Slamming huge discounts and cashback offers from e-commerce players as “subsidies”, Chairman of Manipal Global Education T V Mohandas Pai has said the industry may see a shakeout in the next two years, or &8220;even earlier&8221;.
He faulted the business model adopted by e-tailers, which he said promotes growth without building customer loyalty. Biggies such as Flipkart and Snapdeal are just trying &8220;to grow fast by giving subsidies, which is wrong because there is no customer loyalty&8221;.
&8220;And in the last quarter we have seen. Amazon has overtaken them because it has superior technology and better processes. Snapdeal has fallen back,&8221; Pai, the former director of Infosys, told PTI in Hyderabad. &8220;I think, a very good shakeout may come, maybe, in the next one or two years. Some of the weaker players will fall.&8221;
On the start-up growth scenario, Pai said: &8220;Many of them will die because they are not competitive. They are being kept alive by dollars of money.&8221; According to him, the country currently has 18,000 start-ups creating a value of USD 75 billion, with three lakh people being employed in the space.
He projected 1,00,000 start-ups with USD 500 billion of value and generating 3.5 million jobs in 10 years. &8220;Those who copy successful start-ups will die and many others would fall by the wayside. Top 10-20 per cent (of the start-ups) will rise and become major companies&8221;, he predicted.
On the Indian IT sector, Pai said the challenge is to change the business model to boost the digital economy and the market. &8220;They (Indian IT companies) have to go to the new digital era. Some of them are struggling. That’s the challenge. They should be doing more digital,&8221; he suggested.
Pai played down suggestions from some quarters that India&8217;s IT employees are &8220;overworked and exploited&8221;. &8220;When you have 18-20 per cent attrition (rate), where is the exploitation? It (suggestion) is ridiculous&8221;, he added.
Disclaimer: Mohandas Pai is an investor for YourStory.