I consider my self fortunate to be born in the 90’s- the most historic decade in the history of our nation since independence. The world was waking up to globalization and Dr. Manmohan Singh’s liberalization drive couldn’t have come at a better time. The opening up of the Indian economy to private industries sparked an era of unprecedented economic growth. Our dwindling foreign exchange reserves started surging. Short term debts which had risen to 350% of our foreign exchange plummeted to 25%. And for the first time India had struck gold in the services sector. This laid the foundation for India to become one of the fastest growing economies of the world.
So what went right?
The world in which I grew up, the old industrial economy was being radically transformed by globalization. The series of reforms had for the first time brought more than a billion people onto the global economic playing field.
Manufacturing and Services received a massive boost as the government did away with dozens of licenses. Companies like Reliance, Infosys, Tata Consultancy Services and the Adani Group entered their Golden phase.
The Telecom Services industry emerged as a key player as Indians depended on PCO’s and STD booths.
Demand for Fertilizers catalyzed the growth of the Chemical industry. Automobile companies like Maruti Suzuki and Tata Motors went on a great expansion drive and the Reliance Group was in the process of building massive refineries. This created a great demand for engineers.
The fact that the Europeans and Americans went on a massive outsourcing drive around this time brought millions of jobs to India, especially in the services and manufacturing sectors.
Above all, the reason why we were able to capitalize was cheap labour.
We had a ready workforce of mechanical, computer, civil and chemical engineers who were willing to accept wages which paled when compared to most developed countries. People without technical skills discovered their goldmine in the Service Industry. Millions of Indians rode the wave and came out of poverty. A combination of the above factors led to the rise of the Indian Middle Class.
However, the next wave of innovation and globalization unleashed an unexpected demon -
Automation
We overestimated the boom period and by 2010 the faults were beginning to show:
The service sector industry could not predict what was to come:
Call Centers began migrating to cheaper destinations in South East Asia. By 2015, the world had fully embraced internet and companies began automating customer services through automated bots.
Cold-calling and other Below-The-Line Marketing services were increasingly replaced by efficient Google ads and social media marketing.
The poster-child of the Indian economy- IT Services had its teeth knocked out by automation and Artificial Intelligence.
Consolidation of the telecom industry with the arrival of Airtel, Vodafone and eventually Jio sparked a distress sale of competitors like Tata Docomo and Telenor. Many lost their jobs.
Too many engineers who know too less:
Buoyed by the bull run of the 90’s, engineering became the de-facto graduation degree for many Indians. But the courses were never updated. India produces close to 1.6 million engineers for a population of 1.2 billion people. Only 200,000–300,000 engineers graduate in the U.S. each year. As per reports more than 90% of engineering graduates in India are not acquainted with upcoming technologies in the market.
Artificial Intelligence is set to transform how the global economy functions. And yet, we never focused on building a talent pool to tap this sector.
After years of growth rooted in low cost labour, the era of automation has shook the job markets in our country. We shall soon witness intelligent robots working most of the low skilled jobs because they’ll be cheaper than manual labour. Unlike the previous wave of digitalized globalization and innovation, which drew enormous numbers of people out of poverty in low-cost labor markets, the next wave will challenge middle classes across the globe.
And the signs are already beginning to show in the Indian economy.