Kindly Adjust
Today I was travelling from my new office in Baner, Pune to my home. Half the road has been dug for concretization work. All the office goers were navigating their way through mounds of cement, stones and sewage water, the way only Indian drivers can, with a look of calm satori on their faces. This road being Baner Road, where probably half of Pune’s small scale IT companies are located. And yet not a whimper from any one. Everyone was totally at their “kindly adjust” best while squeezing any available square inch of space to shove in any available piece of their vehicle.
This got me thinking. When I had arrived in India, back in December 2005, I had taken this same Baner Road to get off the Mumbai Pune expressway and get to my home near Deccan. And five years back, they had begun work on this five-odd kilometer stretch of road. We are six months away from December 2011, and the work has not yet been completed. Can you believe that? More than six years to concretize a five kilometer road!
And that in a nutshell symbolizes the India growth story for me. Big talk, no action. High on hopes and low on delivery. Here is my lowdown on what really happened in India:
In the 1990s, with better telephony, communication and the internet, came this TADA! Moment when CTOs across the world salivated at the thought of getting their work done in India for a fraction of the American costs. Work started to get shipped over to India to be done by Indians. The first wave of IT professionals were the IITians who had stayed behind, the REC and BITS guys, who really delivered on projects. We are talking 1995 here. Then the onshore model evolved with the Y2K bug, and suddenly every American corporation wanted an Indian on their premises to save them from the impending Y2K apocalypse. 2000 went by and the dotcom bubble did to the markets what the Y2K bug couldn’t. The CTOs sent the IT guys back to Hyderabad, Bangalore, Pune, Noida with a rider that they set up an offshore team in India. Suddenly recruitment in India picked up. Why have 4 guys on a project when you can afford to fail-proof it by having 16 coders and that too at a fourth of US prices?? Now you had guys from decent engineering colleges with a not-so-stellar academic background getting jobs. The wage scale shifted. Domestic consumer spending increased. All other economic sectors started getting pulled up. Young 20 something programmers wanted duplex and duvets and everything in between. Now the talent benchmark went down across the board. In a lot of sectors, you needed to be a warm body and show up for work to pick up your paycheck. For six years from 2002-2008, the frenzied fad of outsourcing anything ensured that IT sector in India pretty much pulled the whole economy ratcheting up close to 8% YOY GDP growth.
About this time (2002-2008), for a good six years, any government would have picked up the drift and invested heavily in creating good infrastructure, a favorable investment climate, lesser bureaucracy, etc. However, just like the first IT boom (1995-2000) was not the government’s doing, similarly during the second IT boom (2002-2008) the government preferred to use the boom as an alibi to make itself tons of money via scams and red tape. Consequently, governance and a long term vision always took a backseat.
We are now slowly entering the third phase in this outsourcing trilogy. From 2011 to 2015 is going to be another period of growth for the IT industry. And no, it is not going to be even close to the roaring 90s and noughties. The teens are going to be tough. Every business deal will be hard fought. The days when clients dropped bundles of cash on your table are gone. No one has that cash anymore. This will also be the final four to five year window for India to get its act together politically. By 2015, my gut feeling is that wage inflation would have priced Indian labor out of the IT market. You will see a lot of Indian companies opening shop in Vietnam, Phillipines, Africa and Latin America. Unless the government does not take the initiative to create a vibrant domestic economy, flight of IT capital is going to be very bad news to the Indian economy.
The IT boom began in 1995. In 2015, it will be 20 years of the IT boom. The credit for which largely goes to non-government players like Infosys, Wipro, etc. The government’s biggest help in these years was this it stayed away from IT. Mostly because the half literate men who make up the joke called the Lok Sabha did not understand IT. However, what surprises me is the total lack of vision in the upper echelons of power. Did no one get a drift of what the IT boom was doing to India? That it had the potential to change India’s backwardness for good? That all we needed was to bring faster and clearer decision making to the table, and so many more jobs would have been created? So many people brought out of absolute poverty? My gut feeling is that we mistook the trees for the woods. The fleeting prosperity of the IT days gave us a false feeling of euphoria and might. And our totally Indian sense of vanity appropriated this moment as a matter of right, rather than acknowledging it to serendipity.
Such opportunities come by only sparingly in the lifetime of a nation. I really hope that the emerging, monolithic middle class will knock some sense into the heads of our political class and shake them into laying the groundwork for an economically vibrant India.
I will probably be in my new office in Baner for the next two years. I hope the road will get completed by then. If not, kindly adjust……..
