IT boom and WFH impacts

Migrants

Not all states (and not all cities within a state) have good economic progress to provide employment opportunity for the people locally. This resulted in many people migrating to major cities looking for employment opportunities. Some migrated to live the life of a metro/big city willingly while some migrated with no other option available locally for their own progress.

I myself is a migrant (for education and then employment) for almost two decades now visiting my parents, who are living some 450KM (280 miles) away, once in a month or so. I joined a college in Chennai and got a job in a leading IT company. Four years of college and 15 years in job (12 years in IT field and last three years in job related to equity markets).

Thriving ancillary opportunities

With the rise of services sector in the country starting in 1990s led predominantly by IT, employment opportunities were plenty as long as you had a BE/B.Tech degree in any vertical. This helped uplifting of many low income families with their son/daughter getting jobs with salaries considered very high with onsite opportunities. (5 year experienced IT employee used to get the paycheck equivalent or more than 30 years experienced employee in other sectors). I'm talking about low and mid role employees. With rising income levels, purchasing power of families increased. White goods that are considered as luxury earlier become essential. Thanks to Bajaj Finance who identified this opportunity and empowered the middle/low income families with EMI, they have the first mover advantage and is one of the biggest wealth creators for its long terms investors with more than 100x returns.

As many professional graduates shifting to major cities after getting placement out of college, realty market picked pace. Many high rise buildings came up and city limits were pushed out in all possible directions to accommodate the "migrants". When there is a construction activity, it provides business to a lot of sectors like,
- cement
- steel
- ceramics
- paints
- FMEG
- White goods/appliances
- House financing (both banks and HFC)

This in turn generated employment opportunities for many more people including the unskilled migrants from economically poorer states for construction activity. Such workers are mostly exploited mainly by agents or the employers (not all) by not adhering to available labour laws as they don't know their rights due to lack of education.

Growth of IT services sector was so massive that at times, some call this sector as "back office of the world". Even the state governments hadn't anticipated such growth. City infrastructure couldn't cope with rise in migration. Traffic on city roads increased many fold. To avoid congestion, state governments started to have Special Economic Zones (SEZ) developed far away from city limits. Tax breaks were provided for IT companies for the revenue generated from such IT parks. This is to incentivise companies to shift out.

Apart from realty market, auto industry gained the most as most had to commute long distances on a daily basis as IT offices were moved out of city limits. Due to overcrowded/lack of public transport and also due to affordability, mid and higher role employees started to travel by own cars to office. Entry level employees used bikes/motor cycles. Most took loans to buy the vehicle paying it off through EMI. Again, these increased the congestion prompting employers to arrange company transport for their employees. Even some tried carpooling (saving environment/cost). As the number of company transport buses increased, authorities even tried to regulate the timings in which it can ply on important roads. Such is the growth of sector and increase in migrants. Banks and auto finance companies thrived on this growth explosion.

Financial sector gets affected the most both in economic boom and in recession. Apart from housing and auto loans, financial sector gained from personal loans. Margin is higher on this category as the loans are unsecured.

Personal grooming is another space that saw good growth with people spending few times more than what they used to spend in their native place. It created good employment opportunities and good place for cosmetic products market.

There should be more sectors that got indirectly benefitted from the booming IT services sector.

Inflation

As salaries are credited directly in employee bank account and expenses are paid through cards/wallet/UPI etc. in online mode, most of the people doesn't see printed money at all. Due to this, most doesn't understand how much more is spend than that is necessary. If the same amount of expenses is done in cash mode, most will think about it. Also, higher salary led to improved lifestyle which demands more expenses. Most of the employees don't even realise that they are getting into EMI trap on house loans, credit cards until they are fired. Such reckless spending will eventually have led to collapse of the family.

The salary mismatch between IT and other sectors resulted in social inequalities. For instance, in housing societies, altercations became a regular affair in families who can't afford to have similar lifestyle of neighbour IT employee family.

During the initial days of my career, I stayed in a rented house which is 5KM away from work place. I used to commute to office in public transport, mostly share auto. Fare used to be Rs.5 per ride (I'm talking in 2006 period). My IT office is the last destination for autos. Eventually in a year, fare increased more than two fold. I didn't feel the pinch for long until I overheard an argument between the auto driver and an old lady trying to get in. She wanted to get out mid-way but the driver demanded full fare saying she is occupying a seat which would have been taken by some IT employee giving him full fare. That old lady couldn't afford and got down from auto walking to the over crowded bus stop. It is then I realised the inflation that IT sector is imposing on others.

Watch "Kattradhu Thamizh" movie (2007) directed by Ram which exactly captures the inflation issue caused by IT sector.

Pandemic strikes

Things were going fine until 2020, when a virus that originated from China (none know for sure how humans got infected first) spread across the globe with WHO declaring it a Pandemic. Covid-19 has wreaked havoc on livelihoods of many as governments across the globe went ahead with strict lockdowns not seen in a century to contain the spread of corona virus as there wasn't any other tool available.

Locally, lockdown announcement, without giving any time to the public to prepare for it, caught most by surprise. Rather than shutting down the entire country, closure of all international travel from 1-Feb-2020 would have been a more sensible approach giving time for current dispensation to prepare for pandemic when it strikes locally and have controlled opening of international travel.

Lockdowns forced migrants to flee metro/big cities, once seen as employment creating place, to their native place to be with their family during the difficult time of their life. Many walked on foot, some even few hundred miles, carrying their belongings/children, as there wasn't any other way to reach their homes. Some lost their life in this journey. Hardships faced by them can't be explained in words, even the enemies shouldn't face such situation.

Rise in equity market

Like a blessing in disguise, some sectors boomed during lockdown period. Food delivery as dining at restaurants were banned/IT sector as everyone moving online including education/broking sector as most had ample time at home.

Equity markets had the fall of the decade on the potential impact to economy due to lockdown, mostly due to panic as last two generations wouldn't have seen a pandemic of this scale. There was risk off mode everywhere led to fall in equity and rise in safe havens, precious metals (gold/silver). As there was sudden loss of income to majority of the public, governments across the globe took stimulus measures to bring back growth. It includes direct cash transfer, tax breaks, relaxations on guidelines for credit availability etc.

Stimulus measures taken by various governments and central banks along with savings at hands of public, markets started to rise again, not just to pre-covid levels, but to fresh record highs as people poured money into market at lower prices. Surge in direct retail participation was reported in various countries aided by work from home (WFH) culture.