Where are we heading towards China or South-East Asia???????

With the advent of the Second Financial Quarter FY07-08 (July-Sep) in India, Companies are busy announcing their 1st quarter results. Just boasting of how they have badly beaten the investor guidelines, grown over the past quarter and various other merits that they have acclaimed during the 1st quarter. IT companies have however got some more measures to (mis)guide the investors, like number of new clients added, number of customers in Fortune 100 list, attrition % (a real cause of concern) and increase of salary/resource cost over the past year.

It’s Party Time – a reality or a fallacy??

The last metric would be of a real pleasure for the IT employees as Indian IT salary costs are growing by a whopping 12-14%* (average) YOY.
I have a slightly different view point here. There is nothing to be happy about the 12-14% hike for two contradicting reasons. First reason is with a myopic view and as the same would turn out to be a problem in long term, framing my second reason.

The first reason, I view the hike as just a combination of India’s GDP growth and the Inflation. India’s GDP has grown 8% for the past year. The average inflation placed at 5%

Salary Hike 12-14% = 8% growth in India’s GDP + 5% Inflation

An 8% hike – My share in the country’s productivity increase and the remaining 5% contributed by Inflation. So if you had an increase of over 14%, be really happy about it. Yes, you have beaten the market. Else, don’t worry all the best next time…..
But whether or not it meets the individual expectations, when compared to other sectors in India, this is way much better and hence it’s definitely a fact to be happy about and of course party. But till when can we continue to party???? Read on….

The second reason why I am not happy about the % increase in the salary costs is that it makes the Indian market vulnerable given the cost burden levied on the IT companies in resourcing various projects.

Industry barons view this seriously, that if the trend continues over the period of next 5-8 years, India will no longer be a competitive market for IT outsourcing. The South-East Asian countries are gearing up in this front and pose a huge threat to the Indian IT job market. Let’s not forget China which is already eating into the Indian Pie. This is also fueled by the Indian companies setting up shops in China and South-East Asian nations to get the “Early-Mover Advantage”. In the process they also recruit the locales and train them in the area of process improvements, soft skills – Few of the competitive advantages that Indian resources were boasting about till recent past are no longer competitive. The success mantra of India IT companies is very simple – “Be cheap and best”. Hence the moment India turns out to be a costly affair, they will slowly move into low-cost destinations just to deepen their existing presence. For this reason, Indian IT companies have also started to concentrate on the branding exercises in these geographies.

Though, we might be talking about moving into high-end consulting space, the current area of focus for India IT companies, it’s quite evident that for high-end consulting we wont need the size of the current workforce. So where will the remaining people go - To China or South-East Asia?? – A question left to the future to be answered.

* - As published in a recent NASSCOM report.

In shah Allah

tock tock tock.........hey hold on!!! don’t click on the online dictionary page... that’s me knocking my blog space. Guess I left it to a calm slumber for almost a long time.

As usual, it started in a single mail, then couple of conference calls, raise a request, collect some information and finally left totally blind folded. Ram started packing his stuff again. Oh no! there’s nothing new in it.

In shah Allah
In shah Allah was the first word I heard when I got a call from my Dubai Office confirming my travel details. Yeah, I was making my first trip to Middle East (Kuwait). This time my mission was little bit different, “Seek more”, “Even more” and “Finally get more biz”.
The learning started in Chennai Airport itself. As I was waiting to collect my boarding pass, I could see many people from rural areas waiting in the queue. Barring few idiots whose trip was sponsored by their company, (Guess, I have given enough info before to be part of this Idiot list) others had converted their property, jewels and their family’s trust in the form of tickets. These are the people leaving their loved ones behind with genuine ambitions and aspirations to be the bread winner of their family, not sure of what’s in store for them in the host nation, certainly having no clue on when they would return back to see the family. I just happened to see the tip of the iceberg when I helped few of them fill their Immigration Form. I was half dead by then!!!!!!!!!!!

Within few hours I was in Kuwait Int’l Airport. Saw hoards of people, my countrymen gathered in groups out of fear, loneliness and exasperation due to the 3rd rated treatment rendered to them by the immigration officials. In no time my countrymen who were heroes till they left their home country became more like slaves in alien land. Here they are just meant to be bonded labors wanting to be here and earn their living.

“Vanakkam”, sugama??? The first Tamil voice I heard was in my hotel, Mr. Antony from Srilanka has a real sad story. With the island nation under the war clouds, Anthony is bonded to be here for next 2 years, which means it’s almost close to impossible for him to get away from here. It pained a lot to hear him saying that he is considering the stay here as a long term imprisonment.

Who said they are slaves!!!! To me they have become Super-Heroes!!!!!!!!

I am sorry I never realized even when attending the International Financial Management course during my MBA that exchange rate can create such an unbearable pain.

To me life is a teacher with little difference – Life first conducts the exam and then shares the lessons.

PS: Despite all this pain there is one soul that lighted my spirits everyday from UK and helped me sail through the rough sea. Thanks Pr!Y@!!!!!