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Wednesday, July 18, 2012

The shallowness of IT industry and India shining

IT Superpower. IT Behemoth. IT Capital of World. This is how India was used to being tagged in past 10 years. BJP's India shining was fuelled in reality by 'IT'. Congress tried to ride this 'shining India' and then became the reason of whining of India. Is Indian IT industry really so strong today? In just 10 years, this so called IT superpower has started loosing it's glammer, growth and .... shine too.

Read below fact from an article Golden age of Indian IT is over for good

"Recently, I read an article about this year's Google's Code Jam contest, which is a sort of Olympics for programming skills. At the qualifying stage, 17% of the contestants were Indians. By the third round, as the competition intensified, Indians were down to 0.7%.

Although India began with the highest number of participants, just three Indians lasted till round three, compared to 83 Chinese, 77 Russians, 36 Japanese, 25 Americans, 21 Poles, 13 Belarusians, 11 South Koreans etc. In fact, the code Olympics look much like the sports Olympics. So much for the IT superpower."

This is what the reality is. Indian IT industry hardly produces any 'products'. All it does is to provide cheap labour to western clients for offshore work rather than creating any Intellectual property. It is like modern day labourers who earn for the work completed on hourly basis, at slightly different scale though. And their contractors are so called Indian IT giants!!

How does it matter for stock market? The so called IT superpower is loosing it's position thanks to rising costs in India due to inflation and ever growing wages which are becoming increasingly unaffordable for offshoring client who looks for cheaper labour, especially in this era of slowdown. Another reason is slowdown/recession in developed world itself. This will stall growth of these IT bellwethers further in future loosing investor interest. Read: Should You Buy Stocks of IT Companies now?

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