View: India’s sell-side researchers should say what they mean
As George Orwell said in Politics and the English Language, the decline of language ultimately has political and economic causes. Stockbrokers in India use empty phrases as a tribute to corporate power.
So, sales and profit don’t decline for large Indian outsourcing companies, they “degrow.” A workforce doesn’t shrink; the addition of employees turns negative.
The motto is simple: Present the good news, boldly, clearly and upfront in plain English; then, and only then, slip in the bad news, but after obscuring it with jargon. Like in the Monty Python sketch, the parrot may be nailed to the cage, but it’s never dead.
It’s always resting, pining for the fjords.
Want to put a sell rating on a storied Indian outsourcing firm without upsetting the chief executive? Start by talking about record orders. Since despite that gurgling pipeline of business, sales still came in below target, you have two options: Either spin the rise in the so-called book-to-bill ratio as a future windfall, or allude to a “revenue leak:” If you choose the latter approach, you’re pronouncing the global economy to be in tip-top shape; the bucket has a hole somewhere.
At times, though, playing nice becomes a serious handicap.
Around 2016 and 2017, most banking analysts in India kept missing the deterioration in lenders’ asset quality. As the independent analyst Hemindra Hazari described it back then, they would dismiss every souring of large corporate credit as “the last cockroach,” after which there would be no more to be found.
Well, the creepy crawlies just kept coming until India was saddled with the worst bad-loan problem in the world.
The banking industry’s troubles may be in the rearview mirror. Now it’s the turn of the outsourcing firms’
