From Wall Street to Gurgaon Streets – the pain remains the same
Across the globe the financial crisis is taking it’s toll. The problem which started out on a prestigious New York street ( begins with a Wall ) address has become uniquely local in a number of ways. I was in Gurgaon, India recently and had this car and a driver for a couple of days. The driver was quite a reserved fellow. On my last day in Gurgaon on the way to the airport the driver turned around and asked me ‘Sir do you work for Wall Street?’. This was a person who was with me for a few days and had not really spoken much. I asked him what he knew about Wall Street. His reply in Hindi was ‘ Wall Street is taking my job away. I work for a cab company which was contracted by a large Indian firm doing work for Wall Street firms. I moved to Delhi ten years back from my village in Punjab and I love this city. I was always busy and had a lot of foreign people visiting Gurgaon and I enjoyed showing them around the city. They were always very nice and gave me big tips. Now the company I work for was told that the contract is no longer there as wall street is closing down. I will be driving this cab till the end of this month and then I have to go find something else to do. Why is Wall Street closing down ?’
I was amazed and speechless. It made me realize that how small the world had become and how interconnected it is and the localization of global issues is hitting everyone hard. The effect of mismanagement on a less than a mile street where wealth, power and risk was concentrated has spread thousands of miles across the world. There will be thousands of stories like these across the entire globe and everyone is trying to find and scalp the bad guys. In reality finding the bad guy is not going to be easy though the finger pointing will not stop.
The point it does bring home is that the global markets will never be the same. Some people suggest that this is like the crash of 1929 in the US, I was not there for that but that lasted for over ten years and reshaped the US economy more than the world economy. The reality is that every second we get more interconnected and events shaping one corner of the globe and echoed across the entire globe almost instantaneously.
For the IT/ITES industry the challenges in the market place are no different. This industry – the companies and people were one of the biggest beneficiaries of globalization and will continue to be. The question though is that with local politics taking center stage, economies worried about their own domestic survival different forces come in play.
There is a slowdown and despite the strong face rhetoric from companies this is the reality. With corporations in survival mode across the globe long term plans take a back seat. Outsourcing and offshoring have always had long term potential cost benefits. What firms seem to be doing now and those not focused on pure survival and raising capital is to look at immediate cost savings. How can they stretch the dollar to last longer.
For some of the outsourcing vendors if they have built true process expertise this is the opportunity to bring that to their clients. The vendors will remain part of the cost equation and should not and could not deliver on top line growth for firms in this time. What they can help the firms do is to identify options to stretch the limited dollars the current firms have.
For companies looking to leverage outsourcing/offshoring the question is how to do that now or even to consider it now? We see a number of corporates finding innovative ways to stretch their dollars. With budget season in full swing across a lot of the US firms for next year, the focus is on cost savings and initiatives which will offer shorter term returns. Transformation services , cost optimization, vendor rationalization all sound like big buzz words but firms are looking at these services to reduce cost.
For firms looking to enter new markets – emerging markets like India, China still remain very lucrative but these firms are looking at ways to enter these markets cost effectively too with the right trusted partners. A number of niche services/products firms are also finding out that entry into Indian marketplace and making money there are time consuming and costly endeavors . So the rush to go to emerging markets to grow top line also has to be carefully evaluated and planned.
We are all looking and hoping for simple answers to ‘Why the Wall Street is closing down’ and ‘Now What’. I wish I had a simple answer for the driver but I did not. As if it was for me to separate from the guys who caused all this chaos – I did tell him I don’t work for Wall Street.
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