On Indian IT sector

IT is now a mature industry. It should be valued for dividend yield - like a utility. It is not a growth sector.

There are only some 5 million Indians who have the intelligence to do IT coolie work - even they churn out the buggiest software in existence.

Of them some 2.5 million are already in the industry. Rest are doing everything else in the country.

Now that the 30 years worth of underemployed Indians have been found employment in IT, the rest newly educated Indians lack intelligence to do even cyber coolie work. They can only become low end BPO workers - if that - many cant even do BPO. Only a few tens of thousand Indians with sufficient intelligence graduate every year - maybe 2-3% of the existing IT workforce. It cannot fuel growth.

So no more growth. But the industry will continue to exist at current levels. Russians, poles, Czechs etc write much better quality software for much less salaries, but there are only another 5 million people in East Europe with sufficient intelligence to do IT work - and who are under employed.

So IT wages will stagnate and reduce to adjust. Peak has been reached. At current salary IT cannot grow. IT grew when salary in India was one tenth of US salary. Now it is half to one third US salary - and the workforce is poor quality and doesnt deserve better salary.

So Indian IT will persist as a mature industry. IT needs about 20 million new workers overall. IT will be the biggest employer in USA and world for new jobs. There is insufficient trained manpower in USA also to meet this need. The best Indians will still get good jobs in IT.

But every Pappu from NIIT cannot do the work. It is not easy - it is not BPO work where with basic training you can provide customer support for a non-IT internet or phone customer.

It is more likely that Rupee will depreciate to a level where our software makes export sense. And the IT salary levels will become less as compared to US salaries in dollar terms. Similarly, Indian RE prices in dollars will make sense when Rupee depreciates. And our balance of payments will make sense when we cannot afford to import so much - whether oil or gold - because we cant afford the dollars. WIth 7.5% inflation, annual 7.5% depreciation of Rupee HAS TO BE THERE!!!!

So for all that ails India, the only way out is for the Rupee to collapse more. Long term it is inevitable.

And in a globalised world, everyone with same capability and out put will earn the same.

No labour arbitrage possible