The Great Indian IT Professional

NOTE: This article was written by me in April 2005. It is as much relevent today as it was back then.

Eliyahu Goldratt, in his book - The Goal, stated that "The GOAL of an organization is to make money", and this how pretty much all the companies in this world operate.

This objective is all pervasive in every aspect of an organizations behavior. We have seen innumerable instances whereby organizations have maintained / achieved industry supremacy by being the most cost effective firm in the market. For the sake of providing a balanced view, I agree that cost supremacy alone does not transfer to industry leadership. However cost supremacy does lend a potent advantage in making the bid for industry leadership. It would be worthwhile, amidst this euphoria relating the Indian IT outsourcing boom, to pause and take a look at some of the harsh realities that we, as Indian IT service professionals, would have to face if corporates were to seek an alternative low cost destination to India.

"A recent study by the Confederation of British Industry revealed that India could loose outsourcing jobs to countries in Eastern Europe. The confederation also warned that a a "huge culture change" is needed in the UK to make sure youngsters are prepared for the world of work. Otherwise they would face a life of unemployment."

Does the above hold some warnings for India? More importantantly, what does the above mean to the Indian IT society as a whole? It is very much possible that in future India might be in the same boat as the US / UK find themselves in today. Like US and UK, India too might have to face job losses to other low cost destinations. When this will happen is difficult to predict but the fact is - this will happen. Are we prepared to deal with such an eventuality? Since salaries are through the roof for most IT professionals, there might be a tendency to indulge in saving for the difficult times. Worse, there might also be a tendency to indulge in extravagant lifestyles - as seems to be the case with highly paid young BPO professionals. Is saving money for bad times, the best way to deal with such eventualities? No. It is definitely one of the ways but not the best way.

I believe that a financial safeguard approach should also be substantiated with a skill enhancement approach. It is more important to maintain your employability at the cost of money than to make money at the cost of your employability. It is also possible that many of us in the Indian IT sector think that the good times will last forever and that there is no stopping the Indian IT juggernaut. Businesses move to India because they seek low cost. Worse, we attract them by playing the low cost card because that is the easiest way to earn business. As things progress and the industry matures cost will come down even more.

There has seldom been an industry where costs have not come down over a period of time. When customers start paying less, IT vendors will start resorting to cost saving measures like improving effecieny and productivity. At some stage, as the pressure on the industry gorws, there will be downward pressure on salaries. This is already evident in the salary structure for entry level IT professionals. It is only a matter of time before the same impact is seen for senior IT professionals.

A recent survey by DQ India on the salaries of Indian IT professionals revealed a startling statistic - The more experienced the candidate, the higher the salary !! At first look, we might tend to agree with this. However a closer dispassionate analysis of this will reveal a troubling trend. Such trends pass a wrong message to the mass of IT employees that the more experienced you are, the more you deserve a higher salary. At the same time, IT vendors will start realising that there is no reason to pay a high salary just becasue the candidate has more experience. This causes an expectation mis-match between would-be employees and prospective employers. Those who fail to understand this potential discontent will face the risk of not being able to adapt their personal and professional expectations to the changed realities of the marketplace.

The Indian IT services industry is very different from any other industry because of the fact that increased revenues can only come with increased manpower. Ofcourse, increased productivity and effeciency will enhance profit margins but bottom line revenue increment cannot be achieved without scaling up of human resources. This is however not the case with other industries whereby after a point incremental revenue can be achieved with very little investment - for example the Manufacturing industry, thanks to the boon of Automation. In the case of a market upswing, the manufacturing industry can simply get away by increasing production and can reduce production during a market downturn. The cost paid by the firm is related to the under utilisation of production capacity, but this is easily offset by the fact that in a upswing revenue can be increased drastically without a correspodingly huge investment. This is however not true for the IT services industry. If faced with a significant downturn, how long will it be before Indian IT industry decides to shed excess capacity - Human Resource? How is the average Indian IT professional geared up to face this challenge? Are we looking at the shine of the Sun and losing sight of that small Moon creeping up to cause an eclipse?

Is it time that we as IT professionals look at life and career outside the IT servcies Industry? Is it time that we start eveluating our prospective employers not on the basis of - how much they pay, but rather on the basis of - what is the long term sustenance and growth strategy? I guess its time to start thinking, so that when it is time to act, we are ready to act.