Walking the talk

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Topic of yesterday’s post lunch walk, was recession. Looks like all we can think of at work these days is how recession is going to affect us and India in general.

Bangalore is known as the IT capital of India, when we were in school there was nothing like IT industry, but this IT industry kind of started only in early 90’s and picked up by mid 90’s and was at peak in late 90’s. People in my parent’s generation, were very keen on getting into a government job, a 9 to 5 permanent source of income, then came the intermediate generation of 80’s where people really had no clue what to do, with no government jobs to take and not much happening in private sector. That followed with IT, drawing people from far parts of India to Bangalore. One thing this did was, the land values sky rocketed, the service industry which was never heard before, like office cleaners, consultants, HR firms providing profiles for jobs, caterers for ever increasing population, the hotel industry ranging from the road side vendors to 5/7 star restaurants, every one started making money. Banking sector also saw a boom, from a conservative India, where people thought saving is the ultimate aim, it drifted away and people began to live on credit, taking huge home loans, vehicle and personal loans, hence banking sector too made a lot of money, employing more people with a high pay packet.

Then came in the BPO, the call center brought in even more moolah, with the youth being pulled into the tech support arena. It became a good source of income to non engineers with a good degree, providing decent to very good pay packets. More money for the youth, meant more money being spent for recreation, movies, restaurants, pubs, coffee places, you name it people started spending more money. Flow of money revolutionized the market, the textile industry, lifestyle stores, even the retail grocery market started making huge profits, and started employing even more people, making the money flow even better.

The economy now seems to be more based on the cash flow, I mean no one seems to be saving too much, people seem to be investing more and more, and spending more and more. So the Indian economy is more or less changing fast into the US economy model. But what would really happen if the incoming money stops, what if IT does really slow down, and many people get back to conservative money saving mode? How badly will the economy be affected. Can the economy still survive with the money that has already flown in?. Can it continue to flow around keeping all of us in a good state?

I was of the opinion that no, we are going to see huge troubles if the IT generated income stops. I feel the chain will get broken and hence all other sectors might get affected. The business might slow down, and hence other businesses might get affected too, the real estate values might come down, and since many people already have huge loans, the banking sector is also going to see losses, service industry is going to get affected, and almost every one is going to see a dip.

My friend felt no, its not going to affect that much, according to him, the IT industry is still a very small part of Indian economy, and we have enough businesses to keep up the economy. Cities like Bangalore and Noida might get affected, because of the high technology population, but then rest of India is going to survive.

I do not think so, look at travel industry, I mean domestic airlines might see a dip, even the middle men in many areas might have to find a different job.

All this leaves me with just one question, what next, whats going to be the next big industry which is going to take the place of the IT world. Ideas anyone?

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3 responses »

  1. Any field with strong basics and good business model would survive recession. It is only the weak companies that go down. Recession is sonetimes good as the market has its own way of regulating.

    Destination Infinity.

    Recession is sometimes good I agree, but what if a field is indeed week, what goes up steeply does come down too.. going by that logic we might see a steep fall, is our economy strong enough to take this?
    -Rambler

  2. the recession is all we talk about here too. we went through the it recession in early 2000. but now our recession is industry and inflation; it will be interesting to see what happens now.

    It would br interesting to see it happen this time around, that too being a part of it.
    -Rambler

  3. I believe the next industry to take India by storm would be the retail industry .With more and more retail outlets opened in India , plus the numerous ones entering the market , creating more jobs and opportunities ,is likely to be the hype for next couple of years

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