The Hindu Business Line : Trickledown economics from the new world order

A chauffeur to a senior manager in one of India’s most reputed IT services and BPO companies is worth a few million dollars today. His son recently graduated from one of India’s most prestigious management institutes. In fact, several people doing similar jobs have been able to afford their own little homes in the past few years.

A person who does the job of Man Friday for a small team will complete his undergraduate degree in liberal arts this year — something he could not have dreamed of affording. Two young children of a family, working in BPO and travel, are supporting a family of eight. A person in a support role from a very poor family is able to care for aging and invalid parents in a distant city, help her maid put her children through school and live in surroundings that are orders of magnitude superior to what she grew up in.

Thanks to the philanthropic endeavours of companies in the sector, more than 25,000 lives were saved in Andhra Pradesh in the past two years. Pure drinking water, jobs for women, getting children off the streets and getting them educated, helping alleviate HIV and AIDS or at least its impact, providing solar power to homes and providing access to health for all are some of the things that have touched the lives of millions of people in South India alone.

Value generation

About $50 billion in direct value will get generated by about 1.6 million employees in IT services and BPO companies in the year ending March 2008. Over 120 million sq.ft of office space will be used to offer these services from.

In fact, 50 million sq.ft of construction is in progress to house the growth in the sector; 160 million new sq.ft of housing will get created and occupied by people from the sector. It is estimated that almost a million construction workers are currently employed to build offices and homes for the employees of the sector.

Almost $2 billion will be spent in travel by the sector. Airports in Hyderabad and Bangalore are having the hardest time managing the needs of air travel from these cities. Hopefully, the new airports that are soon to open will take away some of that pain.

Hundreds of people are working in travel agencies round the clock helping thousands of employees from the sector get to their client destinations and development centres overseas. Tens of thousands of managers in the sector get chauffeured. Tens of thousands of cabs bring BPO employees to their jobs, particularly in the evening and night. Every fifth bus in Bangalore and Hyderabad seems to carry the logo of a company from the sector. Travel management alone has achieved industry status in catering to the sector.

Industry-size opportunity

Almost 20 per cent of employees in the sector have travelled overseas and at least 10 per cent have lived in developed economies for over a year. They are tired of taking 45 minutes to travel a mere 10 km to work. In comparison, a 25-km commute at peak hour takes 30 minutes in Singapore. They want access to commensurate infrastructure and quality of life. In fact, bridging this gap alone is an industry-size opportunity.

Kolkata, Hyderabad, Chennai and Pune in recent times, and Bangalore, NOIDA, Gurgaon and Malad in Mumbai a little earlier have created several restaurants and pubs, cinema theatres, grocery stores and shopping malls to cater to the personal needs of this new breed of young urban professionals.

This is today extending to Chandigarh, Jaipur, Ahmedabad, Goa, Thiruvananthapuram, Kochi, Coimbatore, Madurai, Salem, Pondicherry, Hassan, Mangalore, Mysore, Visakhapatnam, Nagpur, Indore and Bhopal. It is also creating new jobs in smaller towns such as Bellary, Bheemavaram and villages around. It is estimated that 5,000 BPO employees work from world-class infrastructure in the villages of South India.

Have you noticed what happens to florists in these cities around Valentine’s Day? Have you seen the corner store teeming with youngsters for that cookie, chocolate, cup of tea and a cigarette during lunch hour? Have you witnessed the rush to sandwich restaurants at some of the software technology parks in these cities?

Tens of thousands of shopkeepers thrive on serving employees from the sector. For every 1,000 employees, there are at least 50 jobs in catering. The opportunities in restaurants, pubs, hotels and the like abound.

Limitless window

Half the recruitment advertising space in newspapers and magazines will be occupied for jobs on offer from the sector. There was a time when almost every job in the sector was reserved for an engineering graduate.

Today, the variety of opportunities includes animation, accounting, actuarial services, legal services, remote manufacturing management and the list goes on.

As information security and business continuity are critical to the performance of the sector, jobs in this area are of utmost importance. Extending that, there are several thousand jobs in securing the premises of companies in the sector.

The upkeep of premises — from keeping the premises clean to managing the landscaping — has created thousands of jobs. Extending this to households, it is estimated that for every three jobs in the sector there is a job for help at home — the figure is conservatively estimated at 6,00,000 jobs in household help.

Every job in the sector is effectively creating three times as much in opportunity and it is estimated that the total value creation to cater to the needs of people working in the sector is between two and three times — that’s about $150 to 200 billion.

Which one industry has impacted the lives of millions to create better opportunities in comparison to what may have been possible in the village?

Unprecedented impact

Unlike the manufacturing sector, where raw material and assembly absorb a large portion of the costs, people absorb most of the costs in the services sector.

While the manufacturing sector is important to our economy, for a young and large population, the services sector offers a multiplier that is unprecedented.

As a nation that is becoming the virtual office, the virtual manufacturer, the virtual back office and the virtual laboratory to the world, the number of opportunities to create services from India and serve clients anywhere remains very large.

Given that the sector has barely scratched the surface by creating $50 billion in value this past year, given that growth will continue and that at least three times as many opportunities will get created to serve people from the sector, this economic engine is important to the future of several developing countries. Its quiet contribution is rapid improvement in infrastructure — but that’s another story!

(The author is Chief Strategy Officer, Satyam Computer Services.)

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