Arvind’s Newsletter

1.Goldman Sachs Sees India's GDP Growth At 6.2% In FY24; 'Overweight' On Equities

 Goldman Sachs expects economic activity in India to remain resilient in 2024, even as elevated headline inflation will prevent the central bank from monetary easing before October next year.

The year will likely be a tale of two halves: pre-elections, government spending will likely be the growth driver, it said. Post elections, investment growth is expected to re-accelerate especially from the private side.

Equity Outlook: 'Overweight' On Resilient Fundamentals India has the best structural growth prospects in the region, the Goldman note said. While external macro backdrop of high-for-longer rates, persistent dollar strength, lower China growth and greater geopolitical uncertainty, could potentially lead to elevated market volatility in the region, India is less sensitive to these external shocks, it stated.

Read more at: https://www.bqprime.com/markets/goldman-sachs-sees-indias-gdp-growth-at-62-in-fy24-overweight-on-equities

2.OpenAI’s Misalignment and Microsoft’s Gain, opines Ben Thompson of Stratechery.

To briefly summarize the developing story on sacking of CEO at Open AI:

• On Friday, then-CEO Sam Altman was fired from OpenAI by the board that governs the non-profit; then-President Greg Brockman was removed from the board and subsequently resigned.

• Over the weekend rumors surged that Altman was negotiating his return, only for OpenAI to hire former Twitch CEO Emmett Shear as CEO.

• Finally, late Sunday night, Satya Nadella announced via tweet that Altman and Brockman, “together with colleagues”, would be joining Microsoft.

This is, quite obviously, a phenomenal outcome for Microsoft. The company already has a perpetual license to all OpenAI IP (short of artificial general intelligence), including source code and model weights; the question was whether it would have the talent to exploit that IP if OpenAI suffered the sort of talent drain that was threatened upon Altman and Brockman’s removal. Indeed they will, as a good portion of that talent seems likely to flow to Microsoft; you can make the case that Microsoft just acquired OpenAI for $0 and zero risk of an antitrust

Meanwhile, Majority of OpenAI staff threaten to quit unless Sam Altman is reinstated reported the Financial Times.

3.Israel-Hamas war:Hostage Negotiations

Israel and Hamas appear to be nearing an international-brokered deal for the release of some of the roughly 240 hostages the militant group captured from Israel and hid in Gaza after an Oct. 7 surprise attack, reported Axios.

According to reports, under the latest proposal—led by Egypt, Qatar, and the US—Hamas would release a number of women and children hostages in exchange for the release of roughly the same number of Palestinian women and children held in Israeli prisons. A short pause in fighting is expected to be part of the deal, though the length of the potential pause is reportedly a sticking point in negotiations. 

4.Planning your holidays for 2024? Here are Conde Nast Traveller’s 24 best places to visit.

5.India’s back-office boom sparks ‘war’ for IT service workers, reports Financial Times

International companies are rushing to set up their own back offices in India as they seek to develop technology in house, sparking a “huge war for talent” with traditional IT service providers such as Infosys and TCS, said industry experts.

Companies offering data, cloud and analytics support have made India a software services export powerhouse. But multinationals are opening a growing number of their own back offices, called global capability centres, to develop in-house technology, including cyber security systems and artificial intelligence.

These centres, which can also handle accounting and human resources work, are cheaper to operate in India, where labour costs are lower. Unlike outsourced IT consultants, GCCs are managed by the parent company.

Work that “was core, which was never outsourced before, is getting offshored to GCCs in India”, said K S Viswanathan, vice-president for industry initiatives at Nasscom, India’s IT industry trade body.

The rise of GCCs has caused a “huge war for talent”, said Viswanathan.

Global capability centres have proliferated and expanded at a rate of 11 per cent a year since 2015 to become a $46bn industry employing 1.7mn people in India, according to Nasscom. Real estate group Colliers estimates the number of GCCs in India will double from 1,026 in 2015 to 2,000 by 2026.

Global banks are rapidly expanding their Indian offices, with about a third of their back offices located in the southern tech hub of Bengaluru. JPMorgan Chase opened its first Indian global capability centre in 2002 with 75 people. It now employs more than 50,000 staff across facilities in five cities. Goldman Sachs and Wells Fargo have also been expanding their operations.

A study of 80 global capability centres by Xpheno, an Indian specialist staffing company, this year found that a third of the workers were hired from IT service providers. Using “higher compensation packages, GCCs have been wooing talent from the IT services cohort”, said Kamal Karanth, Xpheno co-founder.