Wednesday 21 November 2018

India's tech renaissance could be short circuited by Trump

Ellie Donnelly

Ellie Donnelly

The technology sector in India is facing turbulent times, with a number of leading IT companies reported to be planning "significant" lay-offs.

The lay-offs are being attributed in part to concerns over US President Donald Trump's administrative clampdown on H-1B visas, making it harder for Indian workers to do business in the US, the World Economic Forum (WEF) reports.

In addition, the increasing ability of machine learning to replace human workers is also a challenge for the IT sector in the country that has become synonymous with technology.

A recent report from managing consulting firm McKinsey found that the skills of as much as half of the 3.9 million Indian people working in the IT sector will become irrelevant in as little as a few years.

However, the news in respect of the tech sector in Indian is not all bad. The country's tech startup scene boasts more companies than anywhere other than the US and the UK, as government initiatives help to increase the number of startup companies that are being established across the country.

The country is also the youngest startup nation in the world - 72pc of new-business founders are under the age of 35, while Indian e-commerce company Flipkart makes it to ninth place in the top 10 most valuable startups, according to WEF.

U.S. President Donald Trump
U.S. President Donald Trump

However, India - which is the world's seventh-largest economy, sitting between France and Italy - is facing a number of other economic challenges.

While the economy is growing faster than any other large economy - with the exception of China - recently the country's gross domestic product growth dipped to 5.7pc, not much ahead of Ireland.

In addition, in a country that has the world's largest youth population, over 30pc of the young population are not in any form of employment, education, or training, according to the OECD. Another issue facing the Indian economy is the problem of the gender gap.

While the country has made progress in closing the gap over the past decade, the progress has been slow, with the country rising to 87th from 98th in the World Economic Forum's Gender Gap Report in the 10-year period.

Meanwhile, the country ranks a poor 135th out of 144 countries for women's participation in the labour force.

As various reports have shown, increased female participation in the workforce is beneficial for economic growth, while it also tends to also have a positive affect on the level of eduction in countries.

As the country's economy powers ahead, increasing the inclusivity of economic growth will be key for India, with the country ranking just 60th among the 79 developing economies that were analysed in the World Economic Forum's latest Inclusive Development Index.

This growing inequality is reflected in the fact that more than half - 53pc - of the country's wealth is in the hands of 1pc of its richest people.

And the concentration of wealth is rising.

In 2000 the country's 1pc had control of 36.8pc of the wealth.

By contrast, in the United States the richest 1pc in the US control 37.3pc of the country's wealth.

As the level of inequality rises, the pace at which India can lift people out of extreme poverty will be hindered.

Irish Independent

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