Information Technology - Indian IT Engineers in Hell....!!

62th BLOG POST -->>

       

        IT industry is the only bright spot if we see rise of Indian economy over last 5-6 years, rest I don't think there is any other sector which stands apart barring maybe we can say auto sector where India is trying hard to become hub for small cars(but that still has long way to go. The Indian IT sector has shown the nation and the government "power of general class". Since government is playing vote bank politics by giving reservations and killing competition which is infact even more important in rising of good breed of officials and bureaucrats.

With no reservations at all and jobs based on merit and knowledge, IT industry has shown the nation and political class the power of general class. With good salary packages to performing individuals it has been truly competitive economic sector. Other advantage with the IT sector is it's billing model, as it bills the employees in USD's but pays in INR, thus the IT companies enjoys high profit margins, and this rises when rupee value falls in international markets.

  In this post actually I thought of why not Indian IT companies change their compensation model where variable component of an employee should vary with exchange rate of US dollar and project profit margins. I think this would help in bringing even more competitiveness in employees for making project rating better in order to increase their variable component and thus their take-home. Their are/might be limitations for this billing model with respect to daily exchange rate fluctuations, but for that case we can see the average for a quarter of year or the variable pay cycle applicable so that employees might not feel cheated or underpaid. This model would raise the work done by the payroll department though.
       
         Indian IT industry has withstood the 2008 recession well, All thanks to the cash pile and the margins and the meager pay salaries over the last two years, The reason for coming out even strongly is the cost cutting measures ranging from sending fewer people on-site, some price negotiations, giving no salary hike for two conductive years to employees (on name of recession), firing people secretly so that stock does not plummets etc, etc, this list goes on.

Putting together these all measures have been very good for the biggies in Indian IT industry like - TCS, Infosys, and Wipro etc. These companies have lots of people on their bench hence lowering the bid price in recession time helped in increasing the percentage of billed employees.

This above scenario has not been possible for mid tier IT vendors like, Patni, Tech Mahindra, Mastek all of them still showing decrease in profits YoY, The reason is simple The biggies of Indian IT are eating their food by bidding at the same price of these mid tier companies, thus taking even smaller projects on which the mid tier IT Companies depends. Since the potential client is now well aware of these biggies they prefer to give new projects to these rather than mid tier companies which is the biggest area of concern for these smaller companies.

They can't compete with these biggies thanks to the bench strength and the cash pile of these bigger companies, Now in such a scenario where there looks no hope for smaller and mid tier IT Companies, the best method for coping is to be acquired by the biggies or bid to these biggies at even lesser rate for further outsourcing as looks rare possibility as margins are already wafer thin, adding further to IT companies owes is the increase in Visa fees by US Government.

        Thus after Indian IT comes out of the recession completely we can possibly see consolidation in Indian IT space. This would definitely help in making global companies which can compete with likes of Accenture, IBM much more efficiently and effectively. Hence it would not be surprise if news about one of the biggies acquire a mid tier or smaller IT companies which would definitely help in the niche domains where the smaller IT companies work.

Hence I can conclude that time has finally arrived when we can see consolidation in Indian IT industry which would definitely make Indian IT companies competency even bigger and more powerful. Thus offering some serious competition to US biggies like Accenture and IBM.

Thanks