– Pradip Bhandari –
While only 0.7 per cent and 11 per cent of Indians labour force works in information technology sector and manufacturing sector respectively, it is still important to talk about the beleaguered USD 150 billion IT services industry. The industry which was projected to reach USD 350 billion by 2025 in a NASSCOM report is staring challenges of jobs doomsday prediction because of automation, robots, the immigration backlash and anti-globalisation driven-trade barriers. An Experis IT Employment Outlook survey of 560 companies, conducted by Experis IT, a 100 per cent subsidiary of staffing firm ManpowerGroup, shows that hiring across IT firms may be hit over the next two-quarters due to an overall global slowdown, impact of automation and scarcity of the right talent with niche skills. The arrival of challenging time in Indian IT sector was imminent, political pushback on labour migration front just catalysed this change.
The Indian information technology industry generates USD 150 billion in revenue has an outsourcing dependent business model, which boomed during the Y2K crisis in the late 90″s. The crisis provided an opportunity to urgently repair the corporate information technology system. The outsourcing of large-scale projects to Indian companies started, and billion-dollar contracts were announced almost every week.
But with the advent of tablets and smartphones and their applications in the 2010s, users gained access to better technology than the companies’ information technology departments could provide. They could download cheap, elegant and powerful apps on their tablets that made their corporate systems look primitive. Via cloud computing, companies such as Amazon.com, Microsoft and Google began to take over the functions of data centres. So the importance of outsourcers declined. The billion-dollar outsourcing contracts evaporated. However, the same technology advances that decimated the Indian advantage offer a new opportunity that could allow the Indian information technology sector to reinvent itself
Global Opportunity
Indian Information Technology sector can help America modernise its ageing infrastructure and enable it to bring manufacturing back from China.
Robots, for example, have advanced so far that they can now do the work of humans in manufacturing. With the computing advances and dramatic price drops of hardware components such as a core part of most robots’ inner workings, the single-axis controller, robots have acquired the dexterity to assemble circuit boards and build cars. They now cost less to operate than the wages of workers in China. And connected devices and sensors in the Industrial Internet of Things enable monitoring of every aspect of a manufacturing plant’s operations.
China is well aware of the threat to its industry and is taking the lead in building zero-labour manufacturing plants, with robots doing practically all of the work. But its robots have no advantage over American robots; all of them work equally hard and consume nothing more than energy. Manufacturing can now return to American shores without raising costs.
There is, however, an obstacle. American businesses aren’t geared up to take advantage of manufacturing robots because they simply don’t have the know-how. This is where India’s outsourcers could help. They could master the new technologies and help American firms design new factory floors and program and install robots. They could provide management consulting in optimising supply chains and inventory management. And they could manage manufacturing plant operations remotely. This is a higher-margin business than the old information technology services.
Domestic Opportunity
According to the latest economic survey, the foreign direct investment in India has received a dramatic boost from the launch of Make In India initiative. (40 per cent FDI inflow increase as per the survey). The flagship Skill Development initiative has an ambitious target to skill 40.2 Crore youth by 2022. These schemes provide an opportunity for the Indian IT sector to become a partner in new India growth story. Reinventing and readjusting its software capabilities can fasten the pace of growth creation in Indian economy. The ancillary effect of a strong software backbone will enhance the productivity, and job creation in the manufacturing sector. A low income—low productive country like India has envisioned to take maximum people out of poverty by creating an 800 million middle class in the next five years. This will be possible when we come out of a ahistorical analysis based on “presentism” identified by historians as a belief that the times we live in are unique. History acknowledges that technological change is powerful but it takes more time than people think. Technological change is not a bulb that goes on but a gentle sunrise. India”s IT industry has network effect in software that parallels China”s in hardware. We produce more engineers than US and China combined. Also, the changes in H1B visa pales the changes in technology climate. All hardware has a layer of software, and smartphones cost is cratering. With Bangalore and Hyderabad probably the only cities in the world where you could hire 1,000 cloud programmers, this vast talent and resource pool should be channelised to boost domestic demand in other lagging sectors. Signs of bullish domestic demand in future have made India the number One destination for inward FDI. Re-skilling, and redefining the focus areas of Indian IT sector can catalyse the giant leap towards the innovation in product and services which have been long overdue. India has largely been a service sector driven economy, this crisis can provide a window of opportunity to boost core sector competitiveness in manufacturing, and design state of the art software processes and applications which can improve delivery of health and education services for the underprivileged, provide. On the contrary increase in the IT employment from 3.5 million to 6 million in 10 years should be the target of the industry decision makers and policy makers. Tata Group chairman N Chandrashekaran, a veteran in the field with over 30 years of experience wisely commented on May 29 —“Indian IT sector is live and kicking “. In the age of Digital India, policymakers and commentators commenting on the Indian IT sector need to shed ahistorical analysis to accept realism that – more technology means more jobs, not less. As I end the piece I see an advertisement looking for UX/UI designers, full stack web developers, data scientists, and Java coders. It is the time we stop bemoaning and start accepting the possibility of a giant leap forward.
(The writer is captain and CEO of the largest digital media channel reflecting the voice of the people- Jan Ki Baat jankibaat.com, @jankibaat1, fb.com/ jan ki baat). He tweets on @pradip103 and on facebook as pradip bhandari
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