NEW DELHI (dpa) – The Indian information technology industry is looking at the U.S. economic slowdown as an opportunity to project itself as the place where hard-hit American software companies can park their computer services and solutions.
India, which regards itself as the information technology powerhouse of the world, also regards the American situation as a means of retaining computer experts now the U.S. has begun to go slow on issuing work permits.
Gagan Adlakha, a senior official at the 266-million dollar National Institute of Information Technology (NIIT), a software training institute, said the spate of resignations that used to haunt Indian companies has come down over the recent months.
“There used to be eight resignations a month, now it has come down to two. And even those who are planning to go to the U.S. are now holding back to see how the situation emerges over a period of time,”says Adlakha.
Sanjiv Kataria, who heads NIIT’s corporate communications, also maintains that the U.S. slowdown has helped Indian companies to retain their staff. A recent survey by the Delhi-based National Association of Software and Service Companies (Nasscom) says it has about 67,000 vacancies now and it fears the shortfall could swell within the next couple of years.
The country’s computer experts are much in demand in the U.S. and Europe and Indian companies admit they cannot compete in terms of salaries and benefits. Projections show India will require a minimum of 2.2 million workers by the year 2008 and even a ten-fold increase in the number of trained computer professionals available would not be enough to meet the potential of the information technology sector.
Owing to the U.S. slump, India has downgraded its software exports target to 8.5 billion dollars from the earlier target of 9.5 billion dollars. “This target is based on preliminary software projections by (India’s) top 25 companies that account for 60 per cent of total exports,” according to Nasscom chairman Phiroz Vandrevala.
India’s software exports have been growing around 50-55 per cent a year since 1991. The World Bank in its recent global development finance report said: “a slowdown in India’s high-technology service exports appears imminent due to global downturn in information technology.”
India is also concerned about the threats emerging from software nations like the Philippines, the CIS nations, Israel and China. Industry officials admit programmers from these countries cost less than an average Indian employee.
N.R. Narayana Murthy, boss of India’s most admired company, Infosys Technologies, warns that the IT industry faces the twin challenges of building a critical mass of knowledge workers and of raising adequate investment capital to fulfil the ambitious growth targets set for it.
He says Indian industry must step up manpower intake and upgrade its training and technological infrastructure by at least 35 per cent each year. India needs to scale up the availability of manpower to create a much larger domain of people. It costs an estimated 15,000 dollars to create the physical working space for and pay the annual salary for each fresh software engineer who is hired.
“If you are talking of hiring 200,000 people, you are looking at a capital outlay of three billion dollars a year. You need to source this capital; it won’t be available just in India. To tap global capital, you need to become much more investor-friendly,” says Murthy, 54, whose own company’s headcount has risen from seven staff members at the time it started in 1981 to more than 6,500 now.
Azim Premji, chairman of Wipro, another successful IT company based in the southern city of Bangalore, maintains that the IT boom has helped India to shed its image of being a land of snake charmers and elephants. He also says complacency in entrepreneurial growth should not be allowed to set in.
The Indian government is in the process of increasing the intake at its engineering colleges and computer institutes, cradles of the IT industry. It also has to look for students from other disciplines – from physics to philosophy – to meet its manpower requirements.
Another problem facing the industry is its ability to retain trained people.
“We are selling knowledge and expertise,” says Kataria. Unlike the traditional brick-and-mortar industries that are more capital intensive, the services sector is considered “more about people who have global aspirations and have access to global opportunities”.
