Saturday, December 27, 2008

Shirts & Pants

"If you think US has lost the shirt in the latest economic downturn. India has lost shirt, pant, underwear, banian etc."

Heard in an informal gathering of Indian IT professionals in the US. Earlier, every time economy here went down a little, IT professional in the US used to say they can always go back to India as economy was booming there. With right skills and experience one could make good money. People claimed you could make almost same money as you made in the US. Like if you made $100,000 in the US, you could make close to 40,00,000 in rupees in India. I do not know how much of it was true. But, these were the kind of figures that people used to talk about not too long ago. Even in 2006 and till middle of 2007. People said - your base will be minimum 10 lakhs plus 2 laks per every year of US experience. I somehow felt those salaries were not justified even if some people managed to get that money. May be for some exceptional IT job. But, for most of the jobs, nobody could pay that kind of money in India and still be making money by offshore work.

Now, with IT industry hit badly even in India, some of the people who had chosen to go back to India are planning to come back to US. God knows what their line of thinking is. Why leave a job in India and come back to US to unemployment? Some people say if you lose job in India, there is no safety cushion like unemployment benefits. In US, at least for a while, government pays some form of money for a few months. It is a different matter that what they pay is peanuts. But, something is better than nothing.

Before I read some news reports, I did not believe that IT could be so badly hit in India. With news stories like Infosys asking employees to take a sabbatical with 50% pay, companies canceling offers they made to fresh graduates, decline in campus interviews, drastic cuts in pay and perks etc. started making me believe that things may not be so rosy back there also.

Earlier companies moved jobs to cut cost. Now they have no money at all to get the job done. So, no question of moving at all. They may even default on their payments to Indian companies if they are being bailed out. Also since most of the new government funding in the US is targeted to revive the internal economy, it is not clear how much Indian companies are going to benefit at all.

Last time financial gurus said, invest more in International stocks, bonds and mutual funds concentrating on international markets. International funds have fared worse than domestic funds. If S&P 500 index has been down by 40%, international indices have been down more than that. What gives?

Fundamental question - was this so called wealth creation justified? Not sure.


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