Monday, July 23, 2007

The Indian IT Industry

There is this huge baloon called the Indian IT Industry which was being inflated right from the year 2001, as soon as the word "Outsourcing" gained momentum. For the companies, it was a good thing to do to save themselves from being doomed.

As you already know, for a company, the bulk of the expenditure is salary. The giants in the Financial Software, Retail Software and Banking Software and (particularly) the Telecom Sector started their outsourcing model (some of them also gave names like Offshore-Onsite model) to reduce the company expenditures by cutting down the task force responsible for the software implementation and execution arm. These jobs were outsourced to India/China/Romania/Vietnam/Brazil etc.

Outsourcing was a definitely a success in some sorts , it did bring out a sigh of relief for the software giants like IBM, HP , Accenture and also established India as a popular outsourcing destination for these companies.

Outsourcing made the Indian Software Industry unnaturally big. But, how long will this model survive ?

As the Indian Software Industry has matured (has it?), there are a large number of problems which are plaguing the Industry. The first problem is to find the "right compensation" for a particular engineer (or "IT Professional" ). Since companies are trying to get software projects by hook or crook, the competitors are ready to pay any amount of money. The job market is so lucrative that you stumble across news like these :-
10,000 quit TCS, Infy, Wipro, Satyam in Q1 . This is in fact, not such an alarming number because in effect, it accounts to 15% annual attrition.

The Indian Software Industry still seems to focus on Engineers with expertise in C, C++ or JAVA or EJB or J2ME or some thing who can be roped in to do sub-standard maintenance. Writing Software is not just about knowing some languages or platforms or perhaps even Data Structures and Algorithms or the ability to understand a cryptic programming language syntax. It is like asking a guy who is a master of English to explain the theory of Supernova explosion. This is something which has to be drilled into both the heads of job seekers and job givers.

That is definitely important, but it is profoundly important for Indian Software Engineers to develop an understanding of the Domain and build an expertise on a particular domain. otherwise the industry won't mature. India cannot have its own killer product.

For example :-

If you are an architect of a banking software, then, based on experience, you should be able to either modify, redesign or re-engineer your solution in a new company. You should be able to lead a team of, say, 40 engineers and direct them to your solution.

With frequent switching of domains, I'm afraid, we won't gain the domain knowledge to call yourself a true designer/engineer. We can't even dream of becoming an architect who conceptualizes and gives a life to the product.

Moreover in the Indian Software Industry, for technical people, the corporate growth ladder is very vague , unlike his counterpart who has a flair for management. We wont have many architects, if they are, then most of them are namesake guys.

But Most Software Professionals I know, get dissatisfied by /frustrated by /bored of their job in a span of 3 years. They find/invent reasons and move out.

Thats why I state this rule

At least 70% People in working Software Projects move out withing 3 years quoting some excuse (which may be valid)....They may move out to higher studies/ America/new job etc

Now the big question is :-

How long does this shift(from India Services to India Products) happen ? How long will our domination in ITeS remain ? What if all these outsourcing jobs move out to China (sob!) ?

How long will it take to have 100% Indian Product Software Companies delivering killer apps ? How long will the Sales guys try to invent ways to keep the monies circulating (instead of stagnating) ?

We do have a massive Internet muscle. We showed how patriotic we were when we wanted Taj Mahal to be the new7wonder. Now why dont we have an Indian Google or a Inaian Yahoo like baidu (the google of china....for china).

Time will tell...I am cross-eyed.....Let's wait and watch... And there are rumours of a 6day working week .... hahahah....


Milan said...

Hmmm...the old debate of when services will move to product making companies. Sudeep, as you have rightly pointed out, the services boom was the result of an arbitrage opportunity that corporations in the developed world saw to reduce their operating expenses (labour costs).

The situation you talk about is driven totally by macro-economics. Every country goes through a cycle where the supply side of its economy tries to keep up with demand. Our economy is booming, largely driven by high demand. Supply must keep up right? In the initial stages, supply is satisfied by investment in labour and capital. The Services industry boom is the manifestation of the first condition and a plethora of airlines, banks, insurance companies, malls, retail, cars, etc is a manifestation of the second.

There is a limit to how far improvement in supply through these means will satisfy the demand in the market, but in India's case, we have not reached that limit yet. Once this limit is reached, further increase in supply will only be met with an increase in PRODUCTIVITY.

This will translate to some of the things we REALLY want to see change in our country. Better roads, NO corruption, competent governance and judiciary. And yes, also engineers who spend their skill and time making products that generate REAL value for their organizations and themselves.

I'm afraid this is a cycle. Which does not mean for one minute that we sit back and wait for the cycle to play itself out. Indeed, the cycle enfolds as a direct result of out efforts. So fight on my friend...think up of a product, and follow your dreams if thats where they take you.

Rajiv said...

Funny how things change. A year ago, the rising rupee, which is causing the BPO industry to think about 6 day week, would have me worried as well. I anyways used to work 6 days, it would have meant no break at all.

But now i am all for it. It helps me to cut down the selling price of my product. Its good to be an importer these days. :)

sudeep said...

Milan :

when you say :-
Once this limit is reached, further increase in supply will only be met with an increase in PRODUCTIVITY

Quality of Supply is implied ;-)

Rajiv :

Definitely yes, it is good to be an importer these days.... If possible, have a look at this week's cover page article of Outlook magazine. He talks about that.

GD said...

The issue about PRODUCTIVITY cannot be solved easily, as the workforce in India is not trained to increase productivity. We are just not experienced in a particular domain or technology to see super efficiency.
This is partly because we are service driven. How much of a tech expert / domain expert one can be maitaing million lines of code, but actually tweaking 10's per year. You neither learn tech or domain. Unless we produce software (product / applications) its gonna be difficult. There is absolutely no value driven approach by the IT companies .. Its all money driven, which gives quality of life to a few at the expense of millions.

But the situation is far far better than China, where a few down-troddens have sacirificed everything (including life) to build a nation .. which is gonna crumble, due to imbalance (trade, environment, wealth, consumption etc etc)

services is a lesser evil compard to manufacturing.. u dont need physcial resources :d

Milan said...


I'm not sure I quite get the gist of your argument. For sure, maintinaing lines of code is not an efficient use of an engineer. I think we all aggre on this.

Neither am I implying that gaining productivity will be easy. On the contrary, it is a tough painful process. And this is not just about India. EVERY nation has at some point, gone through this cycle.

Coming back to Services though, we have to be careful. It has its downfalls, but seen from a higher level, it has done more good to our country. That I have NO doubt at all. People such as Rajiv and myself grew up with the Services boom, worked with top engineers in the US and Europe, thanks only to the Services boom. We grew into what we are today, challenging the norm, cradled in the Services boom. But for it, we may not be in this position today.

Finally, productivity is what you make of it. I have seen engineers become very strong in their domain exactly by maintaing lines of code, but also by doing more than the basic job asked of them. We know the routine, you can spend your time at work drinking buckets of coffee or really get down, examine every line of code, map it to the specs and truly gain knowledge. It wont make you an expert, but it'll make you the best you can be, which is the essence of productivity.

GD said...


I agree to your points about the benigns the outsourcing wave has created to millions of educated and uneducated too, and agree that it has done more good than bad.

And I am really so glad that we followed the knowledge wave rather than the manufacturing wave, which creates good in the short-term but mostly is harmful in the long-run ( like China, with its issues with environment etc).

But I still have issues that outsourcing wave's effect on inflation, property prices, cost of living. But glad that the government think tank is looking at cooling the economy and look for meaningful growth. (finally)

Regarding Produtivity,

I have my reservations about reverse engineering. Yeah you could gain a lot of knowledge, but I think the process itself is counter-productive :-), but given the constraints in which we operate it could be the best done.

I am just acting like a Critic here, without solutions being offered. (not enough grey cells, still in the process of finding solutions :) ).

Akshai said...

"With frequent switching of domains, I'm afraid, we won't gain the domain knowledge to call yourself a true designer/engineer"....Dude, its a choice between being a "jack of all trades" or being "master of one". Both have their pros and cons. Switching between domains and yet delivering is an art by itself and its just that maybe Indians in general are a master of this art and also have the ability to venture out of "their zone of comfort". Its a quite unique trait and they are reaping the benefits of it.

"Moreover in the Indian Software Industry, for technical people, the corporate growth ladder is very vague"....Bingo Spot on. It supposedly (I dont agree 100% with it but this is just an observation) also has to do with the mindset for "designations" in our culture . In a tech line u cannot "make up" designations. You cant have a "module architect" can u? while you can very well have a "module lead". Hence, growth in this line seems like a long drawn out non glamorous story.