Euro Zone scenario and Y2K

BANGALORE, INDIA: Young Indian IT professionals may not be aware how Y2K changed the face of Indian IT exports. So, I might get away with such a comparison, even if it appears out of context.

During 2011, business media across the US and UK began speculating about risky scenarios: Greece exiting the Euro zone; a break-up of the European Monetary Union (EMU) and the collapse of Euro as a currency. I was reminded about the hype and myths associated with Year 2000 during the late 1990s. The Indian IT industry was smart enough to convert this crisis into an opportunity. Who knows, the Euro zone crisis, like Y2K, could end up as a game changer for Indian IT exporters.

In 2012, some of the risky scenarios predicted in 2011 appear quite unlikely. Yet, business media in the US and UK continue to speculate. Should Indian IT exporters care? I am not recommending Schadenfreude (in the German language, it means “one person's pain could be another person's joy”). Can Indian IT exporters assist their European clients in risk assessment, risk management and regulatory compliance? Of course, this may need a different set of skills and expertise. Why not make a beginning?

A topic like Euro zone break-up is very complicated. The clients of Indian IT companies have no control over it. Why not use this opportunity to serve your clients better, during a period of high risk, high uncertainty or both? Haven’t we done this before, during Y2K?

In one of his interviews on CNBC, the global investor George Soros made an interesting remark during 2011 while referring to a question about a country rolling back to a pre-Euro currency scenario. “.....you can't unscramble the omelet...” This explains why an exit from the Euro zone could be messy for Greece, or any other Euro zone country.

All the 17 countries of the Euro zone have made significant investments in the Euro as a currency, in Europe as a common market (for trade) and in making the monetary union (EMU) work during the last decade. Euro zone countries trade extensively with each other as well as with 10 other EU countries outside the Euro zone. Even if a small country like Greece changes its currency, this could get messy for its trading partners. If the Greeks choose to exit the Euro currency, they could also end up going back to pre-Euro living standards. Which bank will support Greece outside the Euro zone? Does this explain why a majority of Greek voters did not prefer a Euro zone exit during recent elections?

As explained in earlier articles, European banks and European businesses could be forced to cut costs, restructure and rebalance. This is an excellent opportunity to present IT products, IT solutions and IT outsourcing from a business value and risk management perspective. It could also be a window of opportunity to “move up the value chain”.

(K R Kashyap is a Bangalore-based management consultant with 25 years of experience in Tata Unisys Ltd. (now part of TCS) and IBM. His areas of expertise include, project management, risk management and business development functions.)

(The views expressed by the author are his own and not of CIOL)

Read earlier posts by the author

Navigating a mutli-speed Euro zone

Euro Zone economy: Growth vs. austerity

Greece: The tip of the large iceberg