IT scene in India

[Nikhil Sun]

Indian IT is doing a lot of things for the country.It has given India fame,job opportunities,a good economy(I think it is an important driver though there are other industries too that are doing well).And looking at the investments that the IT companies(both Indian and MNCs) are doing the road ahead only seems better.Given this will the IT industry here slowly get 'hotter'(through innovation perhaps?) than it's western counterpart or is it too far fetched?

[Deepak Bala]

I dont see it getting hotter. Most companies offer services and support and dont innovate or develop things on their own because that could be risky. When you change something that is already working the job is relatively easy. You dont have to build things from scratch. It will get hotter, if India can develop something on its own that is quite revolutionary. Its not like the talent does not exist. It is a matter of lack of will over lack of oppurtuinity.

There are companies that develop their own products from scratch. I would love to see more companies throwing their resources into R and D. What stops these companies is good finance and almost no marketing power. I know of amazing products that will knock the big branded stuff off their feet, but they dont have the financial backing to promote their product or aggressively market it.

[Ben Souther]

Often, this kind of innovation happens when the economy takes a downturn.
If companies have a "safe road" to follow, it doesn't make sense to take risks on new ideas. Once that safe road no longer exists, then it starts to make sense to branch out and explore other paths.
Also, a downturn in the economy leads to a surplus of talent.
Lots of talent + lots of time inevitably leads to innovation.

[Mark Herschberg]

I think it will get better, but not because IT will get hotter. First, Indian economic policies over the past 20 years have really opened up it's markets (contrasted with prior protectionist policies). I think that has both directly allowed for better imports as well as increased general internation commerce between India and other nations, allowing MNC's is other countries to feel more comfortable making investments and opening offices there. In this sense, India's economy is poised for continued growth.

I don't know much about India's macro-economic conditions to make a call on other economic forces. I do know that there has been wage inflation among the emerging middle class of technologists. This has made India less attractive of late as compared with other markets (China, SE Asia, Eastern Europe). Also, from what I know of history, India will have some internal issues having to do with the rapid ride of the techno-class.

--Mark

[suekar meredilko]

"This has made India less attractive of late as compared with other markets (China, SE Asia, Eastern Europe). "

This fact is wrong. I dont think it makes India less attractive to develop s/w.

Wage is a component which is driven by over all inflation in the economy, real estate, commodity, gas, stock market etc... Right now most of the emerging markets are in overdrive because of the huge investment. A statement by a big co saying it will invest 6Billion$ in IT in India can send the real estate and stock prices of the related economies shooting.

Also for the record, in China there is huge attrition and higher asking salaries. Big companies in India do not pay $ lollies for TL or PMs for the matter. As you see in the forum on an average 10 yrs exp fetches you still avg 10 lakhs and ++. Its only a handful of companies where you get huge salaries but again if you compare that with anywhere in Europe or US for the matter its peanuts.

e.g. 6 lakhs per annum for a TL with 6 yrs exp on an avg comes to 13000 USD per annum and that is before Tax.

Bottom line, its still cheap and competetive place to. Besides lets not forget the maturity of these companies in terms of processes, roi etc. Co(s) in India also promise % improvement in processes as part of std. outsourcing contract...so its not just a cheap coolie work anymore.

[Mark Herschberg]

Originally posted by suekar meredilko:
"This has made India less attractive of late as compared with other markets (China, SE Asia, Eastern Europe). "

This fact is wrong. I dont think it makes India less attractive to develop s/w.

The companies I have worked with directly have all significantly raised prices the last few years. (That fact is not in dispute.) The panels I've attended the lastfew years have had panelists saying prices are going up. (You may dispute them, since I don't have their sources to know how they determined costs were going up; I suspect it was similar to my data, based on inidvidual company information.) This article in 2005, for example, cites a Gartner report noted the increase cost of labor in India.

"Four years ago, a typical call center employee would have earned between 5,000 to 6,000 rupees ($114- $136) a month. Now it may be up to between 7,000 to 9,000 rupees ($159 - $204) a month," he said. "The rise in labor costs isn't significant yet. What's more important is that these increases so far have not been passed on to clients in the U.S."

What I have seen is that these costs (for software engineers, I nwould assume it's true for call center workers, too) have been passed on to the clients. As the cost of hiring a worker goes up, they become less attractive. That's also not in dispite, as it's a firmly established economic principle.

--Mark

[Deepak Bala]

Yep ! Relatively the costs are up. But... the cost of hiring a programmer in the USA is close to 25 to 35$ an hour. The cost of hiring a fresher in India is around 1.5$ an hour to 3$ an hour. That is still cheap. What drives IT companies in India are relatively cheap labour and crazy working hours. People can be made to work anywhere from 9 to 18 hours a day (No joke). The average working hours is around 10 to 11. This is where India's competitiveness lies (sadly). If labour becomes more costly and employees begin sprouting a spine and realize they are being treated like slaves, India could lose its competitiveness. Most companies here are joking when they talk about work life balance.

Almost all servicing companies work this way and there are of course exceptions to this rule. India's competitiveness also lies in the kind of outsourcing policy the USA defines. I dont know what share of the servicing belongs to companies in the USA but i am pretty sure that it must be a large share.

[Nikhil Sun]

Thought of just posting a view on this topic.
Is the BPO industry in India showing signs of stagnancy.In recent times there is news about some companies(Indian as well as foreign MNCs have already or are contemplating offloading their stakes in their BPO arms.Does this trend indicate something?Indian IT services and BPO have largely brought in the bread and butter.In such a scenario does these developments indicate some weariness creeping in or is it that Indian firms are going to some next level?

[Jignesh Patel]

Nikhil,

Indian software companies achieved significant growth in last decades.
Now as mentioned in the post by Mark, prices are going up that�s' true.

1) The salaries are almost compatible to US, if you compare in terms of Savings.(It took me 7 years to reach 50K, but then from 50k to 1lakh just 1 year, off course I have started from small town with a B.Sc. degree).

2) Rupee value is going up now its almost staying in range of 42-40Rs = 1$, so Indian companies can't afford to work at low prices.

So now you will not see the growth link Infy and Wipro from India in services industry.

But what India is achieved it because of software growth, now they are making progress in all other areas, Tata Motors, Reliance Food chain, Steel Industry, ICICI bank etc. etc. are becoming globally competitive.

So when you invest, consider all other areas. Think this way, India is becoming global economy like US in next 20-30 years, regardless politician will support or not after changing global policies by Narsimha Rao, Say thanks to him.

Regarding, becoming less attractive in software industry .. may be up to some extent. But Indian companies penetrated at the extent where you can't just by pass them and go to other third world countries for less pricing, after all software needs an average intelligent person with a peaceful working environment. So Indian companies still not loose their ground and proof is Wipro, Infy etc. still growing 40% every year, which is still amazing as they are just not depend on US.