Posted on 12/14/2004 1:13:21 AM PST by CarrotAndStick
MUMBAI(BOMBAY): At 26, Ajit Fernandes has bought a house and a car, something his parents could never have dreamt of doing in their salad days.
"I have bought both on credit. But I am confident of paying off my loans as the outsourcing industry is booming and salaries are rising," said the operations manager of a suburban call centre.
Fernandes is typical of a burgeoning breed of young people reaping the dividends of India's economic reforms.
Armed with confidence in the future and hefty wallets, they are splurging on items from branded clothes to plush apartments.
"My home is an investment, but my car is an indulgence," Fernandes says.
Indeed, the rise of the urban consumer has been a feature of India's economic transformation over the past decade.
And Indians are young, their median age is 24, and they are not nervous about forking out on credit for pricey global brands.
"Today, kids of 17-18 years earn to augment their allowances. They don't know the days of slow growth, frugal lifestyles and unbranded products. For them, a $300 (Rs 15,000) mobile phone is no issue," says Vatsala Misra, a consultant at KSA Technopak.
In rural areas, business is looking to a massive market of 700 million to sustain the momentum of reforms.
Urbanisation, growth in foreign direct investment and the service sector, and government plans to develop infrastructure point to rising spending in the world's second most populous country.
"India will become the third-largest (consumer) market globally in terms of volume in the next 5-10 years," following the United States and China, said V. Chandramouli, marketing head at Mirc Electronics.
India's rural population is more than twice as big as its urban one but far poorer.
But that is fast changing, economists say.
"India's income demographics will be unrecognisable by the end of the decade," said R. K. Shukla, an economist at the independent National Council of Applied Economic Research (NCAER) think-tank.
The number of middle- and high-income households is growing fast while that of poorer families is shrinking, an NCAER survey of 450,000 households published in May showed.
Rural purchases made up 56 percent of all purchases in terms of volume in the financial year through March 2002, climbing from 44 percent in the mid-1990s, the survey found.
Companies are betting on these changes in the world's 12th-largest economy.
"There is a very clear boom in terms of consumer spending," said Ravinder Zutshi, director at Samsung India Electronics Ltd.
The South Korean giant's Indian unit expects a 40 percent jump in sales in 2004 from a year earlier.
"The attitude is shifting from savings to spending in a very big way in this country, which is needed for its development, as demand fuels growth."
As spending rises, economic growth is expected to average more than 7 percent in the two years through March 2005.
Yet Indian demand is a far cry from that of China. Indians will buy up to 9 million televisions this year, compared with up to 30 million in China.
Indian consumers are starting from a low base, with per capita income of $530 in 2003, World Bank figures show. That's less than half per capita income in China and just 1.4 percent of that of the United States.
But there lies its potential. Management consultants AT Kearney's survey of global executives in October listed India as the third-best destination for foreign direct investment, after China and the United States.
Much of India's consumption is driven by its middle class of about 300 million, concentrated in urban areas that have grown rapidly during a decade of liberalisation.
Thriving activity in the service sector has spawned a myriad of job opportunities in the cities.
Consultant KSA Technopak said each of India's 25 million more affluent households spent an average of $1,500 in 2003 on discretionary purchases, a jump of 16 percent from a year earlier. This year's growth could be comparable.
Already, India ranks fifth among emerging retail markets, say property consultants Knight Frank.
But three-quarters of India's poor live off the land, relying on incomes that fluctuate with erratic monsoon rains.
But the potential is tremendous if rural progress is made.
"While 50 percent of urban homes have television, just 13 percent of rural households do. But rural demand is growing by 30 percent a year, while urban demand is growing 15-17 percent," Mirc Electronics' Chandramouli said.
"This boom will last at least 4 to 5 years. But if impediments to rural development are tackled, it could last another 7 to 10 years," he said.
Rural advancement should stay high on the government's agenda after the rural poor voted out the previous administration in May for neglecting them.
Good to see that in addition to a few jobs, we're also outsourcing a few bad habits.
I can't believe the direction is toward these freaking call centers in India...
I've had to call India a number of times now and I've always had bad experiences. They don't understand half of what you are saying, they don't really seem to care about your business, and they are very reluctant to transfer you to someone higher if they can't solve your problem.
But maybe these problems are only more reasons the corporations love it so -- who knows?
I don't think they care, unless it begins to hurt the bottom line. I'm a bad judge of these sort of things, I never call for help.
And I don't understand half of what they say either. Half an hour on the phone with a thick Indian accent is the more tireing expierence I've had. You have to listen with every ounce of your attention.
Then you run into the arrogant ones who ask you if you can't understand english.. Vud diz de madder dod you udderstan de english languij? ...
One time it must have taken me 5 minutes to give them my name, address, and phone number. The woman couldn't spell and couldn't understand any of the words. She insisted that I do the "A for apple" crap for every single letter in the entire address. By the end I was so irate that I started using curse words and crazy words for every letter...
She just went right along. :)
Though they may have a tough time understanding you, at least there is an institutional nationwide recognition that the english language is the language of the future.
The moment someone utters the word "outsourcing" u have got to expect all that India bashing crap.
Maybe the problem is not so much with the English but with the attitude that comes along with losing jobs to India.
It's sad that the Indians understand that better than we Americans do. If the call centers are in the USA your chances of getting an English speaker are likely less now than by having them in India.
Yes --- because you won't find many articles that start with an American of 26 years old being able to afford a house anymore. India is very likely to become the next superpower --- their government seems eager to bring in good jobs that our government doesn't want to keep here, Indians are becoming united in a common language --- something we've decided we don't want here. Plus they believe in a good solid education --- another thing we've decided isn't important.
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