New Challenges for Indian IT

San Francisco, with only 4-5 million people, beats any big or small Indian city in terms of the IT industry size and number of smaller firms, so the opportunity to grow is huge.

In many regions like the North-East or Kashmir, the larger agenda is very important. People here feel alienated for various valid reasons, but their perception can be changed by the IT sector8217;s efforts.

By encouraging firms to hire from 8216;neglected8217; regions, we are creating the opportunity for businesses to make a gradual transition to new towns. CEO visits show people in these regions that India is not just about an army or oppression, but about 8216;people like us8217;. If some inherited beliefs of yougsters in difficult regions change through the IT sector8217;s efforts, the effort will be a success.

8226; What about the BPO backlash? Are there signs that the struggle against offshoring is easing off?

It is quite clear that the overall climate is better. The West is more positive in discussions on moving people and work offshore. Nasscom is also aiming for a visa regime which is ideal in some senses: A regime without refusals. It doesn8217;t make sense for the US to refuse visas to Indian engineers who must do some work there. Even if the arrangement is delivered in a different form, and struck bilaterally with the US, it should ease travel restrictions.

8226; Has the government done all it could to support IT and BPO, or are there areas which still need attention?

On the supply side, we continue to face HR problems. There are not enough people with the right skill sets and desperate companies are picking up people and training them. In six months, they are lost to poaching, causing severe problems like the spiraling wage rate.

Only better education, bolstered by government, will solve the problem.

Two other concerns are over information security and the breadth and scope of new investments. But new issues keep cropping up. Like the concern over software code being stolen. If stolen software costs 1/5th the original price in India, no foreign or Indian company will want to invest in R038;D here. IP protection needs to be stringent and the government can facilitate this.

8226; After the two recent information breaches in Bangalore and Delhi, will big offshore contracts keep coming to India?

It is possible that individual offshoring destinations will become much more competitive against India after the recent incidents. Already, anti-BPO legislations are being re-introduced in the US as 8216;work should not go out of the US because data should not go out of the US.8217; We say information security is an industry issue, not a country issue. And we want tighter security norms so that the West finds data is more secure in India than anywhere else in the world.

Millions of bank and credit card details were stolen in the US recently, inviting scarcely a flutter, so the West8217;s concerns are still laregly political.

8226; And what of the threat from competition?

Competition is not a likely worry for the next three to five years. At best, rivals are snapping at our heels. China, with infrastructure and manpower, seriously lags in language skills and quality. South Africa and Vietnam have no size and little scale.

The Philippines, despite historical ties to the West, has not grown. For individual Indian companies, competition is serious business because they can lose a contract. But as an industry, there8217;s not a whimper yet. Besides, the offshoring pie is growing so fast that India will focus only on what more services and industries can be outsourced. There is enough to go around.

8226; How big is the infrastructure problem and what can be done?

The industry can handle manpower problems with six months training, but infrastructure is tricky business. For example, if we start building a mass transit system for Chennai today, it will take three years before results appear.

In many cities, specially Mumbai and Bangalore, the infrastructure problem is getting severe. In a year you will see the strains of success. Even if industry moves to smaller towns, well, infrastructure there is already weak. The infrastructure deficiency is everywhere, and even if these are the problems of success, something has to be done about it.