US slowdown & India IT - Loss or Opportunity?

US Financial slowdown is today's hot topic everywhere. It has made so much news that equity market of other countries are being driven by sentiments of news coming out of US market. If there is a sharp fall in Dow Jones then surely there would be a fall in Asian, Europe and Indian market too. And while US market is not able to recover from its bad situation, things are going bad in India too with a single thinking that most of money in India is coming because of industries in US. Especially in IT. Is that really true? Is Indian industry so dependent on US that it will loose its base if US goes in recession? Why do we think that we are so much leaning on US -

1. Customer for our IT industry are mainly from US. If business closes for them, then IT industry will loose money and jobs. It makes a good part of money coming to India.
2. Many of foreign investors were feeding money in Indian industry seeing it as a good growing market. With them being in problem, money would stop coming to India and there won't be funds to continue growth plans for these industries. Few might close down as they has not reached a sustenance level yet.
3. Many more....

Is US a big market for Indian goods? Are most of Indian company partner with US companies? I think we are still very much independent to keep things going on our own and we should not worry so much about it.

For IT industry which seems to be worst hit due to US situation, what are the impacts one would expect this will have -
1. Market for IT will reduce in US and in some cases may even shut down. In India people working on those projects might go on bench or get fired.
2. When laying off, outsiders (contractors in US) will be let go first. Being already low employment situation people will come back to India. Unemployment rate in India will grow.
3. Hikes would reduce or not happen at all. Spending from IT group will reduce including company and employees of these company.
So it will result in a situation where a large share of our population will not be able to put same money in Indian market which it was putting. In some cases, it might create a bad situation like bad credit where people have lost job and not able to meet their commitments. It will indirectly impact other areas of Indian industry like Banks, real estate and retail. These are all under one assumption that IT industry of India will not grow and actually shrink from its current status.

Now let us look at positive side of same situation. Do we really think that all US industry will close down and will not try to overcome the problems. Society has grown and it need these industries to go on. Can we do away with banks in today's time? Can we accept a situation when there won't be any television, mobile or Internet? I am sure answer would be a big NO.
Also if these need to go on, can today an Industry make a good profit without involving anything from IT and keeping everything manual? Again a NO.
Automation is an important key to make profit in any industry which is possible only by IT. And who will supply a cheap and cheaper IT solution?

It may happen that if IT will just wait and watch, things would actually turn to their profit and they would get more work than they have currently in future when US will overcome its financial slowdown? Yes, there is a risk that nobody knows when things will improve and will they really improve at all? While later question is having a very low probability, IT need to prepare itself for surviving in situations like this. One cannot go on like earning its daily bread on a daily basis. Surely those companies are in problem which are not having a future plan and no alternatives. Only the better will survive and that is the law of nature. Even in a totally unnatural concept like business these nature rules apply. Survival of fittest and elimination of weakest is mantra for improving and maturing a life.
So when this phase will be over, we would have learnt to do much better in same situation which we are capable of current time. We need to make ourself better to compete in diverse situations and provide more profitable solutions. Solutions which are directly addressing end user need and converting real business into profit. We need to keep patience for the time when demand will come again and we need to be in a position where we could present us as a valid candidate to meet that opportunity.

South Africa Economy - Its hot

- Shifted from blog 'Life Movie Fun'
I am currently living in south africa and so could not help myself getting involved with coutnries situation and its future in economic world. That's why I put a question to myself and you to think about this country (see post -http://lifemoviefun.blogspot.com/2008/08/some-provoking-thoughts-on-economics.html).

I did some reading which I have mentioned as reference at last of this post on this topic. Based on these I can word my own thinking of where this country might go and achieve in future. These all are just possibilities but thats what one need to start a venture :).

South africa as a country is rich in resources. Its geographical situation brings a good atmosphere, not too hot, not too cold.. a lot of sea shore which can help in trading, a big land area for ground development, not much large population to keep consumption low, mines of precious metals gold/platinum and other minerals to feed its economy with lot of money and raw material required for development, what not. Then why there is problem? May be it is not managed properly or it is just a phase in development of a nation.

Opportunity is aleready knocking in SA when it is giong to conduct 2010 FIFA world cup. It will have a huge chance to utilize its production which can be done totally using internal resources and manpower. It will boost industries, create employment, provide world wide exposure, open market for cheap import, open market for SA good in other countries and a lot.

SA seems to be good equiped to do all this if a good effort is put in all this as some of basic things need to be completed before it can encash this opportunity to its best. Infrastructure, literacy, skilled people are few points which need to be addressed before it happens. Time is less but it need to be done.

Industries are already seeing this and are ready to help SA in achieving this target. Even US and China are hungry for its natural resources and showing continuous interest in SA so that they are on boat when it sails in deep sea. SA need to keep a good eye on what exposure it gives and what it keeps to itself so that a nation grows and not the other countries by using its resources.Ref:

Few links which I read on above topics-

1. http://www.bilaterals.org/article.php3?id_article=5491
2. http://www.csmonitor.com/2007/0817/p09s03-coop.html
3. http://www.vdare.com/francis/south_africa2.htm

Latest in Indian IT, what next?

- moved from blog 'Life Movie Fun'

Inflation is everywhere, not only in India but in whole world. US is on verge of recession or some say that it has already started from last year end. Many other countries are also in similar financial condition. Anyway who cares about rest of world when problem is around us, so what actually going to happen to India?Will living cost keep on increasing and now a days high earning software people will actually look like same middle class of yesterday? Most of them have taken loans to fulfill their dreams - house loan, car loan, personal loan, education loan, credit cards, salary advance... long list? ha..So what would happen if recession is actually hit India as well.

Economic cycle says that a bad country recession occurs every 8-10 years. When is the last time it had happen in india.. 2001 or 2000.. that was a bad time.. and that too for IT industry. India is too much looking for these IT companies to bring money inside country. But has anyone thought that actually these companies are standing on a very ..very very risky concept of an industry?

How does an Industry work? It has resources and it has market. It utilizes resources and sell in market and whoa.. money is produced.. Lets see an IT company for it. It has resources.. (ya we have a big population). a lot of it. where is the market then.. In India? 'No'. In Asia? 'No' ..

It is Mostly US (which is already in recession) or Europe (which is also not in very good shape). So if both market are not at all in our control and in bad shape, why there will be a chance to India. Because India offer cheap solutions and that would help them reduce cost.. good point. but is recession cured by reducing cost?No.

Recession is reduced by controlling money flow within country and providing chance to internal industry to keep growing. Stopping outside hands to take away money from country. So what is going to happen? Will India stop getting more work from US/Europe till they recover? What will happen to Indian IT? Will they be able to survive till then? Where this man power will go if they are not needed for all this time?These are few questions which can bring slepless night to any of our IT guy.. so What next?

Future for Petrol Prices

- moved from blog 'Life Movie Fun'

I am late in doing research about my own posted questions, but the topic was so wast that it took time to find proper stuff on even one point. Here it is for Petrol -

Price for petrol is mainly a result of typical 'Supply and Demand' rule. Many factors are contributing in this demand which are -

1. World population is increasing faster than rise in oil production.

2. More countries are growing fast (mostly developing countries) and so for growth more energy requirement are increasing oil consumption.

3. Almost 1/4th of oil consumption is subsidised in world. Due to this even though price has increased, demand is not reducing.

4. Transportation is increasing day by day and it mainly is running on oil. It is very difficuly to cut down on this sector as it is main need of developing nations.

While above factors are increasing demand, there is another concept of future buying. In this countries/industry quote a future price of crude to reserve an amount of oil for them. This also gives a higher end indication of how much demand has increased and so hikes the price.

Supply is mainly from oil well in Saudi coutnries where reserves are being used more and more while new resources are not being found to provide enough oil to meet demand. It is also getting difficult to extract oil from current resources and that increases the cost of production. Result - an increase in price so that where it is not feasible to continue running the work with increased price, work will be stopped and so consumption will reduce. Pressure is more on developing nations to cut down subsidy (like India and China has agreed to increase price due to hike in crude price) so that consumption will reduce. These measure will help bring a stability in price and an equilibrium will be reached where market will continue its progress.

Major support in this will come from alternate resources, like in Canada - Tar Sand. These are big amount of oil reserves and very big in Canada. Till now it was not profitable to extract oil from these due to lower prices. As price has increased which makes if feasible to extract oild from these places, there would be additional production at price where stability would reach for oil production. On that price, for some more time, it would be better for market to utilize these extra inlet of oil in industry and grow at higher rate.

So, Price is surely going to increase in future for petrol, but what we can expect is that there would be better supply of oil at this price and one can think of utilizing it better way and balance the advantage such as to neutralize the loss due to increase in price. Way to go :)