1Mby1M Virtual Accelerator Investor Forum: With Mohit Gulati of ITI Growth Ventures (Part 4)

Sramana Mitra: But there are two or three different trends that need to be parsed within that one. Is there is a job loss phenomenon that is going to happen in the white-collar because of the IT industry, which is one of the biggest growth drivers in India for a while now. As the IT services model is coming to a head, where does that labor pool go? I wonder if that labor pool could be absorbed within the SMB sector, which would give a huge boost to the SMB sector.

I’d be curious to hear what your thoughts are on that. Then there is this lower-end workforce that is aspirational that wants to learn and that wants to climb higher in the income curve and so forth. Of course, there’s the comment you made about all these people wanting to own cars. It makes me feel absolutely scared shitless because if India adds more cars, it’s already congested and terribly polluted system.

Mohit Gulati: In the last five to ten years, the SMBs have actually been the most neglected part of our GDP. Banks do not lend to them. Most of the traditional businesses have been having a very, very tough last few years. Yes, technology could be a driver for them, but at this moment until our banks don’t recapitalize the SMB space, it’s impossible for that entire industry to wake up.

What’s driving India today is the large companies, which are either in infrastructure, or in oil and gas, or banks, or real estate. But it’s not the SMB’s. The SMB’s have actually been a negative contributor to the GDP. I take your point that a lot of experienced IT workers are going to come out.

Why don’t I consult an SMB? Why don’t I bring in IoT or industry automation within some of the SMB’s to aid them? Before that happens, I think the SMBs need to hit the reboot button and just get their act together. It’s not their fault. It’s the banks who’ve been so shy about lending to these guys.

Sramana Mitra: Where do you think this surplus pool of IT workers is going?

Mohit Gulati: It’s all about timing. At this moment, that surplus pool of IT workers is working in their current jobs at a lower-than-expected salary but they’re just happy to be there and not lose their jobs. You’re right. It could happen sooner than we expect. Maybe a year from today, you’ll have Infosys saying,  “I need to cut 30,000 jobs.” Where do those 30,000 people find meaningful occupation?

Sramana Mitra: The workers are very scared. There are 200,000 jobs that are going in the next year and probably 500,000 in the next couple of years. That means the numbers are really, really serious numbers.

Mohit Gulati: I’d totally buy that argument. Saying that the SMBs can absorb that talent pool is wrong.

Sramana Mitra: I’m not saying that. I’m fantasizing that if that could happen, that would give the SMB sector a big boost because I think technology would give them a boost.

Mohit Gulati: What’s happening right now though is that a lot of young entrepreneurs are actually joining hands with older entrepreneurs and saying, “You know we are here to create something, but we are not necessarily savvy enough to build this company the way it should be. So you have 20 years’ experience working in Infosys, or Cognizant or TCS. Why don’t you come on-board, mentor us, and help us build this together?”

This goes back to the traditional values of Indians as a whole. We have tremendous respect for people who are elderly to us. If you look at Ecom Express, when these guys set out do start this, there were essentially five of them. Each one of them was above the age of 55 now. Typically, no venture capital fund would touch founders of that age and upwards, but these guys were very clear that they understand the business. We hire a younger team to understand technology. That blend of getting a younger team for technology and older people to run a business has worked magic for them.

This segment is part 4 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Mohit Gulati of ITI Growth Ventures
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