India's IT sector starting to roar again? Maybe not

So India's vaunted IT/ITES sector is on the roll again, media reports indicate. Q1 Earnings: TCS, Infy, HCL emerge as showstoppers - screamed an ET.com headline today. But is it all that rosy a picture? Is the IT sector about to regain the glory it lost once the downturn hit in 2008?

Rents in Bangalore, India's Silicon Valley, are still depressed. And it is rather easy to find vacant houses for rent in Indiranagar and HAL II stage, in the heart of the city -- unlike in 2008.

IT hiring is up, stats indicate -- but my talks with friends say those hirings are for freshers.

Salary hikes are not what they used to be; foreign assignments have dwindled.

Mid-level professionals are disenchanted; many feel under-utilized. Media going to town about India emerging as a global IT research powerhouse, professionals I spoke to felt they were still doing the repetitive tasks of a backroom operation than real, cutting-edge research.

My own gut-feel is the IT sector will never be what it used to be. It would sure be a job engine -- but that would be for entry level people; there will not be much that the sector can offer in terms of promotions or pay.

It is going to get worse, not just for the IT crowd

The Satyam fiasco has hit India, Inc. hard, or it is not the case, depending on who you are talking to. But a lot of people in the know say Ramalinga Raju was caught out because he was unlucky. They say a lot of big companies in India, among them some real heavy hitters, are doing exactly what Raju has been caught for doing. Just that they are a lot more smarter and are better connected.
The thing is the IT crowd is worried. For some years now they were the high-fliers in India - in professional and social circles. But all that has changed. There are reports from Bangalore that IT pros have lost their sheen in the marriage market, the most important indicator of social status in India. Well, that has been happening for a couple of years now, but has gained momentum with the setting in of the slowdown and now with the Satyam scandal.
The IT sector is not the only one affected by the slowdown, but a lot of people in others sectors are still in denial. They seem to think India won't be affected much by the downturn and things will be as hunky-dory as they have been.
Wrong. I was talking to a stock broker yesterday and he confirmed my worst fears: the downturn is yet to reach India and things will be pretty bad by March this year. Of course, a lot of companies still have the money to weather the slowdown but it would be a grave mistake to think the party of the yesteryears will continue.
And you have to worry about the millions of youngsters who will graduate from our colleges this year, some of them having taken courses promising jobs in the sunrise sectors, after paying huge fees. They will add to the unemployment and social problems in the country; the surplus in the labour market will see salaries take a dive. Especially in such blotted sectors as retail. Someone told me a couple of months back that a retail professional with just 2 years experience was commanding a salary of Rs 36 lakh a year! Those are definitely going to be rationalised and it will have an effect on consumer spending.
I am sure we haven't even seen the beginning of this downturn yet. And a lot of people think we won't be affected by it. More scary, think of all those expats, especially from the Gulf countries, who may start to return if that area of the globe is hit by the recession.

India's Tech Success: Powered By Sweatshops And Slave Labor

I am departing from my usual topics for this post but I think this topic is more important than any of the political games being played in New Delhi right now. Yes, it is about how some unscrupulous IT companies are exploiting India's IT professionals.
I have heard over the last few weeks several stories of how companies are forcing rookie programmers to work under the threat of legal action. Many of my readers may not be unfamiliar with the problem, but what has astounded me is the depth and scope of it.
It goes like this: a young chap just off college is recruited by an IT company. He is mostly from a small town or a village and not very familiar with the tactics being employed in the job market. Nor are his parents much aware of it - they are just too happy their son/daughter landed a job even before getting his/her degree.
Okay, now the guy finds himself in an office where he is not learning anything of value - he is being used as a simple coder (no major addition to his skills). Soon he get disenchanted and is looking for a way out. And given the scarcity of good workers in the Indian IT market, he sure enough gets an offer from another company. He wants to leave.
Now starts the game. His employer says he can't. They talk about a bond he has signed when he joined. They threaten legal action. They demand money for training expenses (!!!) incurred. They call up his parents and threaten them of legal action and criminal cases against their son. (Mostly such companies leave off the girls, fearing it could lead to harassment complaints being filed against them). They bring all sorts of pressure to bear - it is mental torture. And if the guy still insists on leaving they deny him any certificate to show his experience, and may even go to the extent of serving legal notices on him.
An advocate friend tells me 90 per cent of the time such companies win. The guy stays back - he resents it but he has no choice. If the bosses were sane guys they would have realized that having such people in the workforce is counterproductive. But then, they are sadists - they just want to ruin his life, just don't want him to make it in life!
Why do they do it? No easy explanation. It probably is just a mixture of some of these: bruised egos of the bosses, the difficulty in finding talent, resentment at your junior getting a higher paid and better job...
It sounds terrible and so improbable. But it does happen.
Why? Mostly because the young guys who face this problem aren't aware of their legal rights in this country. And because their parents are cowed down by the threats of legal action the company bosses make.
I recently helped a few such guys to get out of such a company. And I know those guys still have friends there who don't want to continue but are afraid to jump.
I am not saying all IT companies are like this, but there are many out there. A quick scan through some of the discussion boards will tell you what I mean.
We are talking of becoming an IT power. If we cannot guarantee basic rights to our IT talent how are we going to do that? Makes me wonder. And before you get me wrong, let me tell you this is not about cutting costs. These companies have the money but just treat their employees like shit. Maybe it is about mindsets not changing with the times.
We aren't talking about illiterate workers in some rural brick kiln being made to do bonded labor, but about our cutting edge workforce - our IT professionals - being treated like slaves. Are we out to build an IT superpower or an IT slave empire?