Our economy (I exclusively mean the IT sector), at the best of times, can be classified as an exchange rate driven economy. We think we provide services, but the only thing we ever provide to any country is cheap labour. The only reason we became the back offices is due to the cheap labour. And this "cheap labour" is a direct result of the exchange rate. Back in the late 90s and early years of 21st century, the USD vs INR was a healthy 47-50. Now due to various factors (those are a topic of their own), the rate is somewhere around 40ish.
Optimistic punters (well.. it depends where you stand on the issue) believe and hope that the rate will go back to being around 43-45 sometime soon. The pessimistic ones say it will go down to around 35-39. Whatever and whoever might win, it is us, the Indians who lose big time. The fact that our salaries, bonuses, way of life is dependent on something as finicky as the exchange rate is what pisses me off!!
If you were to ask me, if I am happy with the way our INR is rising vis-a-vis the USD, I would say that I couldn't have asked for more. I would like the INR to go to around the 30 mark. Will that screw our big IT companies? Oh Yeah. It will screw them BIG TIME!!! Then why am I happy?
There is a small story I would like to narrate. Back in the late 80s and early 90s, after our 1974 nuclear explosion, America had issued a lot of sanctions due to which we were not able to procure (read buy) treating heavy water technology from outside (one of the many technologies that were banned from being sold to us). Our engineers had to work on their own to produce it. The result? We now have the cheapest and equally working heavy water treatment technology that was indigenously developed. In fact, it is so advanced that we could, if wanted produce it in assembly line(http://www.hindu.com/seta/2007/04/19/stories/2007041900331700.htm)!!!
Coming back to our scenario, we have one of the world's largest IT talent. One of the world's brightest engineers and brains.. but to what effect?? All we are doing is, at the end of the day, cheap labour. And we will be facing this shitty scenario as long as we are dependent on the exchange rate for our survival.
If the USD goes down even further, there are plenty of reasons and chances that it will, it will trigger a recession in our IT industry. I have enough trust in my fellow countrymen (and women for that matter) that we will then work towards being a product based industry. Like Google, Adobe, MSFT, SUN, Oracle etc to name a few. Yes, we do have the talent to work and produce the finest products, what is lacking is the passion and the "need". This USD crisis will give us the "need"!!!
And oneday, hopefully in the near future we will probably see Infosys OS or TCS Search or Satyam DB!!!!
**Here by economy I mean the economy related exclusively to the IT (Information Technology) industry.
Optimistic punters (well.. it depends where you stand on the issue) believe and hope that the rate will go back to being around 43-45 sometime soon. The pessimistic ones say it will go down to around 35-39. Whatever and whoever might win, it is us, the Indians who lose big time. The fact that our salaries, bonuses, way of life is dependent on something as finicky as the exchange rate is what pisses me off!!
If you were to ask me, if I am happy with the way our INR is rising vis-a-vis the USD, I would say that I couldn't have asked for more. I would like the INR to go to around the 30 mark. Will that screw our big IT companies? Oh Yeah. It will screw them BIG TIME!!! Then why am I happy?
There is a small story I would like to narrate. Back in the late 80s and early 90s, after our 1974 nuclear explosion, America had issued a lot of sanctions due to which we were not able to procure (read buy) treating heavy water technology from outside (one of the many technologies that were banned from being sold to us). Our engineers had to work on their own to produce it. The result? We now have the cheapest and equally working heavy water treatment technology that was indigenously developed. In fact, it is so advanced that we could, if wanted produce it in assembly line(http://www.hindu.com/seta/2007/04/19/stories/2007041900331700.htm)!!!
Coming back to our scenario, we have one of the world's largest IT talent. One of the world's brightest engineers and brains.. but to what effect?? All we are doing is, at the end of the day, cheap labour. And we will be facing this shitty scenario as long as we are dependent on the exchange rate for our survival.
If the USD goes down even further, there are plenty of reasons and chances that it will, it will trigger a recession in our IT industry. I have enough trust in my fellow countrymen (and women for that matter) that we will then work towards being a product based industry. Like Google, Adobe, MSFT, SUN, Oracle etc to name a few. Yes, we do have the talent to work and produce the finest products, what is lacking is the passion and the "need". This USD crisis will give us the "need"!!!
And oneday, hopefully in the near future we will probably see Infosys OS or TCS Search or Satyam DB!!!!
**Here by economy I mean the economy related exclusively to the IT (Information Technology) industry.
2 comments:
Excellent analysis. I would like to throw my 2 cents in. Everyone with right brain wants to see desi IT companies to be product based and value based companies. But the devaluation of USD will squeeze the bottomline of the big IT companies and wipe out the smaller ones. How come they can afford to setup R&D departments and channelize funds and at the same time maintain 100,000 workers on their payrolls? Here govt has to step up and contain rising INR and give sops to IT companies which invest in R&D. If the companies dont invest in R&D get them out of tax shelters. They have enjoyed tax sops and other monetary benifits for 15 years,so they dont need benefits to provide cheap labor to US of A. By taking these steps, I am confident that in 3-6 yrs down the road IT companies are well poised to be true leaders. Whether people like it or not, IT is feeding millions of people directly and indirectly. Any disturbance in the sector will cause ripple effect in economy.
Dear Kiran,
thanks for your comment on my blog.
I share your thoughts on IT industry.
Actually the industry is stagnant now--thats why retrenchment and all that! The reason is not what all are saying but--actually there is no improvement or new innovation in the Technology!
Since the advent of cell phones, what else is new? Camera in Cell Phone; MP 3 in c p; Video in c p; GPS in c p; Internet in c p; Email in c p; alterts in c p--all practicaly worth less!
Why our IT professionals do some thing new? Or at least make the available solutions fool proof?
pl try!
Regards.
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