BY RATI KUMAR
Remember when you would awaken to the sounds of communal lunch packing by Mom at 8 a.m. on a Monday morning? Apparently, those days are back again, sans mother. “I never used to get a lunch box to work; but now I am,” muses Kiran Mudigonda, an employee of the Sun Plus Data Group, an Information Technology based company in Atlanta.
This new trend is less a matter of dietary restrictions and more of monetary ones. “A dollar saved is a dollar earned after all,” he states. His concern is a spawn of the current American recession. Like the weather, this topic has become the beloved of most editors – each day bringing bad news for another business sector. For the Indian population in America, the recession became real when it hit the Information Technology sector.
When software Srinivasa Rao, 30, first landed on American soil in 2008, he did not envision himself stranded on a Friday morning with nothing except $150. “They didn’t care about me at all”, he says, talking about his employers. With his first project in Atlanta being wrapped up in a month’s time, he was on the bench for a couple of months before securing another job in California. He recollects how his employers sent him to the project site without any monetary support or appropriate living accommodation. When he ventured out on his own to find a place to live he didn’t have much luck.
Disgusted with his American sojourn, Srinivas returned to India five months later, to wait out this market crisis.
Even people with jobs seem to be precariously poised. “People are very concerned,” observes Lalit Dhingra, President of North American Operations of NIIT Technologies, a global public listed IT outsourcing company with US Headquarters in Atlanta. “Suddenly people’s 401k’s which is their future financial security has gone down. With the housing market taking a downturn, investment in real estate is also a big question mark.” He notes that these previously non –existent issues have become standard backdrops for professional conversations.
“I don’t think we have seen the worst of it yet,” speculates Sunny Duddilla, the CEO of Sun Plus Data Group. He predicts that we should start seeing the real effects of this recession in the first or second quarter of this year and if we are lucky it will only run up to 2010 summer.
Predictions seem to be turned on their heads from early 2008, when some pundits predicted the invincibility of the IT sector, quoting the stellar earnings of bigwigs like Intel, IBM, Hewlett-Packard and Apple. Some historians and economists noted the prevalence of escapist entertainment like the television and the internet during times of economic hardship, with roots in the Great Depression of 1929, when some people chose to watch movies rather than eat.
However, the resilience of the recession seems to be overtaking the invincibility of IT. With the financial and banking sectors still floundering, the information technology sector finally seems to be hurting. Mudigonda says that the IT industry is the backbone for many fields including finance and brokerage. Many of these industries are supported by databases provided for by IT companies. With such a vast proportion of these non IT sectors losing business the technology sector is feeling the heat. “The ripple effect caused by the downturn of the other industries has affected the IT sector as well”, observes Rakesh Gupta, the Vice President of Technologies for First View Financials in Atlanta.
Companies from all over the spectrum like Caterpillar, United Airlines, Intel, Home Depot, Microsoft, General Motors, Pfizer and Sprint, to name a few, are announcing layoffs. Even so, the information technology sector will likely suffer less; compared to others, states Duddilla.“The IT industry is faring better as a result of the lessons learned during the dotcom burst”, he says. However, he fears that despite the government clientele being a stable source of income, the private sector client base in the software products section of his company may dwindle or want to renew contracts at much lower rates. Mudigonda seems to agree. He too, notes that during the 2001 dotcom burst, consulting companies were not as badly affected as the product based companies. That may not be the case this time around.
In addition to the layoffs, the Damocles’ sword of visa processing also hangs heavy over Indian IT professionals. Dhingra says, “We may not see the same number of H1B’s as we did last year unless the IT industry rebounds quickly.” He notes that there may also be the possibility of projects being sent offshore from America. According to Mudigonda, clients prefer to hire people who do not require the hassle and expense of visa filing. Stories abound of hardships being endured by IT professionals all over America. Duddilla narrates the tale of his friends in Sacramento who were on forced vacations as a strategy by their company trying to prevent layoffs.
The downfall of Indian IT giant Satyam, may also exacerbate the dilemma of the IT professional. Gupta says, “We haven’t seen many effects of it yet because it is so recent. However, Indian It companies will be subject to more intense scrutiny as a result of this event.” Also, the disclosure of the World Bank’s ban on Wipro has not helped the credibility of Indian IT companies abroad.
There seems to be a unanimous feeling of fat trimming. Dhingra compares the situation to running a low income household. He says, “We have become very cost conscious. We are cutting costs so we don’t have to cut people.” He says his company has reduced travel expenditure, and authorizes travel only when absolutely essential. Duddilla too, talks of streamlining the processes and cutting costs. He advises people to look for other opportunities other than IT and to explore options such as advertising, art, catering, writing, etc.
Jagadeesh Mupparaju, the CEO of Savi Technologies also suggests an alternative. “Train the consultants in different technologies. That is the advantage of the IT sector.” For example, he notes that if necessary, web developers who cannot be placed in the current market should be trained in database technologies. “It depends on the market,” says Mupparaju. The other option is to send them back to India, and have them relocate to America once the economic situation improves.
So how long will this spiral last? Dhingra anticipates the situation will take about twelve to eighteen months to improve. He says, “When we have bad times, they always seem longer. But when the good times come, people stop counting.” He believes things will definitely improve due to the cyclic nature of these economic problems. “Once the financial sector is fixed and the credit for the companies starts improving we may see a significant boost to the industry.” His salt-of-the-earth advice is,” Work hard, spend less, train effectively and hope for the best”.
So after the statistics have been spouted, the politicians blamed and the losses lamented, what it all comes down to is the revival of common sense – and lunch boxes.