Announcement

Collapse
No announcement yet.

Builders & Real Estate Bulls Theory Proved Wrong

Collapse
X
Collapse

Builders & Real Estate Bulls Theory Proved Wrong

Last updated: November 1 2016
12768 | Posts
  • Time
  • Show
Clear All
new posts

  • Re : Builders & Real Estate Bulls Theory Proved Wrong

    Originally posted by tushart View Post
    Guys start to move into people management roles at 8+ years and start to have a comfortable life ...................>
    Not sure how long the comfortable life will last as the market is will demand change and everyone who wants to grow will have to be effective.
    It shows your bias and proves that you have no experience in project/people management and financials. 99% of jobs we have in India do not need technical expertise of 15-20 year experienced. Best experienced mix every company expects is between 3 to 8 years.
    Most of the 10+ year experienced technical people - find it hard to do coding.
    Anyone who is in financials of IT companies or managing a project will be able to tell you that clients and IT management is focusing on supporting the work with least experience possible. If work can be supported by 4 year experienced - there is no way 8 year experienced will be engaged for the same.
    Yes thats correct cause the normal IT job a 8 yr person does today can be done by a 4 yrs old. So that 8 yr old will either have to be satisfied with below inflation salary rise or improve his / her skill set. That is the beauty of the industry and the new skills can quite easily acquired using the same set of tools that are used for the job today - internet, phone and laptop / tablet
    The only thing which adds value to 15 years of IT expertise is domain expertise and application/business knowledge. Due to policy or tendency to switch projects/jobs every 2-3 year - most of the technical guys loose this advantage.
    sorry why cant one carry forward their technical expertise?

    Summary - If IT continue to grow(as it is till today) - it is not an issue - pyramid keeps growing. But if growth is stagnated - surely we will see high cost people getting laid off and hiring happening at the base of the pyramid. It is a simple common sense.
    IT is a umbrella for a host of jobs that have been off-shored. The point is that 15-20 yrs back people looked at indian IT as application development, testing and maintenance. Today companies are ready to hire IT folks from IT companies to do a whole host of other jobs which are high paying than your old IT jobs. 15-20 yrs back manufacturing people who joined IT would have done it cause the pay for good in IT and then that motivated them to learn new skills. The same will happen now with people who want to earn more.

    Just dont look at the number of people IT companies are hiring or firing and then extrapolate it to how the Indian RE prices will react.
    Last edited by herohiralal; August 14 2013, 04:50 PM.

    Comment


    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Originally posted by ankitnagpal View Post
      I agree. But still a few make it up to CEO, Principal Engineer levels to earn good and work less. I think Suryawork and herohiralal are in USA where there is strict 8*5 hrs. week with good salary and are at a very senior level in a good company. But not everyone achieves that level.
      Not there yet but I can see no reason why one cant make it to that level. A lot of jobs are now available for talented people and it dosent matter what their citizenship is and where the job executed from.

      Globalization has surely worked wonders for the Indian IT sector and the future is quite +ve for people keen to learn and adapt.

      Comment


      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        Agreed but in practical consider the following scenario. Assume in your company - you are a CEO and 100 positions

        20 for starter skills/experience paid 10 units
        50 for average skills/experience paid 20 units
        20 for excellent skills/experience paid 30 units
        10 for super excellent/experience skills paid 40 units (I believe you belong here - great indeed - rather everyone wants to belong here)

        Assume that
        1. Number remains constant for next 10 years (equivalent to IT getting stagnated)
        2. Share holders are not in a position to allow impact to current profitability rather they want to increase profit.
        3. Client is not going to pay you extra for the same skills/experience than what it is paying you today.

        2 and 3 are actual reality today and 1 is a fear standing on the door front.

        Question 1>
        As a CEO of the company what are you going to do about it to survive the 10 years?

        Question 2>
        30 % of the skills required today are going to be obsolete in 10 years and 30% different skills are going to come to market. How would you decide policy as to how to fulfill this demand?

        Now you may have to come out of your comfort zone of excellent technical skills to answer that.



        Originally posted by herohiralal View Post
        Not sure how long the comfortable life will last as the market is will demand change and everyone who wants to grow will have to be effective.


        Yes thats correct cause the normal IT job a 8 yr person does today can be done by a 4 yrs old. So that 8 yr old will either have to be satisfied with below inflation salary rise or improve his / her skill set. That is the beauty of the industry and the new skills can quite easily acquired using the same set of tools that are used for the job today - internet, phone and laptop / tablet
        sorry why cant one carry forward their technical expertise?
        [QUOTE}

        Summary - If IT continue to grow(as it is till today) - it is not an issue - pyramid keeps growing. But if growth is stagnated - surely we will see high cost people getting laid off and hiring happening at the base of the pyramid. It is a simple common sense.

        IT is a umbrella for a host of jobs that have been off-shored. The point is that 15-20 yrs back people looked at indian IT as application development, testing and maintenance. Today companies are ready to hire IT folks from IT companies to do a whole host of other jobs which are high paying than your old IT jobs. 15-20 yrs back manufacturing people who joined IT would have done it cause the pay for good in IT and then that motivated them to learn new skills. The same will happen now with people who want to earn more.

        Just dont look at the number of people IT companies are hiring or firing and then extrapolate it to how the Indian RE prices will react.
        Last edited by tushart; August 14 2013, 04:06 PM.

        Comment


        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          Originally posted by tushart View Post
          Agreed but in practical consider the following scenario. Assume in your company - you are a CEO and 100 positions

          20 for starter skills/experience paid 10 units
          50 for average skills/experience paid 20 units
          20 for excellent skills/experience paid 30 units
          10 for super excellent/experience skills paid 40 units (I believe you belong here - great indeed - rather everyone wants to belong here)

          Assume that
          1. Number remains constant for next 10 years (equivalent to IT getting stagnated)
          Any CEO thinking about growth in terms of just number has already lost the battle. Like I have said in my post before IT today is an umbrella used for outsourcing of many kinds of job and not just IT.
          2. Share holders are not in a position to allow impact to current profitability rather they want to increase profit.

          3. Client is not going to pay you extra for the same skills/experience than what it is paying you today.

          2 and 3 are actual reality today and 1 is a fear standing on the door front.
          This is a fact of any business and so its not particular to just IT so lets keep this one out. This is the base on which any business is run. These 2 points always exist in every industry.
          Question 1>
          As a CEO of the company what are you going to do about it to survive the 10 years?

          Question 2>
          30 % of the skills required today are going to be obsolete in 10 years and 30% different skills are going to come to market. How would you decide policy as to how to fulfill this demand?

          Now you may have to come out of your comfort zone of excellent technical skills to answer that.

          Lets me take an example to explain what should be done. Take Coke or Mc Donalds and see what they have done. Great brands even 10-15 yrs ago. All of them had their key products - carbonated soft drink and burgers. Faced the same issue as IT is facing today. Their key offering was seeing too much competition and margins are under pressure. There is only so many burgers that a person can eat and anyone can mix soda and water and flavour and sell it as less than half the prices as coke (no one has been successful so far but that doesnt mean Coke should not prepare itself for that eventuality)

          So what do they do? Mc Donalds sells food. Already had tons of outlets and the supply chain in place with chefs and the whole army of people ready to serve. So it starts selling coffee and shake and breakfast and what not. Same supply chain needs slight modification, same outlets, new ads using the same trusted brand.

          What does Coke do? Goes and invests in fruit juice and water and everything that is liquid - may soon enter alchohol and beer for all we know - Coke already has plants which purify water. But Coke does not have outlets. Its strength is its relationship with big retail players so it launches new brands and gets shelf place in retail outlets like walmart, tesco and what not.

          So McD uses its same brand and same outlets but moves into different selling different kinds of food whereas Coke diversifies into the same sector - water + anything - to grow.

          What can a IT company do? use its supply chain - HR process to tap talent from colleges and its factories - vast amount of campuses connected to the globe and filled with amenities for employees - to move into other professional services. Indian colleges continue to produce armies of MBAs, HR execs, marketing, financial and legal professional,

          IT for the last 10-15 yr has been nothing but hiring cheap labour here in India and renting them to US or European clients and making profit on the difference between billing rate and cost of resource. Can this be done in offshoring of HR or finance departments of big MNC? Say for example Infosys says to Exxon. let us provide u HR or finance people who will sit in India and do all the low level tasks that you have people in Houston for? Can this also be done in marketing, legal, media, entertainment, food and then have a small army going after that holy grail - consulting.

          There are so many jobs that can be outsourced and off-shored that any IT company which cannot grow 10-15% for the next 7-10 yrs should look very hard at their top management - we have already seen some changes already in the 2nd largest IT company in India. Cogni and TCS seem to be growing well inspite of all the news about the world falling apart. Tech Mahindra is growing its non-BT business very rapidly in a sector where high debt is really killing the European and Indian telecom companies.

          I am not even going into the world of software products and apps that these companies could develop - not the big stuff that oracle, IBM, Microsoft or SAP sell but the cloud and 4g will open up vast opportunities for these players in building solutions and produces for the medium and small sector of the developing world. TCS has started it but it didnt go well.

          Comment


          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            Good thinking - though we should not do a mistake of comparing Indian IT with Food and Retail giants.

            Anyway I guess I have no doubt that Indian IT and people employed in it will do exceedingly well if it keeps growing/innovating which is what you are explaining in beautiful words. And that is what I said - if IT grows we have no issues - pyramid keeps growing.

            The problem is only when it stops growing or grows at a slower rate. This is a fear at this point and all we are saying is that if it comes to reality for whatever reason, then we would see people with high cost(high experience) getting laid off and hiring happening at the bottom of the pyramid.


            Originally posted by herohiralal View Post
            Any CEO thinking about growth in terms of just number has already lost the battle. Like I have said in my post before IT today is an umbrella used for outsourcing of many kinds of job and not just IT.
            This is a fact of any business and so its not particular to just IT so lets keep this one out. This is the base on which any business is run. These 2 points always exist in every industry.



            Lets me take an example to explain what should be done. Take Coke or Mc Donalds and see what they have done. Great brands even 10-15 yrs ago. All of them had their key products - carbonated soft drink and burgers. Faced the same issue as IT is facing today. Their key offering was seeing too much competition and margins are under pressure. There is only so many burgers that a person can eat and anyone can mix soda and water and flavour and sell it as less than half the prices as coke (no one has been successful so far but that doesnt mean Coke should not prepare itself for that eventuality)

            So what do they do? Mc Donalds sells food. Already had tons of outlets and the supply chain in place with chefs and the whole army of people ready to serve. So it starts selling coffee and shake and breakfast and what not. Same supply chain needs slight modification, same outlets, new ads using the same trusted brand.

            What does Coke do? Goes and invests in fruit juice and water and everything that is liquid - may soon enter alchohol and beer for all we know - Coke already has plants which purify water. But Coke does not have outlets. Its strength is its relationship with big retail players so it launches new brands and gets shelf place in retail outlets like walmart, tesco and what not.

            So McD uses its same brand and same outlets but moves into different selling different kinds of food whereas Coke diversifies into the same sector - water + anything - to grow.

            What can a IT company do? use its supply chain - HR process to tap talent from colleges and its factories - vast amount of campuses connected to the globe and filled with amenities for employees - to move into other professional services. Indian colleges continue to produce armies of MBAs, HR execs, marketing, financial and legal professional,

            IT for the last 10-15 yr has been nothing but hiring cheap labour here in India and renting them to US or European clients and making profit on the difference between billing rate and cost of resource. Can this be done in offshoring of HR or finance departments of big MNC? Say for example Infosys says to Exxon. let us provide u HR or finance people who will sit in India and do all the low level tasks that you have people in Houston for? Can this also be done in marketing, legal, media, entertainment, food and then have a small army going after that holy grail - consulting.

            There are so many jobs that can be outsourced and off-shored that any IT company which cannot grow 10-15% for the next 7-10 yrs should look very hard at their top management - we have already seen some changes already in the 2nd largest IT company in India. Cogni and TCS seem to be growing well inspite of all the news about the world falling apart. Tech Mahindra is growing its non-BT business very rapidly in a sector where high debt is really killing the European and Indian telecom companies.

            I am not even going into the world of software products and apps that these companies could develop - not the big stuff that oracle, IBM, Microsoft or SAP sell but the cloud and 4g will open up vast opportunities for these players in building solutions and produces for the medium and small sector of the developing world. TCS has started it but it didnt go well.

            Comment


            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              Originally posted by techynt View Post
              I don't think the rent is going to keep on increasing. Currently there is an oversupply of housing, it’s just that it is too expensive for most end users. For rent to increase, salaries have to increase, which may happen once pay commission starts doling out to govt employess, but in pvt sector that’s going to be hard, because there may be too many unemployed people to take your job, so I don’t think you are going to ask for a raise.

              Even if rent increases, we are a long way from rent becoming equal to even 70% of EMI(home ownership will be worth 30% more payment). Currently EMI for a 50 lacs apt is around 50k, but rent will be around 10k.
              Most of the vacant inventory at least in north India is not inventory for renting but kept locked.

              Rents move up when the baseline bench mark which in Delhi is the lal dora 2 room set, moves up. It is related to inflation in an unbelical way because the small time landlords are dependent on the income and are prompt in changing the tenant for a 1000 Rs per month advantage.

              REst of the rent inflation feeds on the benchmark. In 2009 I used to discuss this with Wiseman and said rent will go up a lot.

              Right now, the rent which was 7000 per month for the bench mark is at 14000 per month = doubled in 4 years. Exactly as predicted and directly related to flat prices which have also doubled.

              Real inflation in rents will not be visible at your level because IT and middle class folks are not so prompt in raising the rent for 3BHK unlike the 2 room sets. There is a lag in rentals for middle class because landlords are more opportunistic people = speculator turned landlord rather than people dependent on rental income.

              Originally posted by herohiralal View Post
              Any CEO thinking about growth in terms of just number has already lost the battle. Like I have said in my post before IT today is an umbrella used for outsourcing of many kinds of job and not just IT.
              This is a fact of any business and so its not particular to just IT so lets keep this one out. This is the base on which any business is run. These 2 points always exist in every industry.



              Lets me take an example to explain what should be done. Take Coke or Mc Donalds and see what they have done. Great brands even 10-15 yrs ago. All of them had their key products - carbonated soft drink and burgers. Faced the same issue as IT is facing today. Their key offering was seeing too much competition and margins are under pressure. There is only so many burgers that a person can eat and anyone can mix soda and water and flavour and sell it as less than half the prices as coke (no one has been successful so far but that doesnt mean Coke should not prepare itself for that eventuality)

              So what do they do? Mc Donalds sells food. Already had tons of outlets and the supply chain in place with chefs and the whole army of people ready to serve. So it starts selling coffee and shake and breakfast and what not. Same supply chain needs slight modification, same outlets, new ads using the same trusted brand.

              What does Coke do? Goes and invests in fruit juice and water and everything that is liquid - may soon enter alchohol and beer for all we know - Coke already has plants which purify water. But Coke does not have outlets. Its strength is its relationship with big retail players so it launches new brands and gets shelf place in retail outlets like walmart, tesco and what not.

              So McD uses its same brand and same outlets but moves into different selling different kinds of food whereas Coke diversifies into the same sector - water + anything - to grow.

              What can a IT company do? use its supply chain - HR process to tap talent from colleges and its factories - vast amount of campuses connected to the globe and filled with amenities for employees - to move into other professional services. Indian colleges continue to produce armies of MBAs, HR execs, marketing, financial and legal professional,

              IT for the last 10-15 yr has been nothing but hiring cheap labour here in India and renting them to US or European clients and making profit on the difference between billing rate and cost of resource. Can this be done in offshoring of HR or finance departments of big MNC? Say for example Infosys says to Exxon. let us provide u HR or finance people who will sit in India and do all the low level tasks that you have people in Houston for? Can this also be done in marketing, legal, media, entertainment, food and then have a small army going after that holy grail - consulting.

              There are so many jobs that can be outsourced and off-shored that any IT company which cannot grow 10-15% for the next 7-10 yrs should look very hard at their top management - we have already seen some changes already in the 2nd largest IT company in India. Cogni and TCS seem to be growing well inspite of all the news about the world falling apart. Tech Mahindra is growing its non-BT business very rapidly in a sector where high debt is really killing the European and Indian telecom companies.

              I am not even going into the world of software products and apps that these companies could develop - not the big stuff that oracle, IBM, Microsoft or SAP sell but the cloud and 4g will open up vast opportunities for these players in building solutions and produces for the medium and small sector of the developing world. TCS has started it but it didnt go well.
              Good analysis.

              But a behemoth like Infosys or TCS will not be nimble enough to manage small groups of highly trained people - smaller start ups will overwhelm and outcompete the biggies who try to stray from their specialised domain.

              Managers of the IT biggies are not good enough to select manage and retain the kind of small specialised companies.

              Even if multiple small subsidiaries are seeded by the biggies, talent will see more benefit in working in small groups for themselves over working for a scrooge like Infosys. Working atmosphere and sense of freedom also matters a lot at higher levels.

              Poland, Russia, Israel, Ireland etc will be able to do this better - they have very talented programmers who are better than code coolies, but ready to work at Indian salary expectations.

              A lot of talent haemorrhage from India to more business conducive atmospheres like Singapore, Kuala Lampur, Shangai, Manila etc which have good law and order or even Western developed countries is also likely.

              Turning a car and turning a train are two different things.
              Venky (Please read watch a or before posting)

              Comment


              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Originally posted by ankitnagpal View Post
                Thanks for the link. But bhai, I am no big-shot and doing a very small business of USD 3-4K/month for the last 2.5 years. If you still want me share my exp. then its fine. The only reason I had to start a business and leave job was a pittance salary of Rs. 40K/month in-hand (6L CTC) in 2010 at 25 yr. of age and I knew that I need to save at least 10 lakhs for marriage within 2 years which was impossible with that salary, alsoI was not getting good marriage proposals because Rs. 40K/month is not enough to raise a family in Delhi. I knew I can not make it up to the golden group of 1L+ salaries ever in job (which I achieved very easily and quickly in business) as I neither had calibre of working 12 hrs/day nor ass-licking capabilities like others in my company. Anyways, thanks for the link.
                I rate you more than people who earn even 4-5 lac/month in a job, because you are doing your own stuff. Well done

                Comment


                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  Originally posted by herohiralal View Post
                  Income is a reflection of talent and execution skill of an individual. So income will increase if the person is talented and can execute really well. Most of your friends who passed college in 2006 are 7 yrs old in the industry and their time will come to earn big money if they can learn more and understand the domain and how businesses work.

                  A person earning 1.8 lakhs per annum 10 yrs ago is able to earn 20-22 lakhs today not by just doing the same old stuff that he/she did back in 2003 or 2006 but by learning new things. Just joining a IT firm dosent guarantee success and salary increases more than inflation. Its a private sector which is very competitive and
                  Herohiralal,

                  Your scenarios are always based on top 20%, whereas it should be based on 'average'. Average 10 yrs experienced in IT is earning 10-12 lpa

                  Comment


                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    entreprenuer

                    Originally posted by ankitnagpal View Post
                    Thanks for the link. But bhai, I am no big-shot and doing a very small business of USD 3-4K/month for the last 2.5 years. If you still want me share my exp. then its fine. The only reason I had to start a business and leave job was a pittance salary of Rs. 40K/month in-hand (6L CTC) in 2010 at 25 yr. of age and I knew that I need to save at least 10 lakhs for marriage within 2 years which was impossible with that salary, alsoI was not getting good marriage proposals because Rs. 40K/month is not enough to raise a family in Delhi. I knew I can not make it up to the golden group of 1L+ salaries ever in job (which I achieved very easily and quickly in business) as I neither had calibre of working 12 hrs/day nor ass-licking capabilities like others in my company. Anyways, thanks for the link.
                    Have a vision of delivering a quality product.Do business with customer satisfaction as a core value.many businessmen fail on this account and business switches over to others in the same line.
                    Always remember:Mighty oaks from little acorns grow or Great things may come from small beginnings.Business at most times requires you to put in 12 hours or more of your time to deliver goods and you need to develop such determination.When you keep customer first extra time always get spent.

                    Comment


                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Originally posted by RP Pune View Post
                      Herohiralal,

                      Your scenarios are always based on top 20%, whereas it should be based on 'average'. Average 10 yrs experienced in IT is earning 10-12 lpa
                      Agreed but then people should not be surprised with people buying 80 lakh houses as those 20% have cash to burn / invest. Average salary of a 10-12 yrs old in India (non-IT) will be like 2 lakhs or even lower but that does not mean house prices will be somewhere like 10-12 lakhs.

                      If areas like wakad, aundh, baner, hinjewadi etc are sought after by people who earn say in the range 10-25 lakhs (IT folks) then price range of 60-80 lakhs for a 2 bhk should not surprise people given the emotional attachment we have with RE, lack of alternate investment options and constant deprecation of the rupee.

                      Comment

                      Tags: None
                      Have any questions or thoughts about this?
                      Working...
                      X