Of Indian IT Industry : Part-1

A lot has of course been already written & is being written everyday about the Indian IT Industry .Their remarkable growth from a big zip to a world beating Industry today, their big plush office buildings, their employee friendly nature,their robust processes and more. They are also often rightly hailed as the Industry that redefined the 'idea' about India & Indians in the minds of people outside our country.

But the fact remains that in most of the cases, the Indian media did what it has always been good at doing : Superficial reporting. Nothing explains more why most of the media reports about the Industry is often a page taken out from the companies' routine press releases.

Indian IT industry is quite unique in nature when compared to other Industries across the globe. It's very different even when compared to the IT industry outside our country. A good amount of reason for this lies in the story of it's origins.Though not strictly intended for the form of 'Offshoring' that we see it doing today, it quickly adapted to the market realities post the dot com bust and created the business model that it operates in now.

Globally, Information technology business is considered 'high-tech' business. Indian IT industry is not. We don't even remotely do what you can term as 'high-tech' when compared to what is going on in the technology world of today. The founding fathers of India's IT industry took on the simple mantra of basic arithmetic to be their guiding factor. If 1+1 = 2, 1+1+1+1+1 is of course equal to 5 ! The bad thing was that they perhaps even forgot to think 5 times 1 is 5 & of course least remembered their classes in exponential series. Point being our IT industry essentially believing in the number game - Hire more people > get more clients > put those ppl onto those client's projects > come back to get more ppl > newer projects.....A pretty good example of how 'flat' human thinking can be !

The debate whether this was good or bad will always go on. It of course 'worked' , depending on your definition of what 'worked' means. It's also worth thinking on the reasons why this idea worked so well. Does all the credit go just to the IT companies or is a good part of the credit due on the Indian system. Huge population of engineers willing to do anything even remotely connected to what they learnt in 4 years, the Indian way of 'following the crowd' , the Indian idea of associating success with the amount of money or rather quick money that you earn, the young Indian lad who didn't complain when he was put to a 12 hour routine before computer screens, and last but never the least...the poor or for that matter lack of regulations in our country and repeated govt decisions to not interfere with a 'growing' Industry.

It's a fact that IT in India is an Industry which helped a good amount of Indians to create wealth with Integrity.In a pre-IT India, it used to be very difficult to earn a extra-decent lifestyle without compromising on your value systems. Anybody who used to drive a fancy car and spend an indecent amount of money on shopping would have naturally called for suspicious glances. This perhaps is one of the greatest achievements of the Industry. The very nature of the model which makes sure that it's resources don't move out of a concrete building and where 'requirements' come & 'products' go through wires helped much of the young India remain out of the world of bribes & illegal ways of making money.

But then... for how long would this show go on ? Forget the often repeated line 'low cost as a business model is not sustainable' , I sometimes wonder if the founding fathers of this Industry even grossly underestimated the intellectual capacities & aspirations of young Indians.

An 'offshore' resource (that's the name given in Indian IT to a guy who works in India) is typically billed at approximately 35 dollars an hour , 9 hours a day, 5 days a week. This translates to about 2,85,000 Indian rupees a month. The guy who 'actually' worked to get this money to his company earns about 35,000 a month. The point here is not that the guy is underpaid, 35 thousand is a very decent salary in India, but the point is to make you understand why almost all the Indian IT companies are so cash-rich today. Added to employee salaries, travel expenses, rental expenses , maintaining different supporting departments , routine Indian addition of 'flab' & other physical expenses too take some amount of the kitty, but I hope you sort of get to the whole picture.

This also exposes the shallowness of the model or may be an interesting paradox. Indian IT industry is often regarded as a positive step that our country made in its efforts to make itself developed. But would the very idea on which it's based survive in a developed economy? AHigher standards of living, increased cost pressures, tougher regulations would all make operating in India almost similar to operating in US. Then where ? Africa ? Another execution cycle of the same model ?