The answer depends on the ability of the domestic economy to absorb the techie workforce

By Parsa Venkateshwar Rao Jr

The Indian Information Technology (IT) sector is not really at the end of its tether as reports pour in about more than 50,000 being laid off. Though it is a large figure in absolute terms, it seems to be hovering in single digits as a proportion of the total IT work force in the country, which seems to be around 10 million.

Despite the naïve optimism of the simple-minded spin-doctors of the liberalised economy that IT is the flag-bearer of the country’s rising fortunes, it was clear that IT, even as part of the service sector, was not the big thing it was made out to be. Indian IT was never in the forefront of technology breakthroughs as it was happening in America. It had always been the rearguard as it were, and it was only good at adding to the armies of cyber-coolies. But the money it raked in, for the promoters as well as the workers, was quite attractive and no one could complain. But it could not have been expected to last.

Let us remember that this was not the first time that Indian IT had hit the lows. It had happened during the turn of the millennium dotcom bust as well. The big players had survived on the back of continuing demand for IT services from the Western economies, especially the United States. So, the Indian IT sector had survived the dotcom scare.

Whatever may have been the exaggerated expectations of the country’s politicians and journalists from everywhere, including the simple-minded Thomas Friedman, India’s IT entrepreneurs knew very well the limitations of their businesses in terms of carrying the country’s economic growth on their shoulders. There was no getting away from the fact that Indian economy cannot do without the traditional sectors of agriculture and industry. The argument that India need not go through the sequence of economic development and that it could leapfrog into the future has turned out to be a false one.

Keeping in mind the fact that IT is but a factor in the economy of the country, a cyclical setback to the sector cannot be interpreted as economic disaster for the country. But the new situation does pose some difficult questions. If Americans and others are no more willing to depend on the IT services provided by the educated Indian workforce, do the IT czars of the country have a Plan B to re-deploy the force on the domestic front?

It has been quite clear from the beginning that the IT services that were on offer were not of much use in India, and therefore they have to look abroad. It was advantageous because work assignments in Europe and America meant handsome foreign exchange dividends. It brought in a whiff of prosperity to a segment of the Indian middle class. The challenge is two-fold.

Have the other sectors of the economy reached a stage where they can use IT-enabled services? It should be an obvious choice in the manufacturing sector because technology is now IT-oriented, and computer-aided design (CAD) is the norm in manufacturing. And India’s own service sector, from education to health to transport, would need IT services than at any time before. So, if Infosys is forced to employ 10,000 Americans for its operations over there, it should be possible to employ those displaced 10,000 IT workers at home. The question that crops up is, of course, the blunt one: Is the Indian economy ready to make use of its skilled and sophisticated IT work force?

The Chinese saying of a crisis being an opportunity should become the fulcrum for IT in India.