Boom after the gloom

MY WORD!

How quickly the mood swings from gloom to reckless cheeriness. One moment we can't get anything right and it's tough to tie our own shoelaces. The next moment there's an extraordinary level of bullish confidence in the air.

And why not? The stock market has soared almost 2000 points in the last five months. Foreign reserves have zoomed to $100 billion "" an undreamt of figure when Manmohan Singh launched his reformist budget back in 1991 and India was faced with the spectre of bankruptcy. Indian corporations have become world-beaters, snapping up companies from the Philippines to Romania.

A year ago some industry observers said the Golden Age of Indian software was behind it. Yes, the companies were hiring at an amazing speed and their growth prospects seemed enormous. Nevertheless, many believed that customers were getting smarter and more tight-fisted. Therefore, profit levels would have to fall.

Those experts have been proved wrong. Indian software companies are growing at stupendous rates and their profits are still rising. And, as for the BPO sector, it is growing at a faster clip than its own stalwarts had predicted a year ago.

The prospects for growth in the BPO sector are so gigantic that nobody even dares to put a figure on it. Some BPO companies say their only constraint is getting people for junior and middle-level jobs.

How different it was exactly a year ago. At that time, India had stepped back from the brink of a nuclear war. The troops were still on high alert and eyeballing each other on the border. The economic scenario seemed filled with gloom even though there were glimmerings of hope from the BPO and software industry.

Some time during the year the clouds lifted. The software industry began hiring once again and the BPO industry belted into the really fast track. And, suddenly, hey presto, Indian industry couldn't put a foot wrong.

What about a few overseas acquisitions? Certainly, in every industry from forgings to auto components to undersea cables. In the closing days of the year, even the mighty Infosys pulled out its chequebook and unleashed its buying power in Australia.

Acquisitions are only one part of the new, emerging picture. Leaner, meaner Indian companies are pushing up profits to higher levels than anyone had ever expected. These corporations are now poised to take on the world.

Indian motorcycle manufacturers aren't afraid of their Chinese rivals. In fact, they are looking to whip the Chinese at their own game around South-east Asia. Bajaj is even contemplating a foray in South America.

Back in the '90s a banker once complained to me that India had been a great disappointment. MTNL had just announced that it would hold a GDR issue and 27 banks had turned up for the bidding war. To their consternation, the banks had suddenly realised that India didn't have enough business to go around and ensure fat bonuses for all their highly priced staffers.

In those days foreign banks and multinationals had charted out ambitious growth plans for the Indian market. This was the market of almost 1 billion people and everyone was convinced that it had gigantic potential.

The fact was that the rosy projections about India's middle class were vastly overhyped. India's middle class wasn't as big as it was made out to be. More importantly, it had terribly limited buying power.

Today the reality has begun to match the picture painted by the statisticians and market research companies. India's middle class has arrived - both in terms of numbers and buying power.

The Indian middle class has turned out to be a formidable force in another way that nobody had anticipated. It is the backbone on which the knowledge industries "" software services, BPO, pharmaceuticals and the R&D industry "" are built.

And it is, after all, the knowledge sectors that have turned out to be more important than the numbers alone. It only goes to show that in the end analysis, brains are always more important than numbers.