That big wave which washed over our country as part of the Y2K bug (anyone remember that dread situation when the world’s IT systems were to be crippled by the Y2K bug on January 1, 2000?) is running out of steam. The software services business which got off the starting block of the Y2K bug has now created an industry estimated at US $110 billion, employing some 4.2 million people in the country.
That business model based on throwing people at a problem, began sputtering some years ago but has now gathered speed with protectionist walls going up in the big markets, read the US and the UK.. This is ominous for India, and Pune’s economy. The results can be seen from the financial results of India’ top software services companies which have warned of headwinds.
It’s not just protectionist policies that are adversely hitting this sector; technology, too, seems to be ganging up against this business model. The smarter way to do things, using fewer people… all of it is hitting this model of having large numbers, the infamous `bench’.
We’ve got so used to saying either we our children are in the IT sector, drawing good salaries, buying homes, cars and heaps of other consumer durables that any talk of slow down sends shivers down our collective spines. Yes, some of this growth may be unsustainable but all of this is making people sit up and take note. Not just the decision-makers at the services companies looking at alternatives to remain relevant but also parents who have so far been regarding their child’s `education’ in terms solely of a return on investment (RoI) like some profit and loss (P&L) statement.
Now may be a wake up call; think, like those company bosses, of how to de-risk themselves and their children, from just the IT sector. Think other professions. Or even within the desk-bound, air conditioned office of IT companies, think innovation, research (higher education, more bucks, deferred RoI) and disruption.
According to a news report which cited industry body Nasscom as saying that the IT sector was likely to add 5-6 lakh jobs between 2015-16 and 2018-19, or about two lakh jobs in a year. In the last five years, this sector alone generated 2.3-2.5 lakh jobs annually. This could go for a toss if the slowdown is exacerbated by political restrictions in the form of fewer H1-B visas to the US.
Jobs are certainly not going to be easy to get especially after the dismal statistics of the average employability of our engineering graduates. And now the software services companies are talking of hiring overseas, to get past the likely restrictions on those visas.
What is the average student and parent going to do in this situation? Look at other alternatives, as I said earlier. There is a spirit of entrepreneurship, a buzz around start ups but not everyone can be an entrepreneur and even of those who start something `new’, there is no guarantee of success. A vast majority would like to be in jobs.
Hope seems to be coming in the form of a central government policy for the software products industry. The aim is to make it a sustainable sector which will have to be driven by the startup sector.
Here, Pune has shown some initiative, tying up with the Israelis to co-develop products. And defence is high up for this partnership, among the sectors India’s software products companies want.
Ends/gaa
- Time for Pune to Get Rid of the Inertia - February 23, 2017
- The M & A Story : Business Moves with Gouri Athale - February 17, 2017
- Why are Global Investors staying away ? - February 9, 2017
