Long term future of IT in India


When I went to college in India, all I wanted to do was take the first job that will send me to US. And a dozen years later, I am starting to think of where I will retire, where I will work the latter parts of my career and so on. This makes me ponder on the long term future of IT in India. I might as well think aloud here, with the hope that I get some insights from the readers. As always, these are just my personal opinions – not that of my employer.

India’s IT scene is dominated by about 20 to 50 companies or so, and the rest is fragmented by smaller shops. Amongst the big ones – and I mean big in terms of head count – the biggest ones are in services. A large number of people make their living doing production support and BPO type work. There is also some design and development type projects in the mix. Outside the services work, there is some product development too. Most big product companies in the world have some presence in India, and they pay better than the services companies to attract top talent. So in short, there is plenty of companies where an IT job can be found.

One thing I do like about the workforce in India is that it is fairly inclusive. Although I don’t have stats officially – I have seen several more women in offices of IT companies in India, including in leadership roles compared to other countries I have visited. 12 years ago, only certain states had fair representation in IT jobs, but by now – people from all parts of India are getting better opportunities.

I think IT pays better on an average than most other jobs in India, and as a result a lot of people have better quality of life. Most youngsters are now able to buy houses and cars early in their life, which is also pretty good. There is a lot of good restaurants and bars and gyms and movie theaters and all that, so life outside work is enjoyable too.

That is the bright side, but I have my worries on the flip side.

How about the supply side of the picture? No issues here either at first sight with plenty of college grads coming out of the education system every year. From the time I joined the workforce – and possibly a few years earlier, IT jobs attracted away a lot of talent from the top colleges, especially engineering colleges. IT companies at that time ignored non-engineering students. They were not exactly looking for comp science grads – any engineering degree was fine. I am a mechanical engineering major, and it never mattered to my first IT employer . I never could put a finger on why engineers were considered at the expense of every one else. I would just as well gladly hire a math major or a physics major or a liberal arts major with the right attitude – since I have to train the engineering grad also to work in IT. Being an engineering grad myself – I am not convinced that education gave me something extra as a programmer, that I would not have gained if I took say Chemistry as my major. I hope this has changed, or is changing.

After a dozen years since I left India, I still have not seen the engineering colleges tune their education to the needs of the IT market. Text books are still the same as what I learned and what my dad learned before me, with very little updates. And people still join mechanical engineering degrees with the sole purpose of getting a job in IT – with no interest in becoming a mechanical engineer.

There are also plenty of IT educational institutions that train people in programming. I try to check out their course work and teaching methods when I can, and honestly have not been very impressed. They teach many different languages in one course – like C, C++,Java, ORACLE PL/SQL, MS SQL, HTML, javascript etc, but with hardly any focus on good basic software engineering. I am even more dismayed when I see a lot of the teachers have never worked in real projects. It gives me the same awkward reaction I had to the guy who taught me power plant engineering who himself had never set foot in a power plant. As a result, employers give a very thorough training after people are hired , and before they can be put in a project. In my specialization – SAP – in which India has a lot of talent, I doubt how many colleges teach SAP. I know plenty of people who have been cheated by expensive “mom and pop” SAP coaching centers.
Someone recently told me that there are classes at these places for HANA too.

The good thing despite the above is that thanks to internet, working in global teams, and the ability to go abroad for projects – Indian IT workforce has access to almost everything that others have, and hence could keep up well with the global pack.

There are some societal side effects – since the best and brightest grads do not seem to want to go to the government services, military,banking and so on which were the coveted jobs for the previous generations. I often wonder if this will have an impact on society over the next several years.

Infrastructure has been a long term problem. A visit to Bangalore will prove the point. It is near impossible to drive in Bangalore at peak hours unless you have lived there for a while. Pollution is also pretty high. Yet, I know several companies who send work to India insist that it be done out of Bangalore. There are physical limitations to expanding the towns where IT is concentrated now – not just Bangalore. Thanks to political structure of the country, the private sector is fairly limited in what it can do to make the situation better. Thankfully trade unions have not yet taken over IT in India and destroyed it, like they have for manufacturing sector etc.

A big advantage India has held over other emerging IT power nations has been the proficiency in English. Companies in the west readily pay a premium for it. But this is not a long term advantage – I have many friends in Vietnam, China and South America who speak very good English, and it is just a matter of one more generation when this becomes less of a differentiation.

Cheap skilled labor was a big reason why western countries outsourced work to India. Well, it is not exactly cheap any more. Salaries have increased manifold. My first job paid me INR 150,000 a year or so. And that is after I did my engineering and MBA. Today I know my nieces and nephews make more than 3X or 4Xthat in similar jobs when they enter the work force. The rates charged by Indian companies to their clients abroad have not increased 3X or 4X – if anything, competition has forced them to keep it down. They still thrive because of volume and exchange rates and so on. This does not mean other countries will readily over take India in near future – that is like saying 25 years from now, Daddy and I will be the same age. India has tremendous experience and skills now and will carry that edge for foreseeable future.

I am also worried seriously about the credit card debt that many of the younger folks carry that I know India. Just based on personal observation – peer pressure has driven many a young IT employee to spend beyond their means and incur bigger loans than they reasonably should take. I have seen this movie before in US from the front seat, and I would hate to see a replay in India. On second thoughts, I am not very sure if this is an IT only issue or whether others are affected too. I guess every one needs to make their own mistakes and learn, and that learning from someone else s mistake is harder.

Bangalore – and other IT hubs – have one thing missing that stops them from being the next silicon valley. And that is a good VC system. It might be a chicken and egg problem since a large part of the IT business is still on services side, and not on product side. I am yet to have made a trip to India where I have not had a conversation with a bright eyed young guy (or gal) who would tell me that he/she has this amazing idea, but can’t move forward without capital. The De-facto capital raising mechanism is to run to a local bank and convince them to give a line of credit. It is an ineffective process to put it charitably. Off late, I know some VC friends in Silicon Valley who lend a hand to budding entrepreneurs in India, but it is a drop in the ocean compared to how things move in the US. It is certainly not a lack of liquidity in India that investors are not supporting these companies – I think it is one of a cultural difference. Since a lot of people from India who worked in US have now moved back to India, I do see some change in this behavior. I am looking forward to see VCs and Angel investors doing more in India.

One last thought before I go back and plant the last few plants in my front yard ( this is what was accomplished before I started typing this post https://www.facebook.com/media/set/?set=a.3381192563120.151791.1068608267&type=1&l=48b8a0feb8 ). If cloud is truly the future – and if most companies move heavily to SaaS etc, what will happen to the majority of IT people in India, who make a living doing services projects?

Let me know your thoughts

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11 thoughts on “Long term future of IT in India

  1. Too good piece of information,your blog gives the best and the most interesting information about IT field in India.. This is just the kind of information students had been looking for.There are so many It companies in India and all the companies recruited software certified students only so suggest for the students to join some demand software courses like SAP course and we are the Best Sap Training Institute In Bangalore.

  2. Interesting post. I agree things are improving and the most heartening societal change is many fresh grads getting well-paid private sector jobs, unlike chasing very few govt jobs.

    Cloud could be a threat for services, but I hope it could also help build some product companies in India as the cost of delivery and sales come down. Another interesting avenue is replicating innovations in the US adapted for the local market (e.g., Square model for credit cards)

  3. Hi Vijay –

    Very long and nice article. Was able to correlate the events, since I know you from 2000-01.

    Few observations:

    Infrastructure is a challenge here. Reason is we are not able to execute (and complete) projects at the pace it is being executed in developed countries. Reasons are several: Population, Politics, Project Management Experience.

    Chennai is going through a massive infrastructure project called Chennai Metro Rail. Two years back it used to take 40 minutes to commute to office. Today it takes 2 hours.

    Bangalore is also going through the same challenge (let me not use the word problem)

    Education. I was at MIT Chennai for campus recruitment few months back. There is a vast difference between between 2000 and 2011. Technology has played a role. Not sure whether you know this. Tamilnadu Government has started giving laptop with official version of MS office to all college students. I am sure 10% of the student community will utilize the laptop for the right reasons and make a huge difference.

    What next: We have all created / generated ’00s and ‘000s of jobs locally and around the globe. We are contributing to the overall development as employees of reputed organizations, as selling becomes easy, also building relationships becomes easier. There is a pull from the client, due to employer-brand and there is a push from our end to stay connected with clients – people – process – technology.

    Returning back to India: I feel each of the areas you have highlighted in your article is an area to be addressed. Example: Finishing School for graduates, Soft Skill Training, Industry Training, SAP Training, Creating a new organization which caters only to SaaS / Cloud Computing. One of the leading IT Service Providers in India is expecting few billion dollar revenues from this segment alone – Cloud Services. I am sure there will be many more organizations will invest a lot on these areas.

    Plans: My recommendation would be to plan for 18-24 months at a time. That is long-term. Short term would be few quarters. The goal of life should be “My today should be better than yesterday – in terms of my life, learning, contribution, relationships .. My tomorrow should be better than today”

    When we look back and compare (Say 2012 and 2002), you will agree that we have achieved more and also contributed more to the society, in terms of taxes to Government, organization development, people development, family, friends ..

    I am sure 2022 will be much more exciting and interesting ..

  4. Initial IT explosion in India was despite govt policies; but govt woke up and any future growth will depend on the direction of govt policies;
    1. Tax discounts: IT companies enjoyed Tax holidays and Tax discounts. It won’t continue. At some point all companies will have to wake up to this reality and it will hit their bottom hard (I mean financially; but true figuratively too)
    2. Retro taxing: Like the one of vodafone, if govt does go ahead it will impact the confidence of the investor (both domestic & foreign). So whoever can, will move to investor friendly countries tapping Indian talents; Already many Indian companies established offices in Mexico, Vietnam etc.
    3. Increasing manpower costs: Not all grads are employable. This increases initial cost (training, induction etc); add to this the transitory nature of employees to next better paymaster, and you got high employee costs. Not good.
    4. Not many dependable domestic clients: B2B in India sucks and large corporations have their own IT firms (exceptions are Airtel like). This impacts heavily during slumps like now.

    Having said that, the growth engine is kicked and it will be long before the wheels are turned negative.

    • Initial IT explosion was not “despite” government – it was when the government decided to open up the economy in early ninetees. There was IT growth before that, but not explosive growth.

      1. I agree on Tax discounts. But India has no incentive to cut down on tax discounts any time soon. In fact SEZ s are opening up all over.

      2. Retro taxing on vodafone literally shocked me. That was not good rule of law in my opinion.

      3. There are 2 sides to this equation – there are many employers who exploit staff . Loyalty is not a one way thing. Over time, I hope employers and employees will reach an equilibrium. Hopefully that price point is still globally competitive, but I am not holding my breath.

      4. Excellent point on domestic business. But it is also a vast opportunity for alternate business models for IT companies and entrepreneurs

      You are right – there is great momentum. As Sameer Patel told me on twitter ” why fix something that is so totally broken” 🙂

  5. Hello Vijay,
    I beg to differ when you say ‘Engineering Colleges’ in India have not changed. When I see my own College, I passed out from in 2007, has changed a lot. Not only that many colleges are taking advantages of technological advancements especially labs etc. There are many indications that the colleges are already tilted towards IT jobs. Making them more IT oriented >> I would say let there be diverse thinking please as exeptions are still there!
    Thanks for a thoughtful blog.

    Regards,
    Kumud

    • Hi Kumud, I will take your word that colleges have improved since you are closer to the action than I am. My observation is limited to what I see when I talk to people when I visit India once or twice a year, and occasional recruitment there. I am glad things are changing.

      Cheers
      Vijay

  6. Vijay,

    Interesting thoughts, i can see nostalgia in your writing..Possibly a passing thought of coming back!!

    Indian IT fraternity is purely private sector working mostly on its own with very less government Interference. Their presence is mostly in 10 cities (Bangalore, Gurgaon, Noida, Hyderabad, Chennai, Pune, Delhi, Mumbai, Mysore, Mangalore) of India.

    Infrastructure wise builders can buid apartment complex, provide facilities inside the complex. Road, Safe drinking water, electricity, waste management, remains in the hand of Government. Are they keeping pace with the rapid growth?I guess you would have experienced it first hand while visiting Bangalore. The scene is no less troublesome across other cities as well.

    Education wise, you must agree with me that the quality of Engineers passing these days have gone down drastically even if the numbers have increased substantially. Quality at the expense of quantity is being practiced for quite somemtime now. Most of the IT companies still follow the same rule i.e, an Engineer in any degree is better then a brilliant student of Maths, Chemistry or for that matter fine arts. These students then goes for BPO jobs or elsewhere.

    SAP as a carrer is somewhat different is India. It has better renumeration since it’s a niche skill. So there is a rush to get SAP certification by any means. You will find various training institutes who in the guise of job lure people and charge them heavily as a fees towards SAP certification. It has become a business in India, and if you may have travelled to Hyderabad you may find situation getting out of control.

    In the recent past lots of entrepreneurs have come up. The image is changing but still it will take time to get some pace. You can see flipkart which is doing amazing business, its and Indian version of Amazon. There is a change in trend where many budding IIT and IIM graduates are venturing into non traditional jobs which includes going on their own.
    As you said, there is a wave which is enabling lots of people who migrated to different parts of the world are coming back to India. It’s a healthy and welcome trend.

    In the end there are challenges in India and they will always be. My advice to all those who would like to come to India would be that India cans till test your patience, but then that’s a challenge and not necessary a Problem.

    Regards,
    Harshit Kumar

    • Harshit, you bet there is some nostalgia involved. Not sure yet if I will go back – but it is an option I am keeping open.

      It is an interesting perspective on education – Kumud Singh just challenged me in her comment that education has improved. It is contrary to my observation, but I give more credibility to her view than mine since I am looking at it from a few thousand miles away.

      But I will tell you this – when I did my BTech in Kerala, there were 10 colleges or less. Now I believe there are hundreds. I would find it hard to agree quality has kept up, given I have seen some of the new colleges and their facilities and staff.

      Yes, I know what you mean by the scene in Hyderabad for SAP. I have many friends there who lament what is happening. I have seen bill boards in Hyderabad and Bangalore offering SAP training.

      Many thanks for taking time to chime in, buddy – much appreciated.

      Cheers
      Vijay

  7. Like the thought processes here and I have had similar discussions with some of my friends too. One comment on your observation on inclusion. I don’t agree that you see a lot more women in technology in India because of inclusion but I think it’s more about women choosing technology as a viable career path. A good paying job generally attracts a raising middle class and IT is still the best paying job out there. Here in the US, most of the women I talked to don’t want to be in Technology because there are other attractive career opportunities and this sort of dilutes the concentration of female employees in tech. Once India presents other viable career paths for the masses, services and technology will keep attracting resources, men and women both.
    KK

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