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Indian IT industry: The way forward - Views on News from Equitymaster
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  • Jun 8, 2009

    Indian IT industry: The way forward

    The business process outsourcing story has been the toast of India for some years now. Many have marveled and admired the speed at which this industry has mushroomed in our country. A Nasscom Everest study has estimated that this industry has the potential to grow to about US$ 52 bn in the next five years. And so we hope.

    Mr. Raman Roy, chairman and MD of Quatrro and a much respected voice in the industry, in a recent interview does a good job of providing a reality check about the preparations that India needs to make for these hopes to become a reality. He estimates that an incremental 2 m jobs can be created over and above the 800,000-odd we currently have if we reach that goal of US$ 52 bn in the next five years. In addition to those direct jobs, it could add 6 m indirect jobs.

    But for that we need to answer one very serious question - Where are these 2 m people going to come? The fact remains that we need to be taking substantial steps to train them today for them to be ready by the time they are needed. For the industry is no more going to be just about labour arbitrage as we move forward. Even though this was the premise on which the industry was built so far, competition from other country in the increasingly globalised labour market is going to ensure that it is the talent and capabilities that we offer and not just cheap labour that determines the success of this important industry of ours going forward.

    Of expectations and stockmarkets...
    If one were to take a step back and look around carefully, one would notice that there is a considerable amount of positive expectations built into the system off late. The recent surge in the stock markets is one of the best indicators of the same. A stable government, a stimulus oriented budget, aggressive reforms, a boost to infrastructure etc. are just some of the factors underlying the nascent optimism and expectations. Infact, a recent survey conducted by All India Management Association (AIMA) of 450 middle-level managers across sectors showed that nearly two-thirds of the managers who took part in the survey were bullish about India's economic growth and believed that India Inc will bounce back with renewed profits.

    But it is at times like these that an investor would do well to step back and view the situation objectively. With such a huge momentum of expectations overflowing in the stockmarkets, there are indeed some stocks that have surged to dangerously high levels. And if reality were to turn out to be any less than those expectations, a crash can be a very real consequence of that. As such, it would be best to not let caution out of the window more so when everyone around has only positive things to say.



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