Thursday, 10 January 2008

bullish marathon..!!

With the Sensex crossing 21K mark!! today.. the Bull seems to keep running.. and hoping that it will for some more time to come…Markets seem to be bullish at times and bearish at times depending on theinternational markets performance, crude oil prices, national/internationalpolitical/apolitical affairs, blah blah …

Business channels and economic dailies come with their daily analysis on which stock to invest and which not ..So in the midst of this run withmajor stocks at all time highs - is it the right time to invest?? What my logic says is that (which is similar to that of age old one or rathersimilar to the theory of diminishing returns expelled by some economistages back ) all times are right times of course depending on which stock one is investing , any investment into the diminishing goods would always bear returns..!!
Ps see : I am barely an amateur in this space (so would not dare to give any explicit views!!) :)

With the dollar’s worth depreciating against that of Re …- the most hit are the export houses, and biggest amongst them are the major IT companies (bagging all major MNC projects) what makes me wonder then is that why still are these major IT companies bringing in new employees and why then are they in the race of number crunching?? If they still have enough of profits from the previous bargains, why not prefer to share amongst the existing employees rather then bringing new ones and distributing the profits..!! ;)

Before I open my baggage of little knowledge in this arena :) – I guess this is enough to quote here.. and would leave the rest to the business channels and economic dailies to bring in their introspection, analysis, judgments etc etc..

Enjoy the bullish run/marathon (if u are part of that race!! :) - rest of us can be the parcel of spectators :) )


CM-Chap said...

Hey... Hope ur doing good.

Well... Its a good question. But ur question itself has got the answer...

I will answer ur question in details (offcourse my perspective) from what I understood from being n IT industry for a while. Soon expect it...

Jigar said...

Well, it was the start before 2 years. After IT bubble in 2000-02 somebody hardly expected that IT will crest this much again. As it was the start up in india... the race has geared up now and trying to make as much market as possible... For that to work perfectly, IT companies must require good chunck of people.

Another answer is techonology... and it's well said that youth are ment for technologies.. more and more youth they will hire more benefit of exploring areas will they have.

One thing, it is not entirely IT there are so many other sectors who performed really very well in india and they also contributed to market hike. Like RIL, TATA (non it groups) and there are also small fishes in India who are really growing up fast in different areas starting from insurance to real estates.

Just before a month or so I watched Donals Trumph's interview.. He was predicting to invest millions of money in India within 1 year just for real estate market. And he was expecting 10 times profit a year investment. Still there are many other reasons hardly to express all of 'em.

Jigar said...

I meant "Donald Trump" not "Donals Trumph"... :)

Jigar said...
This comment has been removed by the author.
chinmai said...

cm-chap : thanks , me doing good, hope its the same at ur end.. wud be waiting for ur reply/perspective..

jigar : thanks for ur views as well..

Bhavesh said...

1. IT companies iin india will soon have to find better ways to utilize resources and do away with bench strength as rupee will start its jounrey towards 35 soon again.

2. you want profits to be shared amongst employees!! how novice... they are to be shared amongst the share holders... employees get their salaries and salary comes under cost bracket in the balance sheet of a company ;) the owners of company (share holders included) alwyas want their cost to go down ;) emloyees are never entitled for profit sharing.

chinmai said...

bhavesh : :employees get their salaries and salary comes under cost bracket in the balance sheet of a company ;) the owners of company (share holders included) alwyas want their cost to go down ;) " thats what i am saying if the companies ve made comparative losses over gains due to rupee apreciation, still y are they on a run to increase their employee strength?? they could pay the same amount of money spent in bringing new people in their salaries to the existing strength:)

Tapan said...

hey want to share my opinion...could be biased for some of us, but this is an Insider's perspective (an IT professional)

1. Unlike major IT MNCs, Indian IT industry is majorly process oriented (except iFlex). More than 95% or revenue comes through software development or system support. Support makes more than half of this chunk.....even repeat business is more than 90% (generally in form of continuous support). To add to this, recent trend of complete (end to end) IT partnership bringing in offering form strategically IT partner to consultancy, software dev, system support, infra support...making service offering bucket ever enlarged.
All these factors put together demands ever high no of human power. For indian IT industry to double in size, its require at least 1.4 to 1.7 times increase in manpower!!! Since last 5-7 years, this industry have been growing at avg rate of 35-40%!! Doubling revenue every 2.5 years.... . Profitability of US IT firms is merely in single digit! While those of Indian firms are whooping 30%..
2. Appreciating rupee may hinder Profit margin in short run. But its this challenge which forces the industry to Innovate and bring a paradigm shift in the way IT business works. Remember the innovations like onsite-offshore model, which made even US giants like IBM, Accenture, HP to have thousands of employees in India.
Its the challenge to survive and prove the history! And I am quite confident about industry to repeat the history.
3. US dependency is ever decreasing. It now almost half of the revenue, compared to 70-80% few years back
4. Diversification in services help industry more stable.
5. Industry even spreads vertically. One end to its is BPO or Infrastructure support and the other end comprises of consultancy or strategic partnership.
6. Indian IT companies are in real term being global. More than 10,000 employees of both TCS and INfy are foreign nationals!! HOw many other Indian private sectors have even more Indian employees..
7. TCS is even planning to open a complete new supply zone as Science graduates
8. Internal improvements, business streamlining, process improvements, consolidation are few continuous endeavour of the companies from within.

Jigar said...

Chinmai, Let's assume that employer will give you more salary and don't hire new people. What will employer buy out of it. You are still one. Raising salary doesn't mean you are gaining strength. Salary hike will not make you work fast and efficiently. You are still one person for them. While if they hire new guys, paying them little less, still they have one more employee. In tern, they will double the force and increasing the force means increasing productivity and in turn revenue.

I want to ask you this quesion. If you are the CEO of any IT company, what would you prefer?

I still agree your point. But this is how majority of companies work.
Even tomorrow if 1 rupee = 1 dollar, it is not going to change this trauma.

chinmai said...

thanks tapan, jigar
tapan : nice analysis but for point 7 i wud like to add is that the wid more Bcom, bsc graduates being recruited they are going to make do wid lesser salaries but work on their skills..its going to more bad for EPs then ;)

Jigar : agreed wid ur point , but wat i wanted to add is wid rupee appreciation , comparitive gains reduce so the companies ve to find better and more no. of deals to maintain status quo..