'India, not US, will lead global economic recovery'

Professional Aptitude Council, based in Silicon Valley, California, is a company that serves the world's top employers by sourcing and evaluating talent.

Set up by Chris Markesky in 2003, the company has its regional headquarters in Beijing and Bangalore.

Sheeroy Desai, chief executive officer, PAC, was in India recently. In an interview with rediff.com's Contributing Managing Editor Shobha Warrier, he made some interesting observations on the global economic crisis. Excerpts:

What is the mood in Silicon Valley these days?

The mood in Silicon Valley and the United States, in general, is fairly grim. When an economy loses more than four million jobs, depression and angst are natural.

But the kind of place that Silicon Valley is, there is also a spirit of hope that new ideas and innovation will usher in a better tomorrow.

Are we to suppose that you see light at the end of the tunnel?

I always see light at the end of the tunnel. The great thing about the US economy is that it moves on and on. Though more than four million jobs are lost, spending has come down rapidly and companies are going bankrupt, the US economy is still in motion.

Now we often get the feeling that we are starting to reach the bottom. Everybody thinks, 'let us get to the bottom, and be over with it.' From that point of view, there is hope.

Once you reach the bottom, you can only start thinking about growth and new opportunities.

Why do you feel you have started to reach the bottom?

If I knew that, I should be doing something else!

I am a big believer in data. If you look at the job losses, at the manufacturing numbers, inventory numbers and the stock market, which are indicators of where the economy is going, it is evident that we have reached some kind of a bottom. Yes, we have seen the worst of the financial crisis.

Some experts are predicting the end of 2009 as the time of recovery. Do you feel that way?

I think we will start seeing an upturn in the second half of this year. I feel some of the developing countries will lead the process.

By developing countries do you mean China, India and Brazil?

I think India will get ahead of China, and services, not manufacturing, will drive the recovery. I don't think this process will be led by the US.

As China is a manufacturing-export economy, it is directly tied to the US and Western consumers. I don't think Western consumers will have much to do with the economic revival. Instead capital spending will show the way.

Companies will come to the conclusion that the worst is behind them. We have seen massive consolidation in the US. At some point, they have to spend the capital on backend, IT and operational infrastructure.

Companies will have to consolidate their savings. I think that will lead to a wave of services work. And a lot of that will come to India. Thus, India will be in the driver's seat.

Does that mean more outsourcing work for India?

Absolutely! It is inevitable, especially if you look at the data that has come in the last week. JP Morgan said they were going to increase offshoring to India specifically this year by 25 per cent.

Gartner too came out with an informal study earlier this month that they were seeing a 25-30 per cent increase in clients requesting for offshoring information. All these are key indicators.

But (US President Barack) Obama talks about protecting jobs. . .

I think Obama's statement has more to do with politics than anything else. We will continue to see this kind of rhetoric, but, at the end of the day, I really don't believe protectionism is going to work.

I don't think offshoring will stop. This has been going on for years in the US. Earlier, there was the talk of halting manufacturing offshoring. But nothing came out of it.

You said recovery is going to come from services and from India. In what way will it help the US economy?

It will help the US economy as companies will make more money. The argument that offshoring of jobs is bad is incorrect because there will be jobs in the US too when companies start doing better.

Once the process of recovery starts, one will see creation of new jobs, economic activity picking up, hardware sales heading northward. These, I think, will gradually start resuscitating the US economy.

Since you are based in Silicon Valley, please tell us how different was the dot-com bust from the recession we are witnessing now?

The dot-com bust was an isolated phenomenon. It affected the technology industry and it was terrible. The present recession has a broader base. It has affected a wider range of people.

As far as technology companies are concerned, they have not been hurt as badly this time. This recession is something worse than the dot-com bust.

You have branches in India and China. And you see recovery starting in India. Therefore, this could help you immensely. . .

Absolutely. We are in the business of helping individuals improve their skills.  Therefore, we see this as a wonderful time for both individuals and companies.

In the last five years, India has been growing at a breakneck speed and companies did not have the time to pay attention to quality while recruiting. Now is the time to do that. And when recovery takes place by the end of this year, the companies will be in a position to be even more competitive.

Are you serving companies in the US too?

No, we are serving organisations in India and China. Reason: we believe in these high growth economies.

How do you compare the talent of India with that of China?

By the end of this year, we will come out with some interesting comparative data. What we found from our Bright Sparks Programs is that talent in remote campuses is at par with talent at IITs (Indian Institutes of Technology).

When it comes to logic, math and science, all students do well but the distinction between the rural and urban students lies in communication skills.

Once the economy starts improving, how much rise in recruitment do you expect from Indian campuses?

Recruitment, I think, will pick up by the end of this summer. I will not be surprised if we see a healthy hiring market in India by early to mid next year.

There has been attrition and people have been job-hopping of late, but I think we will see more sustainable growth soon. One thing is for sure: things will not be as crazy.