Monday, March 19, 2007

IT Re-Investment: Prospects For Future Growth.

In a keynote address speech at a Leadership conference in Mumbai six weeks ago Nobel laureate Economist Amartya Sen urged India's IT industry to re-invest some of its recent spectacular financial windfalls into helping the country.

He encouraged investment in education programs, infrastructure, and further in a general spirit of public altruism that the IT sector had yet to demonstrate. Such investments Sen argued were in the best interests of these companies' ongoing success.

Sen's comments speak to current events across India.

Supply side bottle necks currently plague a booming Indian economy. There are presently simply insufficient skilled workers to satisfy an enormous demand. Faced with labour shortages companies are aggressively vying for highly sought after personnel. Bidding wars for scarce talent have seen a dramatic rise in wages in select fields, fueling an already alarming inflation rate that may threaten to undermine all of the success so far achieved. Meanwhile this inflation reflected in a rising consumer price index has translated into an increasingly unmanageable cost of living for the vast majority of the population, the unskilled poor left outside of India's economic miracle.

The Economist reports the uneasy relationship of development ventures in resource rich but otherwise traditional agricultural areas. The drive to create specialized economic zones for new industry through Eminent Domain in rural farmlands has further pushed a wedge between landholders stripped of very old property rights and large industries seeking to grow. The conflict appears to lie in the perception that development in these areas does not promise sustainable returns for landowners' sacrifices. The article appears to su
ggest the current Naxalite uprisings are a symptom of the collective insecurity arising out the rising disparity between rich and poor: the growing pains of a necessary nascent industrial expansion.

In this current flux there signs of hope taking shape in ventures that Sen argues is the way out of the current impasse.

The Guardian reports recently of a new venture sponsored by IT giant Satyam to tap into the unrealised potential of the rural poor population using the established success of the call center business model. Half of the Credit goes to
Ramalinga Raju founder of Satyam and the non-profit organisation, Byrraju Foundation that underwrites this venture.

What began as a fairly typical NGO development project to improve standards of sanitation and education in a underserved community morphed into something far more broad sighted as the article quotes co-founder Verghese Jacob:

But it rapidly became clear, recounts partner Verghese Jacob, that lasting health gains were impossible without better education and sanitation; and that even together these advances were at risk unless they could be locked in place by new village livelihoods. The foundation now espouses the larger intent of securing 'holistic, sustainable rural transformation' by releasing human potential.

The project is already showing great promise in its pilot ventures, 3 call centers in remote parts of Andhra Pradesh. Costs are low, employee turnover is rare and remarkably the quality of the work is on par or better than in urban locales. The association with Satyam has already meant that the prospect of introducing economies of scale is not far away. This is not charity. This is as Sen has brilliantly argued good business.

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