ET reports: This may literally be a bolt from Big Blue! IBM is learnt to have delivered the pink slip to a sizeable chunk of its entry-level trainee programmers (ELTPs) across major offices in India.
Most of these ELTPs, who were engineering graduates, had put in nearly a year and were working in numerous technology practice groups under IBM India’s global delivery business.
Wonder whether this news is sending a chill down the spines of engineering students about to graduate. I've also heard of TCS showing the door to trainees who failed to clear the test after the training period.
IT companies are still recruiting in large numbers from engineering campuses. In the top end colleges like NITs they don't even have interviews, just a written test to clear. A significant number of people who join are doing so because:
a) I need one job in hand... but will keep looking for something better
b) Need a place to park for 2 years as I prepare for CAT/ GRE
c) No interest in core branch, would rather join software where work is white-collar and jahaan foreign jaane ka chance hai.
Which is all fine but now these folks will have to make more efforts to better acquaint themselves with coding and what not. Because companies are getting more stringent on the performance criteria.
What's intriguing is that companies get stringent only when times get slightly tough. With software margins being affected by the strengthening rupee, they are looking for ways to shave costs. In any time, good or bad, it's hardly advisable to keep people who don't meet your standards after training. But when there's a boom, you just sigh 'shortage of talent' and look the other way.
As far as students go, I think this is a positive thing. At least a few will think twice before taking jobs they don't want in the first place. And if they do join they will have a little less attitude and possibly learn more in whatever time they spend in IT.
As techie MS Vivek Chaitanya commented on the Jobokplease blog:
Due to competition, companies are campus recruiting students in 3rd year, 2nd sem itself. This is inducing recklessness in the students and slowing down their studies for in their final year. So there is no guarantee that the potential of the student at the time of campus recruitment is same as the potential once he finally comes out of his/her studies.
What say you, engineering junta?
This is what you get when a software company hires mechanical engineers who have completed only 2 years of college!
ReplyDeleteI completely agree with what u said but being a Software engineer myself and I IBMer, I would like to add that it has become very hard for us to stand in such a situation,as I am also a fresher. I have seen friend of mine who were doing good in the projects they were working but still they have been shown pink slips on accord of being a non performer.
ReplyDeleteMy question is that these people were really good when IBM hired them and six,seven,eight months down the line they have become non performer ( As said by the Big Blue ). Isn't it that this situation raises a question on IBM's policy, trainings and project allotment. People lost their shine after joining IBM. that is a disgrace for such a company.
I think there is no problem with the people. IBM should rethink about their policies.
Moreover, if strengthening of Rupee is a reason behind this then how are other companies managing this situation. We don't hear other MNCs slashing their headcount by such massive level. There must be some reason behind this which accounts to such a move by IBM. IBM should be transparent on this issue which they are not.
It is shocking that interviews are not conducted in some cases!
ReplyDelete"I didn't know getting jobs was so easy."... This was a statement from a cousin in her final year of engineering in 2006. I blog around this then > http://tinyurl.com/2sfdqn.
@VikramAdith, I completely disagree about your comment about "mechanical engineers". As a project manager I can vouch for the fact that for majority of outsourced IT work, a co-operative and easy-to-work team is preferred irrespective of graduation.
- Rajiv
Software cos hire for aptitude. It doesnt matter to them if a Mechanical Engg student is good at his fundamentals in Mech.
ReplyDeleteTotally agree with what you're saying. Software companies in India need to be more stringent on who they hire.
ReplyDeleteSoftware engineers in India are not too bothered about the quality of work they put in.
That said, I do know some people who are really good too.
FLASH: TCS delivered pink slips to 400 people who are under 2 yrs of experience.
ReplyDeleteReason: Part of annual performance evaluation exercise.
Based on the last paragraph, shouldn't placements become an affair to be conducted after completion of course, be it Engg. or MBA. Then there would be no question of people going lax on their academics becomes their prime goal of a job is all over?
ReplyDeleteMost of the people entering IT belong to the a, b and c categories specified above. There are extremely few, in my 6+ years of experience, who are in it because they primarily LOVE computers and/or programming. Are you the sort that took part in programming contests at school/college? Who was the nightmare of the sysadmin because you knew how to get around the pesky firewalls/proxies set up, or hack into their accounts?
ReplyDeleteIf so, stay the HELL away from outsourced project based companies. This includes all the big Indian players- Satyam/Infy/TCS/Wipro, and also certain parts of the MNCs-Accenture,Cognizant and IBM Global Services. You will be pushed around between projects, treated like the replaceable spare part that you are(what's another fresher among 3000 or how many ever others, after all?). Here's two examples from my former stint at Wipro, and I'm no fresher, mind you!!.
So what can you do then? While still in college, involve yourselves in projects, create stuff on your own over and beyond academic requirements. Heck, join SourceForge
and contribute to an open source project of your choice! These things add street cred to your resume like nothing else, even better than marks.
The kind of employer you should be targeting? Product development companies. For the most part, they're MNCs, but there are many small software companies that fall under the media's radar and rarely get reported.
Such companies are far well insulated from the vagaries of market pricing, and moreover, offer a far more challenging work place.
Foreign travel? Not as likely as with the others, but if you don't mind that, you can make a career for yourself, getting paid to do what you ENJOY.
And in the end, that's what's most important in life.
For the record- I work for IBM's India Software Labs (a separate entity from IBM Global Services, where the freshers were fired).
ISL is a much smaller entity within
IBM (3500 employees total, out of about 70,000 all over India and 380,000 worldwide), and the caliber of people working here is much higher than what you'll find in an outsourced company.
(IBM is the world's largest holder of patents, and the ones from India come primarily from ISL. In 2007, we had 119.)
I hope I've made my point- so that those who hope to translate a passion for computers into a career don't wind up making the wrong choices.
I don't agree in totality to Rex's comment. Come,on these Indian IT companies that are being spoken about actually created the great Indian IT dream and not the so called product companies/hi-tech labs of MNC software firms which are real few in number.
ReplyDeleteYep, I do agree that there are some issues with you being treated like a spare part, but the part of the blame also lies with the Employees. Once into such a company, even a hardcore techie gets easily disillusioned and starts meandering the way he is asked to.
Believe me, the oppurtunities to excel and the kind of challenges,man management skills, customer relationship handling and thrill of creating new business oppurtunities would never be matched by sitting in front of a comp all your life and thinking that you have attained nirvana just because you used to like C,Cpp coding in skool.
We have to understand that very few of us understand our real aspirations in life in college,One should be open to change & learn as one gets on with life.
And why, if you are being treated as one in 3000, that's where the challenge lies. It's not about jumping statistics and moving to a place where you are 1 in 350 , but to stay put and prove to the 3000 that you are made of different metal.
To each their own. Like I said, the people I've addressed are a rarity to start with.
ReplyDeleteWhether you like interacting with people and clinching business deals, or prefer the joy of creating something on your own is a matter of personal preference.
Look at the 2 links in my post-the short of it is I was pulled back from the airport at the last minute before a flight to China, and was forced to lie about my experience during a client interview. This from no less than Wipro.
It's also about corporate culture and what you're accustomed to. I would any day choose a company that values technical expertise and where you are not answerable to clueless people who got to managerial positions. (I'm also an MBA from a high ranking institute, btw)
People starting their careers in such companies are less likely to rebel against such conventions because they haven't really seen any other kind of work culture.
Ranjit, while you are correct in saying that these Indian mega companies created the Great IT dream, your reasoning for that is, IMHO, faulty.
ReplyDeleteI admire your grit to become one of 3000, but pause - would you rather work somewhere where you are interested, and know what you are doing? Or would you rather just go with the flow and land up a job because it is 'comparatively' simple and gives you a 'good' salary? Though I agree the latter is important, it is also necessary to note that one needs to be ethical in whatever one does. That said, anythign is fine if you are OK with it.
When you build an economy on BPOs, you expect layoffs and a slowdown depending on the obvious triggers. At that time having slogged your a$$ off earlier and becoming memorable in the crowd of 3000 matters a whole lot. (And correct me if Im wrong, but dont these engineers also use C, C++ etc?). For the Great Indian IT Revolution is basically a well developed, high end extrapolation of the BPOs. And, slowing down.
If you enjoy working on new things, rather than what is known in Hindi as "gadha majuri" or "repetitive work", when you prefer innovation to operations, you'd rather be part of the 350 you mention, not to be the one that stands out, but because you fit in. Its only after that you think of excelling.
To be fair, there are a lot of people who like operational day to day activities, and Thank God for that. Else there would be no functioning mechanism for the world. But then their monotony should be broken by the employers (demanded by employees) by an innovative project and a chance for shifting later in career. These can be the 3,000 who can grow the volume of the 350 to the next 1,000. Why would you want only 350 ppl in innovative development when the requirement of the world is so much more?
Let the more developing and cheaper economies take over when we evolve and move towards higher end, irreplaceable work.
Companies can hire who they want, when people are willing to be hired n fired.
Let S.Africa, China, Australia take over offshore client working while we Indians move on to developing Patented codes which clients would BUY. I think Indians are smart enough for that.
Wouldn't you agree?
PS - after being the 10 recognised faces in the 3000, where will you go? Will you do client servicing for the 30 yrs of your career life, living in cities as per the location of the customer?
I think most of us who are writing here are from software background.
ReplyDeletepeople, just look around in the other industries.
Mechanical industries it's common.
performance has to be the criteria.
look around in the farms, people work on daily wages but everyone wants job guarantee and even farmers want good workers. every year we have at least 10 new people joining us with strength remaining same. some of you may talk about attrition here but firing is major reason.
Engineering is traditionally known for it's approach and attitude than knowledge. SO degree does not make a difference mech , comp immaterial . attitude is something which we need to bother about. and that is a real cause of worry.
w00t. I totally agree with Rex.
ReplyDeleteFine, if you love managerial jobs, meeting new people etc because that is the beauty of life, fine.Your choice.
On the other hand ,there are people who think coding something new and creative is the bliss in life, yup, we look for jobs for the love of it. I would definitley hate to be in a *normal* company like Wipro or the IBM thingy in India doing nothin but menial jobs .
There was an editorial long ago in a mag. called Chip (circa 2000). It talked about how software companies are happy to work on morsels of food thrown by larger companies (Read "outsourcing" ).
Someone was talkin about the Great Indian IT dream. Crap. A country with a billion people boasting of its IT whatever doesnt even have one software worthy of mention.
Quick. Name 10 softwares you use daily? Well, how many are Indian? Huh?
Well, my dream would come true the day something groundbreakin is done by an Indian software company, not individual.
And as long as companies recruit from collges just because he/she knows howto operate a computer, this WILL be the situation.
IBM was completely justified in ending the party of these people.
The mistake was of the recruiting division and the students.
Dips, you had some real interesting points there. I do agree that we have to move to the world of products and patents and do the so called 'higher-end' jobs which would rake in more moolah and also satisy the appetite of the eternal 'techie' . Having said that, we can't overnight become cutting edge product based companies.All Indian IT companies are seriously attempting to do and foster a culture of innovation in their ranks. And there are lots of examples wherein they have actually come out with results.
ReplyDeleteNpower> And why exactly is that we don't have those product companies to boast of ? I thought we had the best tech brains of the world in IITs here...who stopped it's alumni from starting product companies in India and making it big ? Wipro or Infy ?
Guys, I guess it all boils down to an often let down idea of 'dignity of labor' . We have to understand that even the rickshaw puller on the road is actually doing a meaningful job and making a difference to the world around him,however big or small.
All the guys in BPO are actually doing tremendous jobs making lifes of ppl around the world simpler and driving some changes in their clients lives.
Except perhaps Entrepreneurs , everyone of our jobs can be easily boxed. The IT guy would say the BPO job is mundane, the product-IT guy will say services-IT is mundane,the MBA would say all of IT is mundane, the MBA-marketing guy would say MBA-HR is crap, the CXO would say junior MBAs do dignified 'peon' jobs...etc..the list goes on and on...
And do we think China would have become the power to reckon with it is today , if it had said that it wouldn't do any of the mass manufacturing jobs that it does today and do only marketing work while making goods in African nations ?
As Indians, we have this nature of immediately carving a hierarchy of anything and everything that we come across, be it relationships,be it jobs. But in the new age economy , where the world is essentially flat , we should start learning to think and live in a non-heirarchical fashion sooner in out own interest.
oops...And it really seems that Indian IT giants are tigtening up their scrutiny on freshers !
ReplyDeletecheck this :
http://techstreak.wordpress.com/2008/01/25/suicide-at-infosys/
Wonder why none of the mass media picked this up ...I called up my friend in Infy mysore to check and he confirmed this.
I find it amusing how any attempt to point out the lack of technical innovation in this country rapidly devolves into a spirited defense of the existing state of IT(outsourcing, namely).
ReplyDeleteNo one denies the economic benefits of IT, the jobs generated by Infy/Wipro and so on. Innovation does not have to be at the expense of the existing IT setup.
You want to know why we don't have an Indian Adobe or Google or IBM? Try this- risk averseness of the Indian business community.
We don't have a strong culture of entrepreneurship either-again a venture that's fraught with risk.
Developing a software product takes time and money; you can send it to market only after you finish developing it. You also have to market it and hope it sells enough copies to break even and turn a profit. Quite different from outsourcing and consulting where you have a signed contract before you embark on a single line of code.
How often do you hear of smart school/college kids(Ankit Fadia deserves a mention) who created some software and then actually tried to start a company to sell it? Nope, their ideas get snapped up by bigger companies.
And the Indian IT companies, well, they could try setting aside some of their great earnings (at least before the recession) for R&D, encourage employees to come up with their ideas for interesting software that every day people can use; as opposed to huge ERP enterprise products.
Knowledge is power. Today, ISRO has geosynchronous satellite launch capabilities, and can offer commercial satellite launch services for other countries. The LCA has flown test flights, and proven itself as a versatile multirole combat interceptor.
These are largely the result of R&D by our own scientists, driven by our country's need for self reliance in matters of defence and space technology. After all, we could always buy Russian fighters and depend on other countries to launch our satellites, why bother with our own?
So why do we have to remain at the low end of the value chain when it comes to IT? (Why IT alone, the state of R&D overall is pretty bad)
Why is it ok to remain content just providing 'cheap and best' IT services?
We cannot sustain the cost factor as an advantage forever. Already the rupee is strengthening, in future we may lose out to other countries that are willing to do it for even cheaper.
Like it or not, intellectual property and patents are the new strategic assets for competing at the global level.
It is therefore critical that we innovate, invent and create new products and improvements to peoples' lives (again, I'm not restricting this to IT).
And finally,returning to topic, I reiterate my original comment
If you love computers and technology first and foremost, stay with product development.
Regrettably, people in the above category are extremely few in this country; I only recommend this for them and not as a panacea for everyone.
If making money or going abroad is your primary goal (again, most of the people one encounters are of this category) go ahead with the project based companies by all means.
Be prepared for more bull$#@t like I had to face, though.
Caveat emptor.
It is an inherent risk with services companies. Product companies fare better on this front, as their needs are dictaded by the market and they deal directly with customers and product users. The focus on quality of software produced is much more as a bad product has a bigger impact on the company and for less risky jobs they eventually outsource. This is what eventually goes to services companies and the quality of software engineers they need is hence lower. This has a two effect and the work quality and capabilities of engineers in these companies also comes down a bit.
ReplyDeleteHello Rashmi,
ReplyDeleteHope you doing well. We have interacted earlier with regards to the Malaysia FAM trip. Well, I am a blogger too, and handle Tourism Malaysia and am looking to do some promotion for the Malaysian GP on March 23rd. I am specifically targeting bloggers/sites, and being a blogger myself, I know the power of blogging. So I thought why not do some thing for the blogging community in India.
I searched your blog, and didn't find the number of visits/pageviews you get each month. Would request you to let me know the page views of your site and the number of feed readers. Would really appreciate a favorable response.
Regards
Bhavika Jhaveri
"It is an inherent risk with services companies. Product companies fare better on this front"
ReplyDeleteooooooo...lots of assumptions here. its a common mistake to think of microsoft as the product company and infosys as the services company and then compare!
do you have any idea how many product companies have gone bankrupt???
do you know that the software which goes into launching satellites is written by a services company? though not a desi one!
you can choose to work anywhere as long as the work is good. its just that the % of work is better in some companies while its more of crappy work in some other companies. but trust me...product and service companies are a different ball game altogther.
btw...have you heard of finacle?
Well, I am a manager, and NOT in an industry even distantly related to software. Pharmaceuticals.
ReplyDeleteWe have attrition too, especially in lower levels (graduates) and in scientist levels. A lot for scientists. The reason is not firing, but that they are too good. International companies are wooing them with salaries that touch the roof - getting a 100% raise on a jump is normal even for joining a competitor. Because they are developing innovative products. Because though Indian companies are known for developing "copy" medicines, they are doing it exceedingly well. So well infact, that the same technology is being used to make "new" medicines. Billion dollar research worldwide uses methods and technologies made by Indian scientists and the patents are in these peoples names.
They get paid well (by pharma standards at least) and travel to exotic locations.
They can also stick to working for the US and European companies, doing back-end research and keep earning a lot, and travel and "meet" people, etc. But they have managed to develop an expertise - new product development. And renowned for that worldwide.
Indian companies trying their hand in development of products have started, and licensed or sold their products to big companies when they lack the funds to continue research - this is a reality. India does not have the money inflow to risk billion dollars on a product which MAY earn them a few million. So they sell it. That is OK, because everyone knows it started in India. Many companies have failed and died a quiet death - not only in India, but everywhere - even when they had the money.
Indian companies will do better, more often as time goes by, because they have started.
I refuse to believe that this is not true for IT. That Indian minds cannot develop software or new methodologies and sell them to biggies. Each "techie" is a scientist in his own right - when he thinks. Else, he is an engineer on the shop floor - assembling car parts.
Sure, product development companies will fail. Otherwise its no product development. But there will be those that do well, and can sell their products to bigger companies when they cannot take it forward due to genuine reasons.
There are many organisations in India which support start ups. incubator facilities, Parks, low price conferences which make the techie and the investors meet. Low risk for techie start-ups (Rs 2000 initial fees to start own company with private interest from Wipro and TCS to help them) - as long as the idea is good.
The response has been weak. I wonder why. Is it because those brilliant minds out there are numb by slogging on the requirement of a stupid client who changes their mind every Monday and wants an insane delivery schedule?
Or it is because it is frightening to think what will happen if they *gasp* dont make it after working on their own product for a few years - not earning much money on the way.
Well, for the latter - I am sure once you have worked on developing a product with reasonable logic, International companies (if not Indian) will be happy to have you, with substantial salary. And - about the travelling the world bit? You have your life to do that. No need to have a baby born in the US, is there?
What infy, wipro and TCS did made a lot of sense - to the owners of the company. They want to increase their sales, their income, and meanwhile help the great unemployed Indian diaspora to get jobs which earn them money. Thats what so many car companies and other labour companies have done over centuries. Education is no factor here. You are working in a factory. That did not mean everyone joined them. What it meant was, there was a division - many joined them and some others joined the R&D labs. The choice, I think, remains with the student - all thats needed is removing the false veneer that working as a "techie" in a big company is what a decently educated young person does.
I wish the media would pay attention to the large no. of smaller software product companies that exist. Just come to Koramangala in Bangalore, there are several right here. NDS, for example-a UK based company that produces firmware for set-top boxes and is a world leader in this space.
ReplyDeleteThere was another one-I've forgotten the name-that was developing a new kind of firewall software.
If only these companies also got a share of the spotlight, and the various career advice columns in newspapers would also focus on the benefits of working for a small and product based company, the general perception of the IT industry would change as everyone realizes there is more to Indian IT than outsourcing the Infy,Wipro and TCS way.
Speaking to SC- I know about Finacle. I was specifically talking about end user software-the kind that you and I can use and relate to. As I said earlier, where's the Indian version of Google (the company, not the search engine) ?
College kids working on computers are a creative lot. Ask them for ideas for software, and you'll hear stuff related to gaming, or hacking or web 2.0-in short, everyday things. I'd be very surprised if one of them started talking about making the next ERP package.
This creativity is worth squat if you join a regular services company where you're just writing software that powers vast enterprise level applications that directly mean nothing to you. YMMV.
Again-I'm addressing those who love writing software, who end up directly using what they create, so therefore are more involved in it and can relate to it better.
The TCS variable salary cut was a gimmick which will backfire. Cognizant has released a strong quaterly and annual result and so will Infy. Dunno abt Wipro.
ReplyDeleteTCS had margins presurre and its decesion to cut variable was a gamble. kindof a signal to other IT companies. But why wud others take it?? infact check mark my words, TCS will have a mid year revision this year..
http://triplemsworld.blogspot.com/
ReplyDeleteThis comment has been removed by the author.
ReplyDeletei wouldnt blame it all on the employers .. Company's hire to maintain the attrition rate n as a budding enterpreneur i face it in my day to day life ..layoffs increased because hiring tactics lost its quality but escalated its volumes.. thanks to the recruitment industry!! so far as a degree is concerned i dont think that matters so far as you know your subject.. its not about writing few lines of code anymore its about agile development .. its about how fast and creative you can be .. and how good you sell yourself.. ppl fail to realise its certainly not about working in an MNC or an SME wat matters is that you dont end up being a spare part in a 9 to 5 job.. value your job before others do it for you..
ReplyDeleteAnna University, Tamilnadu has ordered all its constitutent colleges to start cmapus recruitment only from the 7th Semester. Already lack of quality teachers in engineerig institutes - is creating a big problem for the recruiters (IT in particular). I believe that harsh measures like what Anna University, TCS did will make the students a bit more serious. However I know many candidates who do not attend Infy as they fear their training-exit policy. That is a big risk these companies would be taking then. But if everybody other company follows them, we would get quality students out of campus
ReplyDeleteYup, fellow tech 'associates'. The bell tolls, all right. Ding and then dong, to boot.
ReplyDeleteRohan
http://daily-humor.blogspot.com
BANKRUPT USA AND STUPID ASIAN CENTRAL BANKS
ReplyDelete(PATIENTLY READ THESE THREE PARAGRAPHS FIRST)
Joe Smith of USA started the day early having set his alarm clock (MADE IN JAPAN) for 6 a.m. While his coffeepot (MADE IN CHINA) was perking, he shaved with his electric razor (MADE IN HONG KONG). He put on a dress shirt (MADE IN SRI LANKA), designer jeans (MADE IN SINGAPORE) and tennis shoes (MADE IN KOREA).
After cooking his breakfast in his new electric skillet (MADE IN INDIA) he sat down with his calculator (MADE IN MEXICO) to see how much he could spend today. After setting his watch (MADE IN TAIWAN) to the radio (MADE IN INDIA) he got in his car (MADE IN GERMANY) and continued his search for a good paying AMERICAN JOB.
At the end of yet another discouraging and fruitless day, Joe decided to relax for a while. He put on his sandals (MADE IN BRAZIL) poured himself a glass of wine (MADE IN FRANCE) and turned on his TV (MADE IN INDONESIA), and then wondered why he can't find a good paying job in.....AMERICA.....
SUMMARY
USA does not produce any real goods. They import every thing from Asian countries just by printing dollars or tbills which is effectively a promissory note that at some point in the future they will pay us that value of money back by exporting goods to us and buy back those dollars. The accrued debts of USA as of Feb. 08 are nearing 10 trillion dollars (i.e. 10,000,000,000,000 dollars). There is no way USA can produce so much of goods to pay off those debts. Yet our insane policy makers keep loaning to USA.
Majority of Exports and imports of all world countries are transacted in American dollars. If a country’s exports are more than imports then that country will have a trade surplus and naturally the currency of the trade surplus country will appreciate against the dollar. (Eg. If we require 100 dollars to pay for our imports and we have 200 dollars from exports, then the situation of the exporters who would like to exchange dollars for rupees will be “dollar vangaliyo dollar” Narpathu roobai dollar muppathu roobaikku and so on). This is basic economics as the supply goes up demand goes down. When demand goes down price automatically goes down.
Come to the case of USA. As everybody knows USA has been importing more than what they were exporting, for decades together. Then how come their currency is having more value than our Asian currencies or simply put how is the US dollar defying the law of gravity. What is going on in the world markets? We shall see how India alike other Asian countries is contributing in keeping the dollar value up.
Let us take the case of 2007 where we had dollar surplus despite our trade deficit due to NRI contributions and FDI inflows. The excess inflow of dollars being around 120 billion of which RBI bought up around 100 billion dollars and added to our forex reserve thereby preventing wild devaluation of dollar.
From where did the money come to our RBI to purchase those dollars?
Never in the history of India did we have a surplus budget (Our central governments expenditures always exceeded the revenues collected by ways of taxes). We are already struggling to meet the huge funds required to improve our much needed infrastructure. Then from where did RBI get those rupees to buy the excess dollars the exporters are bringing in. Simple. We have a technology called printing press at Nasik. Upon instructions from our Govt it can print as many rupees as the RBI wants.
The printing presses start creating the rupees required to buy those excess dollars from the market at the expense of paper and ink only. This is called M3 supply. (M3 supply =legally genuine but morally govt approved and printed kalla nottu). Now the RBI buys those excess dollars in the market with the newly printed rupees. Then it loans those dollars back to USA by purchasing treasury bills (similar to a fixed deposit) of USA so that America can spend that money again.
In one way our govt is right in doing it because if it doesn’t do this then our stupid Asian competitors whose central banks are also doing the same idiotic thing will become more competitive than us and since dollar is the widely accepted currency for trade with other countries as well, all our exports will be in jeopardy. Our domestic manufacturing industries will not be able to compete with cheap imports.
So easy? and after all a good cause. Then why don’t they keep on doing it forever. How silly they allowed the rupee to appreciate by 15 percent last year. The real reason why they could not keep on printing new rupees and exchange dollars forever is INFLATION.
Okay we will analyze it in two scenarios
Imagine a first scenario where all companies in India stop producing real goods and start doing software jobs to USA and rest of the world and let us assume that all companies run successfully.
Then in order to keep the value of dollar up our stupid reserve bank must keep on purchasing those incoming dollars by printing money out of thin air as if there is no tomorrow and truck loads of newly printed money ( Govt approved kalla nottu) will be chasing the very few goods produced. The end result being hyperinflation. The proof of this is soaring prices in real estate markets, gold, crude oil etc etc.
Alternatively imagine a second scenario where Muhammad bin thuglak comes back alive and somehow becomes the prime minister of India and some crazy guy like say lallu becomes his finance minister and they find an innovative way to eradicate poverty from India by legally printing and supplying 10,000 rupees per month per family in India. Then will anybody do farming, will anybody sit in streets and sell vegetables, will anybody do the laundry work, will a barber work in a saloon. All essential common man services will come to a grinding halt. Again there will be too much money chasing too few goods causing hyper inflation.
USA is borrowing and enjoying, all those goods we Asians toil and produce, due to the stupidity of our Asian central banks in maintaining such a huge exchange rate differential. In USA average salary in software industry is 6000 dollars. At today’s exchange rate it is equivalent to 2.5 lakhs rupees per month. With those 6000 dollars he can enjoy 2.5 lakhs rupees worth of Asian products and have a very high standard of living. The American govt will print dollars and give it to us for all the imported items he bought in the market which means that some day we can also purchase goods from USA with those dollars. But what real goods do they produce? Nothing because they have off shored almost their entire manufacturing capacity to china, India and all Asian countries. Tomorrow if all Asian countries try to buy some real goods from USA with those dollars they will come to know how big a cheat and bankrupt USA is. Russia is cleverly buying gold from USA by using dollars that is why price of gold is soaring from 250 dollars to 925 dollars within a year.
Our Indian software industry is also making abuse of this exchange rate differential. They say in America you pay 2.5 lakhs per month for a techie okay we will do it for one lakh. You have a cost saving of 60 percent and they pretend that they are very fair even though they are aware that the exchange rate differential maintained due to the M3 money supply will create disparity in the Indian working class.
Now they have one lakh in revenue for a person of which they don’t mind giving 50k or 60k as salary. They attract best engineers to do the very basic testing and coding works which they could have very well done with science graduates for a meager 5k to 10k per month. They are not bothered about distorting the balance for the rest of the Asian manufacturing industries who are unable to pay such hectic salaries. The top management of every software company is aware of the exchange rate differentials. They simply don’t bother because RBI is always there to print rupees and exchange for dollars. Further if techies salaries go down then the top management Walla’s salaries must also go down. This is not acceptable to them. They create an illusion that testing and coding are so brain storming and there is a talent crunch in India. They covertly encourage attrition by not even insisting on relieving letters which is a violation of basic ethics and justify wage hikes.
The disparity in salaries these govt approved and printed kalla nottus (rupees handed over to software companies for exchange of dollars) have created is so huge that a bank manager with around 20 years of experience and working 12 hrs a day for 6 days a week and terrible responsibility draws only 60 percent of the salary a tester (leave the programmer) with two years experience and probably spending half of the time in bench draws.
Now it is high time realism is starting to kick in. Gone are those days of illusion that testing, coding are super brainee jobs. They are very similar to assembly line jobs in a factory and don’t deserve such hectic pay. News of software companies hiring science graduates are popping up in every nook and corner. Hope you remember software and other exporters screaming for RBI to intervene when rupee appreciated 15 percent last year. This is because their kalla nottus were creating huge inflation and the RBI decided to stop exchanging govt approved and printed kalla nottus to dollars for a while and the inflation promptly came down from 6.5 percent to less than 3 percent.
At some point in the future if the Asian central banks realize inflation is getting out of control due to their stupid practice and stop buying dollars thereby allowing their currencies to appreciate then all bets are off. Lots of salary cuts and termination news, just like what Tcs and IBM did in the end of Jan 08, will start popping up.
The economy of USA is in no good shape either. Just to keep their economy afloat or worse just to pay the interest of their debts they need to borrow around three billion dollars every day from the rest of the world. Day by day bad news is pouring in. There is no field without a mention of huge layoffs in USA from the beginning of 2008. Being an economy where two third of GDP is consumer spending, if unemployment goes up then consumption goes down in turn collapsing the businesses and their offshorings.
Take the case of a boxer who is infected by HIV. Every thing looks great with him. You cannot know that he is affected by a killer disease unless and until symptoms of the disease starts showing up.
USA is very similar to the HIV infected boxer and now for the symptoms part of goliath’s (USA economy) death.
1) World Bank and IMF have already warned that dollar might collapse any day due to their unsustainable debt.
2) Subprime related problems are hitting the headlines.
3) All banks in USA are writing down (Decent American version of saying “lost the money”) billions and billions of dollars.
4)World’s largest bond insurers Ambac and Mbia are already downgraded from AAA to AA Grade which will in turn erode away huge part of capital from the world’s largest American banks pushing the largest consumer economy (As Americans themselves feel proud to admit) into far far worser situation than a mild recession which is called depression.
Even if America somehow manages to keep delaying the entry into the inevitable depression from mid 2008 to 2025 or still further, there is still terrorizing news.
“THE ULTIMATE AMERICAN DOLLAR COLLAPSE”.
Due to the huge risk involved in the erosion of the value of their forex reserves every nation wants to get rid of the devaluing dollar. The only thing preventing them from doing it is the fear of the central bankers that like stock market crash if any one Asian central banker suddenly tries to sell off their dollar holdings, then everybody will panic and try to dispose off their dollar holdings and the depreciation of the dollar would be so fast that within one electronic trading hour the value of the dollar might change like this
Prior to Dollar sell off 1 dollar = 40 Rs
After Dollar sell off 1 Rs = 4000 dollars.
(This is no exaggeration. I would like to challenge any sane person to prove me wrong).
For a country like India it would mean that all those two hundred billions (20,000 crores) of dollars or so bought by our RBI as forex reserve would become worthless within a matter of minutes. Similar is the case for Chinese (1,40,000 crore dollars), Japanese (1,00,000 crore dollars), Gulf countries (3,50,000 crore dollars) and all other Asian central bankers.
Yes of course nobody wants the value of their dollar holdings to go down. No sane person will try to sell off their dollar holdings suddenly. But the situation is alarming. Every Asian central banker is watching his counterpart with nervousness if whether he would start the sell off. Nobody wants to start this but once started nobody wants to be the last in getting out of dollars for the more later they get out the more worthless their dollar holdings becomes. This is what our reserve bank governor, Indian finance minister and prime minister mean when they say that global uncertainties are looming.
So techies who dream of 17 percent wage hike every year till we match American wages, please be aware of the reality and be prepared for the changes that might suddenly turn up. Bear in mind that your profession might be very similar to a cinema heroine’s career. However beautiful she maybe, the most talented actress, okay. Few years down the line when new beauties turn up the tendency would be to avoid the old heroine.
Similarly when new talents are available in the due course of time and rupee appreciates further the company may treat you like a liability or replace you with a cheap fresher. The recent news of TCS planning to debut freshers onsite is a classic example of what is in stake for the future. Don’t get carried away by current illusions. Start saving now and avoid getting into huge EMI loans. If you are a male get married soon because right now girls both from your field and other fields prefer you only. They are not aware of the risks involved. This situation may not last long. When USA goes down you will end up jobless and will become the least preferred. Act fast.
Especially brides who will not even consider grooms from other fields
Idhae linelayae mapillai parungappa,
Padhinanjayiram sambalathai vaichukkittu enna perusa sadhichuda mudiyum,
Akka veetukarar softwarela ambathayiram vangurar enakku pathayirathula mapillai partha naalaiku Yivarum avarum onna parkum pothu Yivar manasu evvalavu sangadapadum
And all those dubakkurs
If you are still going to be adamant “MAY GOD BLESS YOU”.
STILL NOT CONVINCED? OR YOU ARE IN ONE OF THE FOLLOWING CONCLUSIONS.
1) SOME NON IT JEALOUS FELLOW BLABBERING?
2) USA IS A SUPER POWER. ALL COUNTRIES ARE DECADES BEHIND THEM. THERE IS NO CHANCE OF USA FAILING.
3) I HAVE BEEN TO USA. IT IS THE RICHEST COUNTRY IN THE WORLD. I WILL NEVER BELIEVE THIS ARTICLE.
4) EVEN YESTERDAY I SPOKE TO MY BROTHER IN CHICAGO. HE SAID ALL THESE THINGS ARE RUBBISH AND JUST FEAR MONGERING.
Ha ha ha
REMEMBER LAST YEAR WHEN RUPEE APPRECIATED BY 15 PERCENT THE EXCESS INFLOW WHICH THE RBI DID NOT BUY WAS ONLY AROUND 20 BILLION (2000 CRORE) DOLLARS AND AMERICA HAS A BUDGET AND TRADE DEFICIT OF 1500 BILLIONS EVERY YEAR WHICH MEANS LOTS AND LOTS OF DOLLARS WILL BE POURING INTO ASIA.
NOW ENJOY THESE TWO LINKS AND FEEL THE CHILL SHOCK WAVES FLOWING DOWN YOUR SPINE.
http://www.youtube.com/watch?v=3RhnHo3RDfg
http://www.youtube.com/watch?v=jmeHiFZUWtE
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