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Navigating through storm of confusion
By Pradeep Shankar
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Saturday, 08 November 2008, 17:33 IST |
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Bangalore: On Church Street, in the heart of Bangalore (India's Silicon Valley), restaurants used to be packed during lunch hours. All those have changed in the last few months. "A stroll on the Church Street during lunch hours will present you the reality of the impact of the current downturn," noted E Ragahavan, Editor of business daily Economic Times as he moderated a panel of CEOs on the impact of slowdown on the Indian IT industry.
Even while the panelists were to get onto the stage, news of Investment bank Goldman Sachs Group sending pink slips to about 3,200 employees worldwide or 10 percent of its workforce hit the wires. Earlier this year it had laid off 1,500 under performing employees, citing poor job reviews, but also maintained that it expected to hire more people. Citigroup, too, has been notifying workers that they have lost their jobs. The bank has said it plans to shed almost three percent of its workforce over the next year, or approximately 9,000 jobs total. Both banks had been hit hard by the deepening global recession, tanking credit markets, writedowns on distressed assets and have been scrambling to reduce costs as they hunker down for an uncertain future.
"It appears the global community is stunned by the scale and scope of the meltdown. Many who believed Indian economy was insulated were proved wrong. All of us will be affected and we need to invent ways to cope up with the change," noted P Ravindranath, Director Public Affairs, HP India.
However, the India technology leaders say there is nothing to worry much about. N. Krishnan - Director General, Software Technology Parks of India (SPI) revealed that he had solicited information from member companies a few months back. "The survey did not indicate any slowdown. Either there isn�t any or industry is too shocked to understand and reveal the impact," he noted.
The shock is certainly visible among the companies in the west. "Several companies have still not planned any IT budget for next year. This is reflected in the Indian companies lowering the guidance they had given earlier. It will be a tough year ahead," lamented NRK Raman, Managing Director &CEO of Oracle Financial Services Software (earlier ifex).
However, projecting a different scene in the industry, Sham Banerji, Director of Corporate Business at Texas Instruments India said, "There are four million broadband connections in India today. It is hard to imagine the rest of India will not log on. Hence, the potential of India as a market has not changed. We look at India as a growth prospect. At times like this we look at opportunities of growth. The 'when' may have changed, but fundamentals haven't changed," he said in an optimistic tone. Taking the opportunity to assert the positive side, Sanjeev Sinha, Managing Director of Siemens Information Systems (SISL) jumped in to say that most Indian businesses were still cash rich and this is the time companies should be shopping (buying). "Indian companies wanting to go global should go out and buy the skills and the market access. This is an opportunity that needs to be grabbed," he said.
Some technology experts reflected on the kind of approach to be taken by the companies to boost their industrial growth. Rajan Anandan, Managing Director of Microsoft India said, "If one were to look at the corporate performance of Fortune1000 companies over a period of 30 years, they out-invested by a factor of three to five against the competition during the downturns. When markets recovered, companies outperformed. If you need to be an out-performer you need to out-invest."
Vivek Mansingh, Country Manager, Dell India R&D reminded the audience that all emerging markets, including India, are growing. "In a country where eight million phones are added a month, there are plenty of product opportunities. SMBs in the emerging markets don't have applications. There is a begging for product development for this segment," he said.
Dasaradha Gude, Managing Director, AMD India struck a chord with the audience when he touched upon the social dimension of the issue. "There are several fresh graduates in the market who have been given offer letter but put on hold for now. The fate of these students is uncertain. There are thousands of students in engineering colleges still pursuing their course. They are worried about their future. How do we save these people? If the problem is left unaddressed, we are headed for a disaster," he cautioned.
An obvious element, quite visible during the discussion was that there was no representation by any of the Indian IT companies. Probably they were too busy planning strategies to handle the current crisis or contemplating their next lay off.
