Gurgaon is a little village outside Delhi. It has no special significance, except for the fact that Indian journalist Arindam Banerji's sister lives there, and she likes to talk on the phone:
All of which prompts Arindam to an even more profound reflection about the future of India's Silicon Valleys. India needs good governance, sound infrastructure, a reigning-in of corruption, and diversification. One small quibble with the line he's pushing: the North First Street boom ocurred in the first flushes of a huge bubble associated with the infancy stage of a new technology, the ICT/Netscape cold fushion process. This technology is no longer in it's infancy. India's IT outsourcing boom is not speculative in the way the earlier NASDAQ was (which doesn't mean it is in no way speculative). India is now reaping the benefits which the US industry would have realised in a non-globalised age. This doesn't mean it cannot be undercut from below - as the Chinese outsourcing example shows - but it is on more solid ground. Also effective human capital attracts work like a magnet. Wage differentials are secondary. It is not like moving a garment factory out of China and into Vietnam to save wages. Skills are difficult to replicate. Of course, if you get as far out of line as the US differential then you're going to pay the price. But meantime, the guarantee of India's IT industry is quality, experience and the value placed on its precious human capital.
Three weeks ago, inappropriately early on a Wednesday morning, my sister called me. She lives in Gurgaon. She filled up most of the 45 minute call, with rants and complaints about the sad state of life in Gurgaon. Rampant construction of office buildings, traffic gone amuck and endless commutes were on her mind. Office space was at a premium and land was four times as expensive (some exaggeration, here) as a few years ago and worst of all, the new hires these days were making outrageous demands. Too many jobs and not enough qualified people and every day a new company, seemed to sprout up to hire away office workers. Worst of all, it seems the US returned guppies -- Gurgaon-yuppies, for those not in the know, were kicking the cost of living and prices through the veritable roof. So, these were the problems in Gurgaon, a little village outside Delhi, till recently.
All in one's stride till you consider what happened, later that afternoon. At about 1:30 pm that same day, I was supposed to pick up an old friend of mine for a quick lunch catch-up session. So, I drove up to his office in North First Street, San Jose. North First Street in San Jose is one of those mini-hubs of technology nirvana in Silicon Valley, much like Page Mill Road, in Palo Alto. The street and its immediate environs house the Who's Who of global technology companies. So, it struck me as odd, that when I walked into this office-space complex of about 14 large office buildings -- everything was eerily quiet. Countably few cars in the parking lot, no crowds of people milling between the offices, large signs of rent/lease lying around somewhat disinterestedly and that silence, again.
Remember, this was the same office complex that would have charged you $12.50 per square foot as rent till three years ago; where parking on the premises was impossible and in fact you had to walk almost a mile from alternate parking spaces. And the noise of people, traffic and endless construction would have driven a sane man batty. But, today there was just this eeriness about the place that I could not explain and office space was being given away for $0.50 per square foot.
The stark difference between my sister's picture of present-day Gurgaon and the forlorn presence of those office buildings in North First, can hardly be described. Then, it hit me. North First Street of '99 had given way to Gurgaon of 2003. The boom-town spirit of Silicon Valley had suddenly got up and moved from Northern California to a town in Northern India. The 'Gurgaon boom' had finally settled in. And, I haven't even started talking about Bangalore, Mohali, Kochi or Mangalore. The Gurgaon boom is today's snapshot of India, Inc. In fact, it's a good name for what's happening throughout corporate India, today. Ok! Ok! call it the Bangalore boom if you want -- but, the explosive nature of the boom, especially when compared to what's happening in Europe and the US, is cause enough to celebrate.
The warning signs in the Indian context may be different than what they were for the Silicon Valley boom, but they are there and are portents of things to come. In itself, this is not a death-knell, but just a sign of things India has to manage well. India's ability to manage this boom into the next phase will decide the long-term success of the economy.
The Next phase is coming: That this phase of unlimited growth will at some point end and will perhaps be replaced by one with intense competition perhaps from the Chinese, is already being seen.