Satyam and the Indian software industry

I don’t usually write about industry because there are lots of blogs out there which do exactly that. However once in a while, things happen which warrant an exception. Today is one of those days. Even though most of the world is reeling under the blows of the credit crunch, my home country of India is relatively unaffected. But one financial situation that is currently worrying involves one of the Indian IT industries giants: a company called Satyam Computer Services Ltd. The company provides various IT services around the world and serves over 650 companies, 185 of which are Fortune 500. A few days ago the company’s founder and chairman admitted to falsifying financial records to the tune of millions of US dollars. The company is in severe trouble and a new board has been appointed by the Government to help it. More importantly, the company is in serious danger of going under causing thousands of people to lose their jobs and there is talk of a government bailout.

Being an IT company, a large fraction of the company’s thousands of workers are programmers. Yesterday a national newspaper reported that credit card companies and banks are freezing the accounts of lots of employees because it seems unlikely that Satyam will be able to continue paying monthly salaries and so the employees won’t be able to paying their credit card bills. While the average Indian isn’t as dependent on credit as people in western countries, this sudden loss of financial backing for the common employee is troublesome to say the least. And even if Satyam can somehow be salvaged, it seems inevitable that at least some programmers will lose their jobs.

The unfortunate truth is that being an employee you have almost no way of knowing what is going on at the higher levels of the company. While it might seem like your employer is treating you well and is doing great, the truth may be quite different. After all no one could have predicted Satyam’s current crisis until it errupted into full public view. Especially if you’re a programmer, it’s unlikely that you know (or even care very much) about your employer’s accounts.

I’ve always had mixed feelings regarding the Indian IT industry. The largest computer technology companies are geared towards providing services for other businesses. Unlike the large US technology companies like Microsoft, Apple or Sun, the Indian companies aren’t really involved in actually producing new consumer technologies. Outsourcing is, to a large extent, the lifeblood of the Indian IT industry. The constricted focus of the companies also means that their employees have a more restricted set of work opportunities. I don’t think you’ll be finding any compiler writers at Satyam. While outsourcing has greatly boosted the Indian economy in recent decades, I think the high salaries paid by these companies have lured away a large number of intelligent minds who are currently working on problems that are far below their potential. There is also an dangerous shortage of talented minds working towards advanced degrees in computer science and engineering, which I feel will shortly lead to a serious shortage of educators.

This is an important time for the Indian IT industry. The fourth largest IT company in the country is struggling and another large company called Wipro is in trouble with the World Bank. It is almost certain that this will have some effect on the readiness with which companies will outsource their IT needs in the near future. I hope that this situation will make people realize that there is much more to computer technology than IT. I would like nothing better than to see companies start producing technology that can be widely used: frameworks, developer tools, maybe even new platforms. On a large scale I’d like to see Indian competitors to Microsoft and Sun emerging. Even if that doesn’t happen (and I’m not very confident it will) I hope that programmers around the nation will realize that their jobs are not the best they can have. I would love to see some of these programmers start their own companies, perhaps to fulfill local IT needs rather than attract outsourcing. These are troubled times indeed, but it’s times like these that breed innovation.

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