Peeling the proverbial onion: Decluttering India story

There is no doubt that India is the darling of the World today, both for geo-political reasons as well as investor confidence. Though painting today's India in broad strokes would be a grave mistake.

If you go by the popular narrative, this is as good as it gets. India has finally taken its deserved place on the World map (G20 & others), the economy across industries is expanding, and innovation is flowing out of every nook and corner of the country with a thriving Start-up culture.

?The critiques paint a picture of gross inequality, mass unemployment, caste and religious divide and not so impressive economic indicators like job creation data etc. ?

?The truth, as they say, is somewhere in between. While I may not have the qualifications or the ability to evaluate every nuance of our wonderful country, In this note I have tried to declutter what I understand.

Let's look at the larger economic ecosystem

• The Union Government's Capex spending is up 54%, and the State's figure is 34% above the previous year.?
• The private sector's loan-off take is at an all-time high and significantly above the last year's.?
• But in contrast, Consumers (FMCG & Durables), Automobiles and other industries are seeing a 3rd consecutive quarter of negative consumption numbers.??

Assumptions are that the industries which? benefitted from the heightened spending (last year) have a healthy P&L and are taking loans to increase capacity. Hence we can expect increased consumer spending in the next 6 to 12 months. This addition in capacity should also increase the number of jobs for people and hopefully better increments for the workforce.

So, in summary, 2024 should bring a lot of cheer to everyone in India !!

Since IT, ITES and start-ups are close to my heart and work, I will detail how things have shaped this industry in 2022- 23 and what we expect in 2023-34.

Zooming on the IT & ITES world - It will be an understatement if you call year 2023 as one of the most challenging ones for the IT / ITES ecosystem.?

The following numbers better highlight the severity of things.

• In the first quarter of FY23 (April to June 2023), India's top five IT exporters – Tata Consultancy Services (TCS), Infosys, HCLTech, Wipro and Tech Mahindra – reported a cumulative dip in net headcount of 21,838.?Some thing which hasnt happened in the last 10 years.
• Even global IT majors like Accenture, Capgemini and Cognizant, which have a large employee base in India, saw headcount slipping by over 5,000 each during the most recent quarter.
• The good news is that for all major IT companies, Q2 deal wins show green shoots of growth coming back for this sector. TCS and Infosys' Deal wins are predicted to be 25 % to 50% above their last eight-quarter average.?

Analysts are sure that Q4 2024 is where we can expect recruitment to come back on track.

We are in the week of earning calls from these tech giants, and my expectation is a very subdued call for the current financial year but a few words of hope for a recovery in 2023-24.?

For start-ups? in GOT parlance "The winter is here" ihas been doing the rounds. Some numbers

• In 2023, India has added only 3 companies to the unicorn list compared to 24 of them in 2022.
• During the first three quarters of 2023 (Q1 to Q3), Indian start-ups experienced a substantial drop in funding, with a total of $7 Bn raised. This figure is significantly lower when compared to the same period in 2022 when start-ups secured?$22 Bn in funding?and an even higher amount of $27 Bn in 2021.
• Layoff in Start-ups are galore, as per one tracker till June 2023 more than 20000 employees were laid off.
• Another supply side tracker reported that 35 to 40 percent of passing out batch of most higher education entities are without jobs till now.

We should expect this ecosystem to be cautious over the next 12 months with profit rather than revenue growth being the key metric tracked and spoken about.

Last words

We now live in a world where massive events with global ramifications happen almost every second week. Oil prices, which started to look stable after absorbing the Russia - Ukraine crisis, are challenging to predict post-Israel

If you look at India, we have conflicting trends in almost every industry:?

• Indigo and Tata's airlines are doing very well. However, other airlines are on the verge of bankruptcy in the same industry.
• In the Auto sector, we have Tata Motors rapidly expanding. However, in the low-cost car segment, almost all companies are reporting negative growth.?
• HDFC has expanded its retail presence at the rate of 50% vs. PY. In contrast, ICICI, the second-largest private banking name, has followed a digital-first strategy.?

As a business student, we need to make peace with the fact that the larger picture has a lot of nuance. We need to peel the outer layers and spot the actual story at the core of every company and industry to know the truth.?

?Long story short, any organisation that?wants to thrive must be a setup that has its ears to the ground to be the first to pick up early trends and be the fastest to pivot.?

We 美世 | Mettl are striving for to become one such unit.