shifted from west to east. I doubt in 100 years that will be possible in China or India due to lack of cultural development. However, in IT industry Indians are of great demand but cheap.So American businesses are outsourced to India.
10:36 am on Dec 28, 2009 (gmt 0)

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My guess would be that poor people (as in not spoiled) are hungry (I mean it as in eager to change their situation)

Your speaking from a western point of view. Actually poor people from other countries (assuming daily necessities are met) tend to be more content then westerners, priorities and ideas of success are also different.

11:16 am on Dec 28, 2009 (gmt 0)

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I'm from India. I agree with every word of what vik_c has said.

American/western business culture simply doesn't exist in India. In the USA you start a small company with say 5-10 employees. If you succeed then all is well and good but if you don't succeed, you just file for bankruptcy under section 11 or whatever that is and move on to the next venture or the job etc. There is no permanent shame attached with trying and failing in a new business venture. After all most small businesses do fail just a few years after the start. Here in India, there is a stigma attached with the failure, so there are not many people willing to take risk by starting any business venture. I know some very bright and well educated people working for American companies like Oracle, Cisco, Microsoft, IBM, HP etc. in India. They have done very well in their jobs if you measure success by the salary that they are earning in their present jobs but if you ask them to start a small business or join an existing small business as a partner, they just walk away from the idea. The basic job of an entrepreneur is to take calculated risk because no business can succeed without taking certain amount of risk. People in educated class of our country are too risk averse, hence they don't want to try new ideas. They just want a job with a boss. Somehow killing instinct is missing from the well educated people in my country.

Unfortunately or fortunately (depending on which side of the table you are), cost of broadband internet service is going down in India. So, be prepared to receive more of the stupid link requests from my fellow countrymen :)

12:21 pm on Dec 28, 2009 (gmt 0)

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Entrepreneurs are always a limited minority in any culture. In India, smart companies have provided entrepreneurial opportunities within the organization and helped to grow the company also. Many western companies like Adobe, ST Micro, Accenture, IBM, recognize, and nurture this ability of Indians.

It is not easy to set up a new venture from scratch in India. It takes contacts, bribes, money and patience. However that said, web business is relatively easy to set up with low cost of entry but the risks of failure are great. In India, to be a first generation entrepreneur is risky ( but isn't that so everywhere). I am proud to say that I have taken that risk and have been online since 2004 with a small ecomm store. It has taken time and patience to reach a level where the business is now self supporting. I have done this with the help of my parents and wife's support. Without this support, I would have failed and given up long ago due to frustration. However, I have seen an opportunity / niche within my country and have targetted same. My ecomm site does not sell outside my country. India has enough of an internal market. The problem is internet penentration and the lack of culture of web buying. However this is changing as more and more companies go online offering better deals in the webspace.

Indians have to ( and maybe, do) realize that it is difficult to compete in the American / European web space. They should target the Indian market and as the Indian internet market grows, their presence will also grow. I already see that trend emerging. Indian websites in general do not target the West. There is enough of a market here. Maybe that is why you do not see enough competition in your space.

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