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Future of IT in India

B.Sathish
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Joined: Aug 18, 2005
Posts: 372
How long is the IT boom expected to last in India? When do you think the next depression / recession will happen and how severe will it be and why?
Devesh H Rao
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Joined: Feb 09, 2002
Posts: 687

Originally posted by BM.Sathiesh:
How long is the IT boom expected to last in India? When do you think the next depression / recession will happen and how severe will it be and why?


... dun ask me why i am smiling.... it was the first reaction ..
Ulf Dittmer
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Joined: Mar 22, 2005
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  64
You could make a fair amount of money if you knew the answer to that.


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Bill Mc Coy
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Joined: Feb 10, 2007
Posts: 57
How long is the IT boom expected to last in India

depends on global conditions and also depends largely on US Trade Practices.
When do you think the next depression / recession will happen and how severe will it be and why?

with most of young people in india employed in IT,if at all bust happens, it will lead to situation were US was in 1921.
Sameer Jamal
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Joined: Feb 16, 2001
Posts: 1870
Originally posted by dan dunst:

with most of young people in india employed in IT,if at all bust happens, it will lead to situation were US was in 1921.


India has about 60 million youth population and youth employed in IT or ITES is about 1.6 million i.e 0.96% dont think it will have a major impact though.
Devesh H Rao
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Joined: Feb 09, 2002
Posts: 687

Originally posted by dan dunst:

with most of young people in india employed in IT,if at all bust happens, it will lead to situation were US was in 1921.


:roll:

Total workforce in IT and related services - around 1.5 million
Total workforce in just Indian Railways (one of the government dept) - around 1.5 million


Total contribution to GDP by IT - around 4-5 %
Just rReliance Industries amongst others contribute around 3% of GDP

The truth is far from what is assumed.... and hence the smiley in the first post.
v ray
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Joined: Mar 15, 2007
Posts: 223
Yeah its highly unlikely that it will lead to a situation similar to the great depression..however, in the cities like bangalore where thats the profession which drives the economy, it will be a big problem.
Another problem is, many of the students seem to be preparing to get jobs in the IT field, so what are they going to do??
However, its unlikely that the people who are technically sound and actually contribute will be affected too badly.
Then another thing to consider is the people who sit on bench and idle, they maybe the first ones targetted. No longer will people be put on a project just to show the client that the project is on good hands...
What is going to happen if the US economy slows down significantly is that the unhealthy practices in our indian industry will correct themself.

However, hopefully Obama or Hillary take over and the economy recovers, there is still some hope
[ June 04, 2007: Message edited by: raybr ]
Ulf Dittmer
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Joined: Mar 22, 2005
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Originally posted by dan dunst:
it will lead to situation were US was in 1921.


Not following. What happened in 1921?
Bill Mc Coy
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Joined: Feb 10, 2007
Posts: 57
As IT sector expands it will lead to integration.Most of the industries involved with sectors such as energy, banking, health care, communication, defence, entertainment and transportation services have begun integrating into themselves all aspects related to computerisation. These industries will no longer outsource these areas or tasks to the IT industries once this integration is complete. Without outsourcing the IT industry in INdia is as good as out.

The second is a vicious circle. As the Indian IT industry gets bigger, the competition grows fiercer and the companies are forced to provide their services at a lower price to attract more clients. To attract and employ the best professionals periodic salary hikes are absolutely essential. These two factors are bound to collide.

Moreover with falling exchange rates, the Indian IT companies will be forced to raise their service price tags. At one particular juncture outsourcing will no longer be as cheap. And at this juncture the standards of living will be higher and the IT employees will begin to ask for more. And that is one more collision.


secondly,

if US goes ahead with its plan of putting restrictions on h1b visas, which 2 of its senators have been contemplating for sometime and add it to it some restrictions on indian software goods, it will hit indian IT cos mighty hard.then the next depression in india will be clearly in sight.

[ June 04, 2007: Message edited by: dan dunst ]
[ June 04, 2007: Message edited by: dan dunst ]
Amit Batra
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Joined: Mar 04, 2006
Posts: 361
Not following. What happened in 1921?

1929.
The Great Depression
[ June 04, 2007: Message edited by: Amitabha Batranab ]
Devesh H Rao
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Joined: Feb 09, 2002
Posts: 687

Originally posted by dan dunst:
web page
Then the next depression in india will be clearly in sight.


Looking forward to it
Amit Batra
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Joined: Mar 04, 2006
Posts: 361
How can there ever be a depression of that magnitude in India or any other developing country which has sound economic fundamentals??. All hell would have to break loose(read WW3) for people to even begin thinking of something like that.
Devesh H Rao
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Joined: Feb 09, 2002
Posts: 687

Is economy so simple....? Can the economy of a Country containing no less than 1/6'th of the worlds population be so simple so as to say with certainity that an industry can lead to depression.


Originally posted by dan dunst:
As IT sector expands it will lead to integration.Most of the industries involved with sectors such as energy, banking, health care, communication, defence, entertainment and transportation services have begun integrating into themselves all aspects related to computerisation. These industries will no longer outsource these areas or tasks to the IT industries once this integration is complete. Without outsourcing the IT industry in INdia is as good as out.



Industries mature... from doing data entry jobs to a level up and then more up. This is not a claim made in jest, Indian IT used to mainly do maintenance and development activities at the turn of the century, now its into services, do you think it will take time to move into pureplay solutioning space?

Information technology is like any other industry, it has its cycles. IT has its ups and downs and not a step ramp where once you are done there is nothing left.

Originally posted by dan dunst:


The second is a vicious circle. As the Indian IT industry gets bigger, the competition grows fiercer and the companies are forced to provide their services at a lower price to attract more clients. To attract and employ the best professionals periodic salary hikes are absolutely essential. These two factors are bound to collide.



It is already happening... but when the factors collide companies do not fold up they just get lean by getting rid of the chaff.. people who are not good lose out, not the companies.


Originally posted by dan dunst:


Moreover with falling exchange rates, the Indian IT companies will be forced to raise their service price tags. At one particular juncture outsourcing will no longer be as cheap. And at this juncture the standards of living will be higher and the IT employees will begin to ask for more. And that is one more collision.



On the contarary...you know with falling exchange rates... imports are cheaper.....? do you get my point or do I need to explain more....


Originally posted by dan dunst:


secondly,

if US goes ahead with its plan of putting restrictions on h1b visas, which 2 of its senators have been contemplating for sometime and add it to it some restrictions on indian software goods, it will hit indian IT cos mighty hard.then the next depression in india will be clearly in sight.



I seriously think this H1 is playing to the political issue in the US. H1 is not restriction on indian software goods... H1 restriction will only affect the body shoppers who misuse it and most of them are anyways hired by US corporations... Indian software companies are moving onto L1 as H1 is proving to be a pain in the neck with people switching jobs ......

Originally posted by dan dunst:


2 of its senators ...........

.then the next depression in india will be clearly in sight.



Wow... i never knew senators had so much power.... jokes apart it may hit IT the glamour boy of the indian industry but however strongly I may wish to belive it was the case as I myself work in IT, the real workhorses for the indian economy are elsewhere...
Indian IT does not even pay the full taxes to the government.. it has so many tax breaks being a nascent industry....
Bill Mc Coy
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Joined: Feb 10, 2007
Posts: 57
How can there ever be a depression of that magnitude in India or any other developing country
it will be developing countries that will be most hit by volatility in global market rather than developed countries.
The high salaries of Indian software pros has led to high inflation rates in india to a level that the Prime Minister of that country had to plead to IT cos to rationalise the salaries of their personnel.
well,this is all i know about strong economic fundamentals in that country. :roll:
Devesh H Rao
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Joined: Feb 09, 2002
Posts: 687

Originally posted by dan dunst:
it will be developing countries that will be most hit by volatility in global market rather than developed countries.
The high salaries of Indian software pros has led to high inflation rates in india to a level that the Prime Minister of that country had to plead to IT cos to rationalise the salaries of their personnel.
well,this is all i know about strong economic fundamentals in that country. :roll:


Can I request you to please read up a bit more on the context of Mr MMS's (Respected socalist economist, having support of a left wing party to stay in power)speech if you wish to quote him and try to think why he may have said what he said...

And by the way what you have quoted is wrong, the speech was about CEO salaries and social inequality index.
[ June 04, 2007: Message edited by: Devesh H Rao ]
M Burke
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Joined: Jun 25, 2004
Posts: 388
Originally posted by Ulf Dittmer:


Not following. What happened in 1921?



Windows 21 was launched
M Burke
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Joined: Jun 25, 2004
Posts: 388
Just my opinion, but India needs to start consuming its own sofware products and services and not depend on US outsourcing. Outsourcing market can only get so-big, staying that course is limited.

Also, educated IT people in India will not put up with low wages long. They want nice cars, homes, and enjoy the fruits of there labor, which is human nature. But what drives outsourcing is cheap wages. So China is next on the outsourcing bandwagen.
Devesh H Rao
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Joined: Feb 09, 2002
Posts: 687

Originally posted by M Burke:
Just my opinion, but India needs to start consuming its own sofware products and services and not depend on US outsourcing. Outsourcing market can only get so-big, staying that course is limited.


A very valid point indeed and in fact most of the top tier companies realize that. US is still where the cream is but the bread comes from other geographies and companies are moving at de-risking dependence on US to a very large extent. A very good example for that would be 2-3 years back INR getting stronger against USD would have led to profit margins declining to a large extent. It is not the case any longer. The effect is there but is taken care of.

Also Indian B2C is in a very nascent stage, most of the work gets done using manual processes and there is a huge market in house. As the Indian industries mature they will need more automation and that is huge business. Google for recent deals in the IT outsourcing space from Indian companies and the revenue earning possibilities become evident.


Originally posted by M Burke:

Also, educated IT people in India will not put up with low wages long. They want nice cars, homes, and enjoy the fruits of there labor, which is human nature. But what drives outsourcing is cheap wages.


Cheap wages is again a misnomer��. it is relatively cheap and not comparatively cheap. There is a difference in the interpretation due to a context and that context is exchange rates.


Originally posted by M Burke:
Originally posted by M Burke:
So China is next on the outsourcing bandwagen.


Actually speaking china is a market and not a competitor
Rambo Prasad
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Joined: Feb 23, 2006
Posts: 628
it will be developing countries that will be most hit by volatility in global market rather than developed countries.
The high salaries of Indian software pros has led to high inflation rates in india to a level that the Prime Minister of that country had to plead to IT cos to rationalise the salaries of their personnel.
well,this is all i know about strong economic fundamentals in that country


Please read this Goldman Sachs BRIC report http://www2.goldmansachs.com/insight/research/reports/99.pdf...India is projected to become the 3rd largest econonmy by 2035...

Indian econonmy has strong econonmic fundamentals...In terms of purchasing power parity Indian gdp ranks 4th...We have a huge population and a big domestic market...We are not a country which is dependent much on exports,so global volatility will have little impact on most of the sectors,albeit the equity market and the IT sector...
[ June 05, 2007: Message edited by: Rambo Prasad ]

Helping hands are much better than the praying lips
Arjunkumar Shastry
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Joined: Feb 28, 2005
Posts: 986
Originally posted by dan dunst:
As IT sector expands it will lead to integration.Most of the industries involved with sectors such as energy, banking, health care, communication, defence, entertainment and transportation services have begun integrating into themselves all aspects related to computerisation. These industries will no longer outsource these areas or tasks to the IT industries once this integration is complete. Without outsourcing the IT industry in INdia is as good as out.

The second is a vicious circle. As the Indian IT industry gets bigger, the competition grows fiercer and the companies are forced to provide their services at a lower price to attract more clients. To attract and employ the best professionals periodic salary hikes are absolutely essential. These two factors are bound to collide.

Moreover with falling exchange rates, the Indian IT companies will be forced to raise their service price tags. At one particular juncture outsourcing will no longer be as cheap. And at this juncture the standards of living will be higher and the IT employees will begin to ask for more. And that is one more collision.

[ June 04, 2007: Message edited by: dan dunst ]

[ June 04, 2007: Message edited by: dan dunst ]

Very interesting!!!Your thoughts dittos match with this article in Hindu Word to word.!!!


Namma Suvarna Karnataka
Arjunkumar Shastry
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Joined: Feb 28, 2005
Posts: 986
Originally posted by Sameer Jamal:


India has about 60 million youth population and youth employed in IT or ITES is about 1.6 million i.e 0.96% dont think it will have a major impact though.

Correct.Small percentage of people are invloved in this industry.even if you take surrounding jobs like food,non-IT services etc it doesn't cross 1% of total population.However their purchasing power could exceed 80% of rest of youth.Any kind of IT bust can impact consumer companies in Car,food,real estate industries.It will be limited only to 5/6 cities I believe.
Ram kovis
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Joined: Jun 23, 2005
Posts: 130
Originally posted by Arjunkumar Shastry:

Very interesting!!!Your thoughts dittos match with this article in Hindu Word to word.!!!


And the author of the article ( written at the bottom ) is

"The writer is a third year Chemical Engineering student". He might have written it for his college mag.

Devesh H Rao
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Joined: Feb 09, 2002
Posts: 687

Originally posted by Ram kovis:


And the author of the article ( written at the bottom ) is

"The writer is a third year Chemical Engineering student". He might have written it for his college mag.



You also missed out on this part at the bottom of the article...


" These theories might be the pinnacle of pessimism."
M Burke
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Joined: Jun 25, 2004
Posts: 388
Originally posted by Devesh H Rao:

Cheap wages is again a misnomer��. it is relatively cheap and not comparatively cheap. There is a difference in the interpretation due to a context and that context is exchange rates.

Actually speaking china is a market and not a competitor



Yes, wages are relative. But any area experiencing an economic boom will see local prices rise. Case in point, my Indian co-workers tell me Bangalore real estate prices are rising considerably. It's not like Silicone Valley...yet. But give it time. And the demand for cars will raise energy prices and affect any product brought in by truck. One thing affects others, so prices can rise exponentially across the board.
Devesh H Rao
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Joined: Feb 09, 2002
Posts: 687

Originally posted by M Burke:



Yes, wages are relative. But any area experiencing an economic boom will see local prices rise. Case in point, my Indian co-workers tell me Bangalore real estate prices are rising considerably. It's not like Silicone Valley...yet. But give it time. And the demand for cars will raise energy prices and affect any product brought in by truck. One thing affects others, so prices can rise exponentially across the board.


I agree to what you say, the living expense rises in places which experience these booms. Yes, Bangalore has exploded on the real estate index but then that's a market thing when there is a glut of things its a sellers market, when the supply becomes more than the demand it becomes a buyer's market. These things are cyclic.
 
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