Infosys’s loss of the RBS project is a matter of grave concern for IT and also for flats in Bangalore. The prestigious Royal Bank of Scotland account generated nearly 1,400 crore rupees revenue annually for Infosys and was the Indian IT giant’s largest European customer. Considering a large number of Infosys employees who are likely to be acutely affected by the decision of the RBS to withdraw its account, things may be looking grim for many mid-level Infosys employees who have purchased property in Bangalore using a loan. Whether this move by the RBS shall be followed by similar actions by other large IT clients of Indian software companies is too early to tell, many domestic IT companies still rely primarily upon foreign markets for revenues and growth.
The employees in India’s Silicon Valley may be likely to contend with a double whammy, first the increasing sophistication of artificial intelligence which is leading to layoffs in large IT companies in Bangalore and now the loss of an important project from one of the region’s biggest customers. The growth model which had worked well for Indian IT companies a decade and a half ago may be too sclerotic to continue to do so in the future. Ironically new developments within the IT industry itself are posing challenges to India’s IT industry. This may lead the Indian IT industry to become less competitive and to new projects in Bangalore to flounder as a result. Bangalore owes much of its ascent to the technology sector and a declining IT domestic industry will likely lead to a reversal in the cities fortunes.
As the surging real estate in Bangalore is linked to software development in the city, the risk the city faces which may render it’s IT industry a vassal industry to overseas IT giants is too great to overlook. Steps should be taken by Indian IT giants to change their growth model, even if it means growth pangs in the short run. The idea of creative destruction is important for innovation, Bangalore thus far has little to show in this respect. An example to consider is that fifteen years ago the largest software companies in the US today were startups then;
companies such as Google and Facebook which are the global bell weathers of the IT industry did not exist in their current avatars. Looking back at the Indian IT industry between then and now we find a remarkable paucity of large new players whereas most of the largest IT companies in the US today were either little known or non-existent before 1999. This displays a lack of innovation within the domestic IT industry and bodes poorly for luxury apartments in Bangalore which may never rise in prestige to rank as top real estate destinations alongside homes in San Francisco or Shanghai.
Unless the domestic IT industry seeks to push boundaries and tries to reinvent itself, it risks placing serious limitations on economic growth within India. Mid-segment apartments in Bangalore which are usually bought by taking loans from banks may never blossom into world class homes and may forever be resigned to exist only as high-quality homes in a less relevant part of the world. Such economic stagnation shall lead to far lower wealth creation than was envisioned fifteen years ago. Builders in Bangalore with global aspirations may never be able to achieve global recognition.
Steps are needed to transform the Indian IT industry and the Indian IT majors so that they are once again a credible challenge to global IT giants rather than companies subservient to foreign technology giants and which rely upon overseas customers for revenues and growth.