Nothing gloomy about Indian IT: Nasscom chief

NEW DELHI, INDIA: The impact of global recession on Indian IT industry will be short term and industry will not be laying off people in huge numbers, promises president Nasscom, Som Mittal.

In an interaction with CIOL, the Nasscom president, however termed the present global economic situation as a serious one for the IT industry but not one to be construed with gloom and doom.

"Don't relate everything that we have been doing for years to say it is downturn. We could talk ourselves in gloom and doom when there is none. There is serious situation but not gloom and doom," Mittal said.

"It will short term impact. The growth will be on track this year and next year. What we do is integral part of people operations. This is not like consumption of products where if you consume less you stop producing. Surely there will be dip in volumes and transactions but fundamentals remain very strong," Mittal added.

No layoffs in IT industry for now

Mittal also rubbished claims that IT industry will be laying off large number of employees in coming months as part of industry plans to cut costs to tackle recession.

"I don't know where this news of layoffs is coming from. There are no lay offs. You must talk from an industry level. There are always some individual companies who irrespective of whether economies are growing up or down, layoff people because of their own competitive positions", added Mittal.

"Hiring even today as usual is going on. The offers that were made last year for campus recruitment are going ahead," he said.

Replace rather than layoff

Mittal also added that the apex software body was actively facilitating among its member companies the policy of getting people replaced rather than getting them laid.

"There are some impacted companies who may decide either to close or downsize. Because there is net hiring, we are trying to facilitate employees to get replaced rather than get laid off. There is somebody who needs them at the other end of the tray".

"We are talking to member companies to see if there is any need, Those HR managers should reach out rather than lay off", he added.

Mittal, however added such arrangement will be called for a few companies as slow down didn't affect the whole industry.

Hiring will be lower, but will be there

On the question of why Industry is witnessing less hiring this quarter as compared to previous quarters, Mittal attributed the fact to the new strategies IT companies have put in place to tackle downturn.

"Hiring will be lower but it will be there. Hiring will be lower because people are improving efficiencies. Hiring is lower because attrition is lower and because hiring is closer to delivery rather than anticipation."

"We have hired so many that invariably you can't take them together. There is not university that takes 20000 people in 4 months. They get staggered and that staggering has gone on for ages except for media picking it up only now", he added.

Growth will be slow in BFSI but will catch up

 On the question whether the impact of recession on Banking and Financial institutions which analysts say, accounts for 24 per cent of IT majors in India, will have a serious impact on the growth of companies, Mittal agreed the growth will be slow in short term but eventually will catch up.

 "The BFSI companies are there. The companies haven't vanished. The new decisions are the ones that are getting postponed. We are seeing slow down in the growth for some time but it will grow again".

 Obama will find India as of solution not problem

 Interestingly Mittal believes, the new president elect, Barack Obama, a vocal opponent of outsourcing, will find Indian IT industry as part of solution to fix US economy rather than a problem in the long run.

 "Unemployment is removed by creating jobs and jobs are created when there is economic activity. We are part of solution as we help businesses transform, help them become more competitive and win more business."

 "US companies are looking at outsourcing and off-shoring as part of solution not a problem. The new president needs to look at how economy has to be tackled. If you don't have tech resources you can't get to fix the economy and get economy back on track," he added.

 Outsourcing, Off shoring will get out from our dictionary

 Mittal during the interaction also contended that concepts of Outsourcing and Off shoring that have catapulted Indian IT industry to the centre stage in world economy will be soon consigned to history books soon and wont find any takers in the future.

"The word outsourcing and off shoring will get out from our dictionary because you have to answer who you are outsourcing to and who you are off shoring to," says Mittal.

"Indian IT companies operate out of 27 countries and in 75 cities have their own centers…. So if that is the case, then it is actually part of delivery chain and not outsourcing", Mittal added.

Elaborating on this argument, Mittal said the way demographics are changing across the world, in the next few years the new world order will not entail the concepts of offshore or outsource.

"In developed world we have an ageing population thus lesser people to service. Younger people in these countries have choices and they don't want to be in technology space for it is demanding and entails lot of work."

"Next five to ten years, we are going to see dramatic changes that eliminate many services in the world.  It is not about cost arbitrage, but very few people to service the world. The next five to ten years we are going to see dramatic changes that will the way world works and that will not necessarily mean offshore or outsource," said Mittal.

Mittal added that these demographic changes across the world present an interesting opportunity for India to cash on.

"From an Indian perspective, population, considered a problem one time, is now an opportunity. Human capital need to be built on and we need to continue to work with the government to get people skilled so they are some of use to changed the world," said Mittal.

Legal Issues Surrounding Outsourcing

 Speaking on the legal issues surrounding outsourcing, Mittal pointed that for Indian IT industry to deal with legal issues with multiple countries gets very difficult at times.

 "Each one of the ninety countries we deal has different rules, laws and legal provisions on outsourcing and then you have a single country here which is trying to service them. There is always a gap and need for Indian law to be enacted to deal with needs of every country"