T.T. RAM MOHAN writes from Ahmedabad: What precisely are the grievances that people in Bangalore have against IT folk? The litany of complaints includes: rising property prices thanks to the IT employees’ purchasing power, grabbing of prime land by IT companies, the bar and disco culture, and IT employees being preferred in the bridal market.
There is a clear divide between other middle-class professionals, including the many in the public sector, and the IT employees. Those on the former side resent the rise to prominence of the latter.
The Outlook story set me thinking. There are other professions that pay even more—the financial services sector as well. How come we do not see a similar resentment towards investment bankers and private equity people in Bombay?
I guess that’s because partly the City is not yet identified with these professionals, they are not that numerous and, besides, in Bombay, there are other sectors that absorb people and pay well. IT dominates Bangalore in a way in which other sectors do not dominate any metropolis and, also, the disparity between a dominant sector and other sectors in any city is not as great. If the proposed International Finance City materialises in Bombay, we can expect an even greater backlash.
A second reason could be that IT does not have the same linkages with the domestic money. Finance professionals create prosperity in companies they take public, the stock market benefits thousands of shareholders. IT is seen to benefit only the people in the sector and nobody else. True, as Subroto Bagchi points out, IT creates benefits (such as declining telecom costs) but these effects are indirect and not as visible, hence the resentment.
Thirdly, to some extent, the prosperity of IT and its employees is seen as coming at the expense of the economy. IT companies have benefited from huge allotments of land at concessional prices, they benefited from an undervalued rupee for over a decade and they benefited from tax concessions as well. The charities made by some IT personalities are seen as poor compensation for the benefits earned.
So, what do we do? Throw IT out? Not at all.
Can greater philanthropy help? To some extent, maybe, for instance, a classy university run at affordable prices on IT endownments might help assuage popular sentiment.
But the biggest corrective, I reckon, will come from the very economic environment that created IT’s prosperity—no more concessional land, a decline in profitability from a rising rupee and its attendant costs (including layoffs in the IT sector) and a greater focus on the domestic economy on the part of IT firms in the face of a rising rupee.
(T.T. Ram Mohan is Professor, finance and accounting area, at the Indian Institute of Management Ahmedabad. This piece originally appeared on his blog, The Big Picture, and is reproduced here courtesy of the author)
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