Wednesday, January 04, 2006

Unemployment and the IT Boom

The rise of the IT industry in India is being heralded by all and sundry. State governments are falling over one another to attract investment from these companies in their states. The sunrise sector – as it has come to be known – seems the answer to one of the greatest problem facing India today – that of unemployment. The fact that Infosys, TCS, Wipro and their likes are employing nearly 50 thousand employees each and individually each of these companies have surpassed the headcount in the “old-economy” companies and are growing more than 30% per year has added to the notion of IT companies being the knight-in-shining-armour for the government. It has to be said here that over the last 50 years, governmental policy has not helped create more jobs. On the contrary the government has tried its level best to stifle entrepreneurship and industry, thereby killing any chance creating greater jobs.

It is true that the IT industry has been able to create a great number of jobs. It is true that it has single handedly improved the living standard of a few million Indians. It is also true that it has enabled India to become a trade surplus country from a trade deficit one 15 years back by earning billions of US dollars as foreign exchange. However, it is also true that it has been able to create jobs only for the “creamy” section of Indian society – the urban highly educated class of people. Although, the indirect employment generated is nothing to scoff about, the fact remains that it has created a social divide. The high salaries that these people command and the flashy lifestyle they lead exacerbate this social divide. The people who have been left behind tend to feel cheated that they are not part of the great boom that they see all around. If you walk into any shopping mall or multiplex today, you will see these places thronged by the IT folks who need a place to spend their high disposable incomes.

The ITES (read BPO or call centres) are serving a good purpose. While the IT companies are recruiting only engineers and MCAs, the ITES companies are hiring arts, commerce and science graduates. They have created lots of jobs for people who previously had only sales & marketing jobs offered to them. The pay, although not as good as the IT companies, is much better than what they could have earned otherwise. However, the less educated people still remain outside the job market. India as a country desperately needs huge investment to generate jobs for this section of society. I strongly believe that if development and growth happens in pockets, then it creates great social strife. I think, we are beginning to see that with the number of crimes increasing greatly over the last few years.

The state governments have to ensure that they woo industries of all types with the same zest that they display with the new economy companies. Moreover, it needs to work only on policies and provide governance and slowly distance itself from running companies. Unfortunately, we are lacking in both areas. Therein lies, perhaps, the answer to our unemployment problem.

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