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Wednesday, October 29, 2014

Beginning of the end? Indian IT Industry!

In the beginning of October 2014, there was a small news item which few people might have noticed. That of Yahoo India downsizing heavily and moving its product engineering onshore. Today i read a similar news item in Economic Times and i realized, that one can be a coincidence but two is a trend.

Yahoo Lays off 400 in India

IBM scaling down in India, moves management to US

For past two decades, Indian engineering graduates assume that scraping through a college degree insures them a lifetime of cozy IT sector salary and career. Well i am one of these believers, however these two news items clearly state that MNCs are clearly ahead of the curve.

MNCs hired in India in bulk, when no one had even heard India's name or believed in us, and now they are closing down when the India trend is getting established and hence they are either totally wrong or clearly ahead of the curve.

So what is the core reason here?

Software product development business is clearly moving to smaller teams, aka Facebook, WhatsApp and Google, where core product team is 3-4 member in size. Hence the bulk engineering talent advantage of India is clearly not required. Come to think of it, total company size of Whatsapp is less than 50 people, with its multi-billion dollar of valuations et al.

Secondly, Wage differential is diminishing with US graduates willing to work for less and Indian wages at higher end of talent spectrum matching those in US.

Thirdly, with Cloud, Mobile, and other disruptive technologies, firms want to control Product development close to their chest. They want control back when it comes to core product lines and want to re-engage closely with their best developers sitting in front of them.

And there are some more reasons.

So who will hire tons of engineering graduates swimming out of Indian engineering factories each year. Well, look forward to our desi firms like Flipkarts, Snapdeals and of course desi IPPs like Wipro, TCS and Infosys.

The now experienced Indian developer, who has by now drank ghat-ghat ka pani, will also start his own garage startup, so pls beware of next billion dollar firm coming out of Indore or Mysore or any such place. This is a boon in disguise.

Clearly, all is not lost, but this trend of reverse offshoring is present and it will only grow stronger from here.

What do you think ? Write in and let us know.


  1. Hello,

    Can you please share your views on Persistent Systems and the product development outsourcing opportunity....

  2. Persistent is definitely a good IT firm, in product dev services area. But at 5000 crore market cap, it is not a value buy currently.
    Current support is at 1200 and next at 1050. Can correct for a while.


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