How To Become Rich???? Part-1

This will be a long post and require a lot of patience to read,,,

Just think about the years 2001-2007 , where IT job was a top pick among Indian graduates due to various reason :

• Quick money (onsite at USA and other countries)
• 15-20 % CAGR wage hike every year
• Companies were getting big deals due to cheap cost advantage over other countries
• If somebody was losing job , he was trying and getting it in few days with other firm with high CTC J.

Now tell me guys does this things hold true in these years in higher probability. I know answer would be NO.

In IT your salary is directly proportional to billing rate from customer and we all are cyber coolie.Now a days India is not enjoying any cost advantage while  comparing countries like Brazil,Philippines,China(slow but coming days competition will be more) etc.Even Indian big IT giants realizing that and already set up development centers in china. ex: Infosys .Hence day by day billing rate is decreasing and therefore companies trying to leverage this with employee wage. So they are replacing cheap labors (Fresher) with highly experienced labors (experienced). Typically, the idea is to get work done by “freshers” or people with low levels of experience, with oversight by someone who’s experienced (a “project lead”).Its because in IT 2 major costs are its employee wage(comparing to other sector) and software licensing cost.These 2 costs can be avoided but not the rest .

“I remember, almost a year ago, several CEOs of the IT services industry were openly discussing if they needed people with 20-25 years of experience because people with 10 years’ experience are capable of handling these responsibilities,” said Sudin Apte, research director and chief executive officer at Offshore Insights. “Either senior-level skills do not matter now in the changing nature of technology or the senior level is more into management of client relations and technical expertise is required at less experienced levels.”

Also guys I am from IT , and I know learning a skill and working IT is not a rocket science. People who understand English , writes English and speaks English and has zeal to learn can do this.

I remember till 2000 there was no tax on IT .But now days they are suffering with double taxation.

Within the IT companies, the path to glory was common:

1. Go through training program which was essentially what-else-to-do-when-on-bench
2. Be assigned to a project. You’re “sold” to a client saying you know X and Y, when you probably don’t
3. Piggyback on project lead to learn stuff that’s important for the project
4. Code, document, test, learn to write proper emails
5. Get promoted to project lead, when you’ll be helping others do the above steps
6. In three years, make project manager. Now you don’t “code”. Yuck.
7. Your tools of choice are word, excel, powerpoint and outlook.
8. Scale up the management tree of the organization, with your power being how many people report to you

How Things are changing?

While this was happening the reality has changed without the knowledge of IT employees. Earlier a company which was using 3000 servers now moved to cloud which is managed by 5-6 very talented engineers. So mangers are almost not required there .If required also the same manger is managing at least 20-30 projects at the same time. Reporting structure also automated, So he is getting status without any hassle on day to day basis from system.

The start up like Flipkart, Snapdel taking best  freshers with handsome pack from collages.Also companies like FAcebook and google also doing the same.It is because IT folks, by and large, didn’t join the startup revolution, and distanced themselves from the newer technologies that involved doing great things with smaller teams. And that has been a fatal mistake. 

Other IT companies emerged that made themselves niche. A Mu Sigma, for instance, could charge a huge premium, at hundreds of dollars per hour, because they have massive analytics investments that helps their teams deliver solutions to customers faster.

Here I want to give a give Porter’s five point analysis:

The framework for the Five Forces Analysis consists of these competitive forces:

1. Industry rivalry (degree of competition among existing firms)—intense competition leads to reduced profit potential for companies in the same industry
2. Threat of substitutes (products or services)—availability of substitute products will limit your ability to raise prices
3. Bargaining power of buyers—powerful buyers have a significant impact on prices
4. Bargaining power of suppliers—powerful suppliers can demand premium prices and limit your profit
5. Barriers to entry (threat of new entrants)—act as a deterrent against new competitors

IT does not fit any of the above .Though big companies enjoying few advantages but new people starting their own ventures eating percentage of business of Big IT services companies.

Some may argue 63 rupee value will help IT companies to take advantage. My point is it is slowly improving and sooner or later it will regain to 45 . If at 63 rupee value firing is like this , then what would be the situation once rupee will become strong and reach to 45.At the same time in india operating cost price also increasing and taxation is always a burden .

The Endgame Begins: The Stalled Salary Hikes and IT Firing

These things companies realizing and restructuring the pyramid from now .

Ex:Infy did not give hike for several years and mid management people quit company by themselves and it is now manageable. Who are these mid management level people? That created extremely skewed dynamics for everyone that graduated from an engineering college between 1996 and 2008. 

Wipro will slash its employee strength from 1.3lakh to 1lakh.These all are natural. Same with TCS. In the coming days we will see more this like situations. In the recent years 3lakh is new 6 lakh and 6 lakh is new 12 lakh salary.If your salary is beyond 10 lakh you are always is firing Zone!

What these peoples will do?

I heard one of my friend was saying, few are fired and we are waiting for our turn sometime in near future!!! Even I faced this like situation some time back while I was asked to resign by one of my ex employer couple of years back showing these reasons. I will try to address this still I know this is not a perfect answer for this. Still will try to address in rest of this blog.

As per GITA “Change is constant and nobody can stop this.”

This was a question they asked in the US when manufacturing jobs left for China, and then service jobs left for India (BPO, IT Services and so on). This is insane. Technology will displace people from jobs, and has done so forever. We IT people took away the jobs of some manual process worker somewhere. Cars took away the jobs of horse drawn buggies. Mobiles destroyed the whole “Public Call Office (PCO)” ecosystem. Online e-commerce will hurt retail. Uber and Ola will hurt the auto rickshaw.

But the question should be human. Where do these people go? 15 to 20 years of experience and they will get that pink slip.

What we can change at our levels?

Last time when I posted this on Facebook readers give comments like all employee of company should stop working and union.

Do you think, this a real and wise solution?

At least I do not agree. If we do like this, IT will die in this country. All companies shift their operation to cheaper destination other than India slowly.

Do we guys raised our voice when we were getting fat package and onsite couple of years back J so why now?

We could blame the government, but that couldn't do us any good either.

I know this is a debatable topic and by discussing this we will not go anywhere.

Life is reinventing yourself again and again and we need to do that now:

1. Stay Humble: the people who reported to you could be your next boss.
2. invest and create alternate sources of income: “you need to have an life boat (passionate job) side to your ship (main job).In case your ship sinks (lost job), you can jump to life boat and can survive for some time. And who knows you can become an entrepreneur by using this life boat one day!”
3. Keep your debt level minimum: Don’t rush and buy a home or apartment just because somebody else is buying or rent is increasing YOY. See if eco system will break The broader impact is on real estate and discretionary spends (like cars) and local economies (like Bangalore). But that will need a different post altogether.
4. Learn a new skill – either back to code and processes in newer technologies, or in a completely different domain. This could take months or years, but it’s necessary. Few of my friends who are from banks now starts thinking going back to bank jobs because it is slowly booming in India.
5. Emergency Fund: If you are in IT, please make a 2 year emergency fund .

Do you agree with me?

If you have still patience then please read my 3 blogs which elaborate addressing these concerns:

How To Become Rich???? Part-1

How To Become Rich???? Part-2

How To Become Rich???? Part-3

 

Note :

Source of knowledge:

http://capitalmind.in/2015/01/the-inflexion-point-for-the-it-service-industry-long/

http://www.business-standard.com/article/companies/winds-of-change-in-indian-it-services-industry-114121500188_1.html

http://www.marsdd.com/mars-library/bargaining-power-of-buyers-porters-five-forces-analysis/