Will 2017 be a recession year for the IT industry in India? - Quora Discussion
A2A.
Now why such speculation?
Majorly due two reasons:
- US Trump Administration
- Automation
I agree that there are tensions amidst these reasons, resulting in layoffs and less intakes, however that is to deal with the targets and that IT/ITES business operations are making changes in their core strategy with the vision to adept with Digitization. Software sales are expected to grow 7.2% in 2017, while IT services spending is expected to grow 4.8% in 2017. And the exponential increase in digital use in every industry will only increase the overall number of jobs being created in IT industry.
In fact, this report by ET on 29th May 2017 adds more confidence to the opinion.
So what’s next? Embrace changes. Stay updated with the data driven technology and the market trends and you will also be a part of alive and kicking IT industry in the years to come.
Sandeep, Solution Architect at DELL EMC
Answered Jun 5
Answered Jun 5
Not sure. No investment bank talks about it. No economists talk about it. Government doesn’t talk about it clearly as well. Service companies laying off don’t tell the facts. There seems no legal mandate to specify the let-go numbers -like in US, where public companies need to notify SEC and/or state labor dept. Nasscom says no mass layoffs. Only analysts firms like McKinsey indicating 2lacs job loss per year for another 3 years.
God knows what’s in the immediate horizon!!
On positive side:
US economy keep growing, with recent jobless numbers (May) lower than expected.
Europe economy growing pretty solid.
Japan has solid successive 3 quarters of GDP growth.
China -though debt raising alarm levels, there seems no indicators like in early 2016.
Overall global economy doing good and growing. That means India IT which depends to the most part global market, by theory should be doing great in next year or so.
Impacting factors:
- Service companies reached plateau growth levels. Companies have more than 250k people in payroll. It is very difficult to sustain growth at that levels.
- Highly competitive. Hourly service rates keep falling. Heard for conventional IT services like SAP, rates have gone down to $80 onsite, and $25 offsite.
- New trends that creeping up silicon valley over past 5years -interestingly didn’t have any traction in massive Indian Software industry - AI, Machine Learning, IoT, Microservices,….etc the massive hirings are happening only in US even at high scale. Though product companies hiring folks locally here, not sure how much it penetrates into service sector. Simply Service companies seems missed bus on the latest innovation trends and see themselves stuck with old cash cow.
- High revenue earning companies seem to do it all themselves at large scale. AWS, Azure cloud, Google cloud, Sales Force, Oracle cloud -all doing it themselves.
So Industry transition, gone too big pains for service companies, missing bus on innovation , plus visa restrictions of US, Canada and Australia seems to tighten the grip on service companies.
Big question is job loss from service companies -can that be compensated by hiring by IT MNC bigwigs -like Financial, Retail, Cloud offshore firms. If so then no need to worry!!!!
Puneet Vig, former Content Strategy Analyst at The Indian Economist
Answered Jun 3
- I would focus on more wider gamut of your question and put perspective on overall economic condition India.
- To begin with India needs 10–15 million jobs every year to employ its youth. Good thing is, it has the capability to do the same, anecdotally in 2009 -10 it has done the same by producing almost 8 million jobs a year. But the problem lies in its occupational structure.
Looking at Indian occupational structure which is mainly bifurcated into three sectors ,i.e.-
1.) Services (mainly IT firms fill in over 60% jobs here),
2.) Agriculture (employees over 50% Indians)
3.) Manufacturing ( contributes 15% to GDP) things does not comfortable for Indian economy despite growing at a rate of 7%.
- Now, if you look at IT sector specifically then in next 4–5 years due to automation and further technological advances over 50% jobs would become redundant. Looking at global scenario, where developed economies like USA and UK are implementing protectionist policies then Indian IT firms like WIPRO, TCS, Infosys,etc would need to deal with huge Indian labour supply to fill in jobs and due to increased protectionism, Outsourcing service industry may contract causing massive loss of business to these IT firms and in coming years may lead to massive layoffs if things remain same.
- In agriculture sector huge disguised employment is there and Indian government is not financially capable to give straight easy subsidies and benefits to farmers. Monsoon still hurts this sector badly, with that increased migration to urban areas only increase unemployment.
- Manufacturing has been a great force to drive indian economy but due to automation in coming years, unskilled and sweat jobs will definately would be swiped away by machines. Manufacturing doesn't seems to have capacity to fill the unemployment gap india needs due to future capital intensive ecosystem.
Such things will lead to huge unemployment but a recession seems far fetched as Indian economy is hugely “consumption driven”. In 2015 investments fell in India to a 10 year record low of $111billion, but GDP grew at arnd 7 percent due to high consumption and population.
Also schemes like MNREGA ensures people to earn income to fulfill basic needs , because of which MODI Government has focused more on MNREGA and awarded huge budget allocation.
These are just short term measures, for long term prospect of next 10–15 years lies in how can we promote private investment and increase are Retail Business industry which may fulfill the required number of job target.
Ashok Purushothaman, M.B.A
Project Management & International Business,
University of Wales (2009)
Answered Mar 24
Project Management & International Business,
University of Wales (2009)
Answered Mar 24
I do not think 2017 will be a recession year for IT industry in India.. We can not judge what is going to happen to an industry just by few small happenings around the world..
Protectionism by few countries might hurt our outsourcing industry little, but as Indian IT sector’s clients are spread across the globe, there will be less damage..
It is not possible for any developed nation to fully stop outsourcing.. The main reason is the salary paid in India to Software Engineers is far much lesser than what is paid in US.. If US wants all the (Previously) outsourced jobs done by locals than it will not be possible for American companies to pay to locals in US dollars to get all the work done..
How can an American company remain profitable by paying 10 times the salary to each employee?? In India I am seeing several Engineers working for as low as INR 30K per month.. Now if his work has to done by an American in America, they should be paid atleast 10 times of it.. How long can American companies survive paying such high salaries??
Moreover, the skills that Indian IT people posses, can’t be replaced by locals in developed nations.. Here we train to students to a much higher standard than other countries.. We have millions graduating in IT each year.. I think it will be very difficult to get that much of qualified local people in other countries..
Even when Obama administration came to office, they wanted to stop outsourcing.. But what happened?? It is not practically stop outsourcing.. Every country needs the talents at lower cost only then, their economy will grow..
Sree Harsha, Engineer (2012-present)
Answered Mar 28
No it’s not a recession year for IT Industry. Definitely not in India. IT industry in India is likely to be safe until another 15–20 year.
However, it’s very critical for the employees of any organization to keep themselves updated with latest technologies in their domains.
With the recent technologies and methodologies coming into light, traditional and legacy technologies are not relied upon anymore. Hence, it’s very important to keep ourselves updated from time to time.
If you’re up to date with market, you can never be taken out of the job.
The people who only lose jobs are the one’s who stick to legacy systems, are too stubborn to change and who’re deemed not valuable for the organization.
Muthu Kumar, iObserve, think, analyze
Answered Mar 24
Answered Mar 24
Indian IT sector will not be hampered too much as speculated in the media. The recent FED rate hike by the USA makes us to predict that the global economy is improving & hence to control inflation we can see the recent hike in the monetary policy by the worlds greatest economy. Some economist predicts that this hike will effect the investment in emerging markets like India making the investors to park their money in US for higher returns but considering the Global economy doing well we can expect the consumer demand to increase which means automatically the exports will be increasing which was not the case for the past few years so the Indian software exports too will be increasing and we cant expect recession for Indian IT sector.
Moreover USA remains to be the higher software export partner for India & they dont have much talented STEM (Science Technology Engineering Mathematics) graduates to meet their own domestic clients demands hence the chances of curbing the H1B Visa is also less (not the Premium H1B Visas which it had revoked temporarily). Apart from this we Indians are not substitute for American jobs we are just an add on to them to grow their economy & so we cant say that 2017 will be a recession year for Indian IT industry.
Source: https://www.quora.com/Will-2017-be-a-recession-year-for-the-IT-industry-in-India
Source: https://www.quora.com/Will-2017-be-a-recession-year-for-the-IT-industry-in-India