I am taking my chances in forecasting which even biggies avoid to do !! I want to talk a bit about the current stature of IT sector in India and to where, we as a country, are heading towards.
India is the hub of outsourced work in IT and ITES all around the globe. The presence of lacs of English speaking (no matter how broken it is) and techincally sound work-force. So it is definite that we will remain a very strong-force due to these characteristics. Also, I do not think that we are going to loose our ground to China or anyone else. They are a potential threat but not that big that it cannot be tackled. We have mushrooming Universities and Engineering Colleges all around the nation. People have got money in their pockets, market has more liquidity these days and people are ready to send their 'ward' for higher studies. Slump in US and high paying jobs in India is tightening the bottleneck for brain-drain. Good symptoms all around in the urban lifestyle.
But we were talking about the future of the IT/ ITES sector. The currency difference is one of the major force in deciding the compensation for employees by the companies. A couple of years back when the 1 USD was touching Rs.50, industry had 1:6.75 profit margin ratio which fell down to 1:5.25 when USD fell to Rs.43. A huge drop in the margins for the companies.
We would not talk about or reason the gowth in the sector and the current compensation trends. Lets assume this is reflecting as per the profit margin ratio as of today. Now try to visualize the scenario where the USD is dropping day by day because of its aggressive involvments in contentious issues and ever strengthening Europe.
We can also see INR growing and gaining ground against USD. It is very good in overall perspective of the country but where does the IT sector's profit margin ratio will go. USD losing and INR raising will do a balancing act and the compensation will be consolidated as a result of this. I suspect this scenario can reflect similarly in other service sector industries as well.
On the basis of above said things, I can definitely assume that consolidation in IT sector is about to come in next 10 years (timeline is a hypothesis). And to keep the wheel of development moving India would need to evaluate options to move into Manufacturing and Tourism big time. And just like US we will need to rush in technologically advancements to be able to cater to world and earn. Infrastructure and Education are the future of India.
