Monday, December 10, 2007

Bengalooru Bangalore-d

These are not the rosiest of times for IT companies. Their profits are being squeezed by a rising rupee, they face high rates of employee attrition, they have come in for sharp criticism from the Health minister for the working conditions to which BPO employees are subjected and their stocks have lost some of their sizzle.

Now, they are coming for in flak from the city with which they have come to be associated and which they claim to have placed on the international map, Bengalooru. Outlook magazine has an interesting story by Sugata Srinivasulu on how IT companies and their employees are being viewed with disfavour by many in Bangalore.

The world's most celebrated IT city is now considering that privilege to be a curse. Infosys and Wipro are no longer considered gateways to heaven, but more as roads to hell. When Infosys's Narayana Murthy was charged with showing 'disrespect' to the national anthem, there was a glaring absence of sympathy for the IT czar in the public domain, whereas earlier there would have been a tidal wave of support. Likewise for Wipro, when it was charged by a government panel of encroaching upon Bellandur lake to build its guest house. Another time, when the state government proposed to set up an education training and management institute with the Azim Premji Foundation, there was a letter campaign against it. There is now a perceptible change in the way the public in Bangalore looks at Murthy and Premji, the two most revered symbols of its IT industry—that they're no different from other businessmen who merely make profits for their company and their shareholders.

Well, well. What precisely are the grievances that people in Bangalore have against IT folk? The litany of complaints includes: rising property prices thanks to the IT employees' purchasing power, grabbing of prime land by IT companies, the bar and disco culture and IT employees being preferred in the bridal market.

There is a clear divide between other middle-class professionals, including the many in the public sector, and the IT employees. Those on the former side resent the rise to prominence of the latter.

The feature set me thinking. There are other professions that pay even more- the financial services sector, for instance. How come we do not see a similar resentment towards investment bankers and private equity people in Mumbai? I guess that's because partly the city is not yet identified with these professionals, they are not that numerous and, besides, in Mumbai, there are other sectors that absorb people and pay well.

IT dominates Bengalooru in a way in which other sectors do not dominate any metropolis and, also, the disparity between a dominant sector and other sectors in any city is not as great. If the proposed International Finance City materialises in Mumbai, we can expect an even greater backlash than what we are seeing in Bengalooru today.

A second reason could be that IT does not have the same linkages with the domestic economy. Finance professionals create prosperity in companies they take public, the stock market benefits thousands of shareholders. IT is seen to benefit only the people in the sector and nobody else. True, as Subroto Bagchi points out, IT creates benefits (such as declining telecom costs) but these effects are indirect and not as visible, hence the resentment.

Thirdly, to some extent, the prosperity of IT and its employees is seen as coming at the expense of the economy. IT companies have benefited from huge allotments of land at concessional prices, they benefited from an undervalued rupee for over a decade and they benefited from tax concessions as well. The charities made by some IT personalities are seen as poor compensation for the benefits earned.

So, what do we do? Throw IT out? Not at all. Can greater philanthropy help? To some extent, maybe- for instance, a classy university run at affordable prices on IT endownments might help assuage popular sentiment.

But the biggest corrective, I reckon, will come from the very economic environment that created IT's prosperity- no more concessional land, a decline in profitability from a rising rupee and its attendant costs (including layoffs in the IT sector) and a greater focus on the domestic economy on the part of IT firms in the face of a rising rupee.


ggop said...

Good article - I liked the comparison with the finance industry in Mumbai.

But how about middle class people who have made a killing in the stock market buying stocks in the big IT companies? Surely, they have done well for themselves or are they too few to matter?

SK said...

You're right in pointing at the domination of the IT sector and the disparity between them and the non-IT employees as a cause of the resentment. And the IT companies themselves CAN and SHOULD take measures to manage their image(s). But isn't the root cause more in the FUBAR way the govt has handled IT growth in the city?
As far as the non-IT guys are concerned, all the IT guys have done is:
1. Make them combat fierce call center taxi's on the way to work
2. Increase the wait time in restaurant lines
3. Strain the city's infrastructure (roads, parks, water table, electricity, trash collection etc) beyond breaking point
As you note, they have started to resent the noted Gandhian and Premji amongst others, but their resentment - I believe - is misplaced.
But there is no point doing so. Corporations should and WILL take advantage of available govt policy and sometimes even loopholes. It's the govt that has to balance out these incentives over time, spread the growth around (geographically and socially), and plan to reduce the negative impact on the daily lives of their citizens.
But our politicans (anywhere in this country but even more so in Karnataka) have been too busy running from one party to the next bartering their integrity and soul for a short stint at a lucrative portfolio.
In my mind these power hungry low-lifes are primarily responsbile for the shabby state of the city and the resentment that comes with it.

Some time ago I spoke with a few IT-BPO types to check out what drives them and what they thought about the negative comments made about their types by many (including myself). The result was a tremendously rambly post. Check it out if you can excuse my language -->

Anonymous said...

Very good article. What I liked about most was the THEN AND NOW of IT situation. I have always been concerned about the BPO sector and how the BPO employees can ruin the country in the long gives monetary independence but will they make good citizens in long term...can they make India a great country and help it towards superpower stature...

T T Ram Mohan said...

It's true, as GGOP points out, that IT cos have benefited their shareholders. There could be two reasons why this does not create much of a constituency for them in Bangalore. One, the high prices of the top stocks has probably put these out of reach of most middle-class people. Two, Bangalore itself may not have many shareholders in these companies, apart from the IT employees who have benefited from stock options. Shareholding must be more dispersed in a place like Mumbai.


Anonymous said...

I've stayed in Bangalore for couple of years when it was not an IT capital but only the seeds were sown. The resentment then was against north Indians. Not apparent but very subtle. If you are a north Indian, you would pay a hefty fine for traffic violation while you got away if you knew kannada. An auto guy could fleece you and policeman would support the auto guy. But they were all exceptions and far and few in between. So no big issue there.
This would happen in any city across the country, be it Delhi, Kolkatta or Chennai.
Now for IT guys and non-IT guys, i think there should be something with the Kannada culture that has changed. They are basically nice people who were by and large very warm people. Very easy going people, god fearing and not very flashy. May be all the flashiness is bit too much for them to take any more. Moreover, the infrastructure I hear has gone to dogs. May be the benefits of city growing have not reached locals. Look at Gurgaon or Noida. There too is a divide but farmers there benefitted from higher land prices, better infrastructure has reached most, rather than just Electronic city or campuses like in Bangalore. The IT guys have to pull up their socks and give back to the society and city in a big way but with present troubles it may be a bit difficult. They talk a lot about corporate social responsibility but it appears to be all but a lip service.
If not addressed now, it would be too late and it has all the potential of becoming a divisive factor beyond repair, unless ofcourse IT industry crashes (hopefully not). So industry, government have to do something fast to assuage these feelings before things get out of hand, as has in the past on the issue of painting hoardings and bill boards in Kannada, Cauvery issue and language issues. With hardline politics gaining ground in South, this is cause of worry and a glimmer of hope that it would not spill over in to North south divide but definitely an IT, non-IT rift because they need an enemy to win over votes. This could well be their launching pad!!

Krishnan said...

Envy as always drives human emotions. My guess is that when the IT industry was taking off, people were only glad to donate land, excuse taxes, whatever so "jobs" can come to the city. People forget the economic impact through salaries, spending - the money does not go into some hole - but has obviously shown up in the local economy. Infosys has apparently hired 300 US school graduates to work in Bangalore ... In a few months, I would guess I'd read stories about "ugly americans" and their behavior (even if such behavior was rampant before they got there)

Sentiments about "Northerners" or others - happens everywhere, so it seems. If the city planners are tired of the growth and want to stop handing candy to the industrialists, they should do so - Stop. I am sure there will be other cities that would welcome Asim Premji or others who, yes, are interested in making money for themselves and their shareholders and whoever else they decide to make money for.

May be it is a good sign. Bangalore should start complaining more loudly - Other cities should start planning welcome parties.

No one group has a monopoly on stupidity. I have seen sentiments like that expressed in different cities in the US when certain things go sour and they want to renegotiate everything so they can grab more money.

Unknown Indian said...

The resentment that some Bangloreans express towards the IT industry reminds me of an old story - about how Indian spiders can be stored in an open jar, because no sooner does one try to make it out than the others pull it back down into the jar.

PSU employees being jealous of anybody is a joke - they are grossly overpaid (that too in the form of tax free perks like housing), underworked and have dominated society without adding any value.

And all the talk of IT cos benefiting from free land is also bullshit - real estate is a small part of the operating costs for IT cos. Similarly, the point on the Rupee - the Rupee has become an acceptable currency instead of being a worthless rag due to the revenues from IT exports.

The only valid grouse is on the tax holiday for IT cos - they certainly should pay full taxes.

Anonymous said...

good article - i like the way you bring out the disparities between the IT and the non-IT sectors in Bangalore compared to other cities..

i was pondering along similar lines when i made these notes on my blog ( essay is about a personal choice but reflects some of the things u are trying to highlight in yours..

Anonymous said...

Hmm, i feel the outsider bashing will only get worse..

Mass migration is an issue that the government should pay attention to

Anonymous said...

Data entry work from home in india, data conversion projects from home, ocr based data conversion work, data processing bulk and single pc projects, Ad posting work from home on pay per postbasis, data entry, data typing work from home in india and world wide.
Html tagging, medical transcription,PDF to DOC copy paste work, formatting, article writing, book conversion, and other e library non voice bulk projects. All offline bpo home based online and offline opportunity

Anonymous said...

Thank for good article about bpo industry in Bengalore

Faxless Payday Loan said...

Faxless Payday Loans

jacob123 said...

Here we are discuss about it solutions which i have solution for it problem that i will provide you. BPo Project in India

Cool said...

I liked the way you wrote. Excellent Post. Thanks a lot.
work from home jobs

Anonymous said...

You actually make it seem so easy with your presentation but
I find this matter to be really something which I think I would never understand.

It seems too complicated and extremely broad for me.

I'm looking forward for your next post, I'll
try to get the hang of it!
Feel free to surf my homepage - forex trading hours