Indian IT is in a crisis, or so the newsmen claim.
A string of layoffs, some at very senior level, and the new and proposed visa measures in the United States, United Kingdom, Australia and Singapore have contributed to a sense of seize.
But, while this headline story has its merits, but the sense of crisis and the connections with US Visa changes are certainly overblown. The problem with this crisis-mongering is that this diverts attention from the structural challenges that the sector faces.
The Indian IT has had mixed fortunes for some years, and the salaries, at the entry and mid level, were stagnant for some time now.
There are a number of reasons for this.
First is the 'productisation' of IT - this whole phenomena captured in the expression 'there is an app for that!' - that challenged the custom development model that the big Indian IT companies are usually accustomed with. The trend, which started in the Consumer sector, is rapidly spreading to enterprise, and the custom development market is increasingly being eaten away by purpose-built products, or plug-and-play environments.
Second, with a transition to cloud and newer technologies, the business of application maintenance - which is perhaps an ever bigger chunk of IT Services business - contracted. When an application moves to Cloud, it needs less people to maintain it: These people need to have different skills too. And, with Cloud, comes a different set of security concerns and data ownership issues, creating a trend towards near-shoring.
Third, there is the impact of automation too, and this is not just about Robots and intelligent machines. Machine-readable forms and automated routines for everyday tasks eat away more jobs than the more glamourous aspects of automation. There were an army of people in the Indian IT sector doing routine maintenance work - backing up and restoring data, managing user privileges, attending to breakdown situations - and a number of these tasks are now being done through relatively simple computer programmes.
Fourth, the costs of operating in India has been rising. This is primarily as the cost of living was rising fast in the key cities, driven by high real estate prices and consumer price inflation. Though India is far from being a middle income country, the IT companies were caught in an equivalent of a middle-income trap, as they failed to move out of certain key cities, and drove up the costs in those areas. The availability and quality of manpower has also become an issue - partly the IT industry was a victim of its own success - and this has contributed to rising costs.
These factors were in play for a long time. I would recall Vivek Wadhwa writing about the unsustainability of Indian IT Business Models in around 2011, where he lamented that the senior managers, though acutely aware of these challenges, were failing to drive change in their companies.
The Trump Administration's rhetoric about curbs on H1B visas, and layoff announcements by top Indian IT companies, have resulted in a perfect storm of news. The hyperactive Indian media found its demons all too easily: Indian IT bosses for their collective lack of foresight, and the Trump Administration for making it difficult for the Indian IT sector.
However, it is perhaps unfair to say that the Indian IT companies were sleepwalking. Many of them were reducing headcount (remember the fuss about TCS layoffs a couple of years ago), freezing recruitment or moving to other, lower cost, locations, like the Philippines. There was also a range of measures to expand the recruitment pool, with extensive pre-recruitment training and deeper engagement with select colleges to get students ready early, aimed at combatting the cost-disease.
Besides, while it is easy for outside observers to notice and point out the business model challenges, it is not easy for executives running large, publicly-listed companies to change tack easily.
Besides, one must also recognise that the shifts in the global market not only a visa issue, but part of a wider shift in the process of globalisation. This challenges not just the business models of Indian IT companies - using relatively low-paid Indian engineers to implement business IT applications for customers worldwide - but essentially the role India sought to play, and positioned itself for, in the globalised world.
In summary, it is exceedingly difficult for the Indian IT companies to shift away from their proposition of building and maintaining IT applications at a low cost and start building products without a profound change in overall context. The sector does not have access to the educational infrastructure, local demand or start-up ecosystem that can help build a different kind of business models. The teeming millions in Indian Engineering colleges are trained, in best cases, to follow instructions, not to innovate and think for themselves; the culture of the Indian workplaces favour being the Manager - with better pay - than accumulation of technical expertise by working in an area over many years; start-ups are frowned upon by middle class families with background in Government employment, which most Indian middle class families have, but even a lowly maintenance job in a publicly listed company gets more attention socially. There are relatively little enthusiasm about art and design - those areas are 'feminised' in India and kept at arms length from Engineering and Business - and the relatively disengaged world of the Indian middle classes rule out imagining new solutions to social problems. These, and other, ideas, approaches and engagements have to change before Indian IT sector can suddenly start becoming great technology companies. The IT companies, for all their size and resources, are at the mercy of their return-seeking shareholders: Initiatives that will bring difficult-to-measure rewards are not usually welcome in the stock markets.
Also, the Trump Administration is not the first administration that talked about tightening H1B and other visas: This was in conversation ever since George W Bush's time, and any other president would have talked about reviewing the long outdated (like $65,000 salary threshold for a skilled worker) norms. Besides, many other countries are already revising the norms for the kind of visas Indian IT companies use - Australia and Singapore have already done it, and UK is going to make significant changes after the June elections - and Trump administration would only be doing catchup. Trump's encouragement to weak dollar should be a bigger issue for Indian IT than his rhetoric around the visas, which should be treated as a part of the business environment.
In fact, by talking up the crisis and blaming Trump, the Indian media is looking at the wrong problems. The big Indian IT companies are no longer 'Indian' - they have global footprint and Infosys' plan to offer 10,000 American workers is a sign of what they are going to do - and Mr Modi can do little to solve the bigger problem (though he is being urged to influence Theresa May and Donald Trump on visa issues). There are complex issues on the table - of a new kind of education, of regional re-balancing, of developing a larger ecosystem of smaller cities (as opposed to pushing a few metropolises to unsustainable size) - and the easy globalisation that benefited India for last 20 years is over. The conversation that we need to have now should be about how to change course, not of a company or of a sector, but for the country as a whole.
Popular posts from this blog
A friend has recently forwarded me a quote from Lord Macaulay's speech in the British Parliament on 2nd February 1835. I reproduce the quote below: "I have traveled across the length and breadth of India and I have not seen one person who is a beggar, who is a thief. Such wealth I have seen in this country, such high moral values, people of such calibre, that I do not think we would ever conquer this country, unless we break the very backbone of this nation, which is her spiritual and cultural heritage, and, therefore, I propose that we replace her old and ancient education system, her culture, for if the Indians think that all that is foreign and English is good and greater than their own, they will lose their self-esteem, their native self-culture and they will become what we want them, a truly dominated nation." The email requested me to forward me to every indian I know. I was tempted, but there were two oddities about this quote. First, the language, which
Introduction : The Business of Gift Giving Business gift giving has always been common and contentious at the same time. Business gifts are usually seen as an ‘advertising, sales promotion and marketing communication medium’ (Cooper et al , 1991). Arunthanes et al (1994) points out that such gifting is practised usually for three reasons: (a) in appreciation for past client relationships, placing a new order, referrals to other clients, etc.; (b) in the hopes of creating a positive, first impression which might help to establish an initial business relationship; and (c) giving may be perceived as a quid Pro quo (i.e. returning a favour or expecting a favour in return for something). The practitioners of gift-giving generally argue that doing business is often an aggregation of personal interactions and relationships, and gift-giving should be seen as a natural way of maintaining and enhancing these relationships. ‘Business gifts, especially one given in the course of the festive s
Today, Helen Goddard, 26, a highly popular music teacher of a City School for Girls, has been sentenced to 15 months in prison. Her crime was to carry out a year long lesbian affair with one of her pupils, who appeared in the court and admitted that the affair was consensual and it was she who pressured Helen into the affair. For Helen, a bright musician and a devout Chistian, this is an extraordinary lapse of judgement. Also, she was teaching in the £13,000 private girls only school in London. She was surely aware what the consequences of her action will be. The fact that she still could not stop herself tells us that lovers do not always act rationally, something we always knew. There is more in this affair than personal tragedies. For a start, this has all the dramatic elements: a bright, beautiful teacher more in Julia Roberts mould [as in Mona Lisa Smile], a stiff upper lip school [not unlike Wellesley] and a story like Notes On A Scandal with an added twist. Indeed, Helen
Buzzwords have disadvantages. Right now, experiential learning is one, and that means we put the label on everything and it stops to mean anything. Also, this means reasonable conversation about experiential learning becomes difficult - at times such as this, either you preach experiential learning or you are traditional, antiquarian and hopelessly out of touch. But, overlooking the limitations of experiential learning can cause big problems. Experiential Learning does many things - putting practice at the heart of learning is an important paradigm shift - but not everything, and it is important to be aware what it does not do. Usually, we equate the terms Project-based Learning (the method) with Experiential Learning (the idea) and Learning from Experience (the ideal), treating them as one and the same and using the terms interchangeably. Any talk about distinctive meaning of these terms is usually seen as pedantic, but really represent very different ideas about education.
Nations are ideas. We try to fashion them as territories. But how can a river, a mountain ridge or sometimes an imaginary line in the middle of a field can explain the wide division in the lives, thoughts and futures of the people who live on different sides? Nations are not the people too. Indeed, people build nations and become its body. But the soul of the nation is an idea: People come together on an idea to build a nation. While that's what a modern nation is - an idea - and that way exceptionalism is not an American exception, very few nations are as completely defined by an idea as Pakistan. There was hardly any political, geographic or military rationale of Pakistan other than the idea of an Islamic homeland in South Asia. [In that way, the ideological brother of Pakistan in the family of nations is Israel] This, abated by the short term political calculations of some backroom colonialists, created a modern state which must be solely sustained on that singular idea. Reli
In most societies today, making profits are accepted as moral, if not especially praiseworthy. This was not as obvious as it appears today – people used to be embarrassed about making a profit not so long ago. Crazy as it seems today, it is worth thinking why it was so. Profits, as economists will put it, is the reward for risk-taking, for putting a business enterprise together in the pursuit of an objective. In this definition, remember, profits are not what it is commonly understood to be – the gross middle-line towards the bottom – but a figure net of entrepreneur’s earning [wages for his labour], dividends and interests on borrowed capital, and provisions for building and other physical assets [a sort of rent, offsetting what these assets could have earned if leased out]. This pure profit – surplus – accrues to a business as a reward to its organisation, for the act of entrepreneurship itself. Economists were divided on how this surplus comes about. The conventional wisdom was,
Introduction: Hastings in the history of Indian Education Whether or not one includes Warren Hastings in the history of Education in India is a matter of perspective. If writing the history of education means writing the history of schools, the impact of Hastings' administration would be quite limited. If anything, the rapid implosion of local rulers in Eastern, Southern and Northern India during Hastings' tenure had meant a bleak period for the indigenous education system, as patronage and funds would have dwindled away for many of them. The Company administration really concerned itself with the schooling of the natives only after 1813, as Nurullah and Naik rightly pointed out ( see my earlier post ) and one can legitimately start the story at this point. However, if history of Education in India is to encompass the transformation of Indian Scholarship, on which foundation the new, colonial, system of Education would be built, the story must start with Warren Hast
There is no other city like Kolkata for me: It is Home. The only city where I don't have to find a reason to go to, or to love. It is one city hardwired into my identity, and despite being away for a decade, that refuses to go away. People stay away from their homeland for a variety of reasons. But, as I have come to feel, no one can be completely happy to be away. One may find fame or fortune, love and learning, in another land, but they always live an incomplete life. They bring home broken bits of their homeland into their awkward daily existence, a cushion somewhere, a broken conversation in mother tongue some other time, always rediscovering the land they left behind for that brief moment of wanting to be themselves. The cruelest punishment, therefore, for a man who lives abroad is when his love for his land is denied. It is indeed often denied, because the pursuit of work, knowledge or love seemed to have gotten priority over the attraction of the land. This is particularly
India's employment data is sobering ( see here ). The pandemic has wrecked havoc and the structural problems of the economy - service sector dependence, uneven regional development and health and education challenges - are more evident than ever. Something needs to happen, and fast. To its credit, the government acknowledges the education challenge. Belatedly - it took more than 30 years - India has come up with a new National Education Policy. It is a comprehensive policy, which covers the whole spectrum of education and perhaps overcompensates the previous neglect by advocating radical change. As I commented elsewhere on this blog, it shows a curious mixture of aspirations, cultural revival and global competitiveness put under the same hood. However, despite its radical aspirations, the policy document often betrays same-old thinking. One of these is India's approach to foreign universities. The NEP makes the case for allowing foreign universities to set up operations in Ind
The story of British influence on Indian Education, to which Macaulay's Minutes of 1835 belong, has been told in six distinct phases. Syed Nurullah and J P Naik's very popular and influential History of Indian Education calls these 'six acts' of the drama: From the beginning of Eighteenth Century to 1813 The British East India Company received its charter in 1600 but its activities did not include any Educational engagement till the Charter Act of 1698, which required the Company to maintain priests and schools, for its own staff and their children. And, so it was until the renewal of its charter in 1813, when the evangelical influence led to insistence of expansion of educational activities and allowing priests back into company territory. From 1813 to Wood's Education Despatch of 1854 The renewal of Charter in 1813 re-opened the debate, which seemed to have been settled in the early years of the company administration, between the Orientalis
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.