Jugaad literally means an improvised arrangement or work-around, which has to be used because of lack of resources. And this is how a large part of diurnal business is done in India across sectors ranging from agriculture up to high tech service sectors. And this is a critical attribute of the 'Indian Genius’ adding a wholly new definition to Innovation as a concept in sharp contract to Developed Economy perspective. A very potent example can be sited, and probably is a cliche of more ancient origins, from a rather popular and recent Indian movie – Three Idiots.
An ambidextrous genius dean of professor has been rewarded a million dollar pen that can write in space in the absence of gravity. He shows this off with great pride to a group of freshmen as he, in effect, talks about excellence. The protagonist in the movie asks why a pencil was not used instead as this would have saved a million dollars.
This, my readers, is the power of Jugaad! More visibly we see the power in the capability to turn around innovation within a budget with limited financial and human resources to minimize the cost of innovation and maximize returns on investment. Devita Saraf, CEO of Vu Technologies and Executive Director of Zenith Computers in Mumbai, writes “I truly believe that the future of India's exports lies in our ability to create products and services for the world through our ‘frugal engineering and Jugaad skills’ ”
The most potent display of this frugal engineering is seen in the outsourcing industry – services and IT. The one consistent trend in the very rapidly changing world of BPO and IT Outsourcing is the ability to achieve effective and rapid turn around within a constrained budget. This approach of quick-hit innovation helps achieve the 60 – 70% reduction in cost (among other benefits) that is realized from long term outsourcing relationships. For the chief opposing schools of theorists who believe that outsourcing dilutes value and is an unfair trade-off between cost and quality, here lies a lesson that deserves deriving inspiration from.
I will call it Focus on Ends Approach to Value Chain Engineering. This approach adopts is by nature frugal and hence tough to explain in a formalized or diagrammatic structure. From the wide world of Outsourcing, I will try and explain how the End to Means engineering works in a small component of setting up operations – basic technology infrastructure, trying to show a contrast with how the same would be achieved in a developed economy.
An example of how Jugaad works…
I must declare that the numbers are not statistically collected and validated and are based solely on experience. But I have a sneaky feeling that if you really dug deep you would find that I have been fairly conservative. As an example, if we pick the PC hardware as one component, a branded desktop with limited frills will cost anywhere between $ 400 – $ 500 if purchased in bulk (I mean 50+ when I say bulk). In India, an assembled PC with similar performance statistics and configuration can be put together at $ 250 or less with less than $30 p.a. on annual maintenance contracts with third party providers. If we add the numbers we see a 130% – 150% lesser cost of setting up an average 50 – 100 people operational setup.
That, my readers, is the power of the Jugaad approach! And the end goal will be achieved within the budget with all the required 99.9% uptime and high rates of throughput, etc. Only it will cost 150% lesser leaving that much room for the provider to make margins on the services provided. So, I know that most BPOs and IT providers will hate me for this, next time you wonder why your operations cost $65 - $75 per person per hour and someone from India can do the same work at the same level of quality at $10 - $12 per person per hour, you need to take a look at the component and resource level engineering that stands between your deliverables and cost targets.
That, my readers, is the power of the Jugaad approach! And the end goal will be achieved within the budget with all the required 99.9% uptime and high rates of throughput, etc. Only it will cost 150% lesser leaving that much room for the provider to make margins on the services provided. So, I know that most BPOs and IT providers will hate me for this, next time you wonder why your operations cost $65 - $75 per person per hour and someone from India can do the same work at the same level of quality at $10 - $12 per person per hour, you need to take a look at the component and resource level engineering that stands between your deliverables and cost targets.
As an economy, this is probably central to how the Indian economy, despite being rated low on multiple fronts including corruption, infrastructure, etc., keeps growing unaffected by the world’s crisis. The global economic crisis, with all the intellectual and exotic location based discussions, boils down to one thing – people have lower disposable incomes, companies have lesser money to spend and the demand for cheap and high quality products and services is on the rise. In the end that is what drives economic growth and probably the reason the Indian economy keeps chugging along at a 7 – 8% growth YoY despite all else failing around.
There is a lesson to take from here targeted to all the small, medium and large corporations and governments, in the way innovation comes to pass and make small and incremental contributions to a grand total impact. Millions of MBAs across thousands of business schools have studies the Mumbai dubbawaalas as a 6-sigma case study and tried to analyze and learn from it. The fact of the matter is that the learning is not about flowcharts and complex theories but the implementation of Frugal Engineering as means to deliver the end goals. And the way to do it is very simple.
Step 1: Break down the target to its absolute basic components – that means going to the extent of breaking down the PC into RAM, Processor, MB, Video Card and so on.
Step 2: List the end goal of every cluster of components – if the PC is a cluster component what purpose does the PC serve and what does it depend on to serve this purpose.
Step 3: Find out what the cheapest or fastest or most efficient way of achieving the purpose – Do I need a branded Dell PC to calculate taxes or can this be done by an assembled PC with a cheaper processor and 256MB of RAM running a stripped down configuration of Windows? Do I need a Support contract with Dell to take care of this PC or can I employ someone to take care of the 50 PCs that are used to calculate taxes (90% of troubles of PCs can be resolved with guidance from Google for free)
Step 4: Switch to the most attractive option that does not disrupt the entire value chain – This may not be the cheapest option as the other cluster components may depend on the target cluster component, however, it makes sense to then engineer the depending components to suit the cheapest/fastest/most efficient engineering.
It can be applied to almost anything from hiring people to dealing with the Government on regulatory issues and it works! We have a country full of case studies to prove it.
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