The success story of Indian IT outsourcing / offshoring is studied closely by emerging economies from Asia and Eastern European countries in hopes of emulating it.
Have you thought about the ingredients that are needed to be on top ?
If one has to put down briefly, I would broadly segregate them in 13 points:
Here they are according to me. (let me know if I have missed something):
1) The number one reason has to be the large well educated population in India.
2) The highest number of English speaking people. (one of the rare positives of Indian invasion by British)
3) Low wages in India as compared to West. Although this factor is slowly becoming a disadvantage, it was one of the main reasons for International Software companies to outsource IT work to India.
4) The Indian culture itself is a huge contributor. For e.g: Parent’s commitment to children’s education. The importance of education is ingrained by them on their children at a very young age. They see good education as the only means to have better standard of living.
5) As much as Indian IT Industry has grown due to offshoring, equal amount of credit should go to growth of domestic companies in Auto, retail, banking, telecommunication, manufacturing etc. They have equally contributed in its growth .
6) The young and dynamic working population. More than 60% of Indian people are below age 25 !
7) The opening up of economy starting in early nineties. A lot of credit goes to then Finance Minister and current Prime Minister – Manmohan Singh. The outsourcing / offshoring started taking roots due to the change in policies back then.
8 ) Partial privatization and growth in Telecommunication, in late nineties. Telecommunication forms an integral part of Information technology Industry.
9) The rapid growth in IT parks in India in last 10 years. Government setup SEZs (specialized economic zones), where opening of software services companies would get certain tax subsidies. This attracted lot of companies to setup software shops.
10) The tax breaks and sops offered by Indian government for upcoming software firms. This made India one of the most attractive markets for setting up Software shop.
11) The commitment of Indians towards their work. It is a common knowledge that people in Software Industry normally put more than 10 hours a day in their work. I do not subscribe to the view that working long hours necessarily leads to higher productivity, but I think this “hard working Indians” definitely plays on people’s mind.
12) Rapid growth in Infrastructure and transportation facilities that started in mid nineties. Yes, we still have to go a long way yet, but we are moving in right direction.
13) The entrepreneurial spirit and Innovative tilt of Indians. This may be controversial, however I think it is a factor that has made Infosys and Wipro such huge success stories !
Update: suggestion by Indian Blogger
14) The time difference is one of the reasons for growth of Indian IT Industry. Western countries get advantage of having a 24 hour work cycle.
If I have missed some, drop in a comment and I will add them here.
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Author: Arun Prabhudesai
Arun Prabhudesai is founder / chief editor at trak.in. He jumped the Entrepreneurship bandwagon in early 2008 after a long 13 year stint in I.T Industry. You can follow him on twitter @trakin or get in touch with him at admin-at-trak-dot-in or 91.9822575676.Related posts:
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{ 13 comments… read them below or add one }
Time zone difference ( 12 hr) is another factor. Work then happens 24/7. Also, increase in the number of engineering colleges in India ( perhaps this is to meet the growing demand of the ITservices firm).
Yes Indian Blogger, that is well caught. This is true especially for American Firms who outsource to India and more than 70% outsourcing work comes from US.
There are other reasons why we still have a 10 year lead:
Seasoned and experienced Project managers in large numbers familiar with Offshore development
Large pool of middle managers with strong development experience. China will need at least 5-8 years to build this critical mass for projects requiring 100+ people
Experience in all technologies from a Business perspective not just rechnical.
ith large ERP projects knowing the nuances of business practices in local domains is critical, and it is difficult to leverage the chinese experience to a global perpective. Till the Chines employees have enough work knowledge in western countries this will reamin a lacunae.
For these reasons amongst others I believe that India has a 5-8 years advantage. However there are sme problems that will kill the golden goose
Employee retention
Wage inflation
Experience inflation and misrepresentation
Rh Mayo…
Well said..I completely agree with the points that you have mentioned. I do not see Wage inflation as too much of a problem, because offshoring for low cost advantage is becoming thing of past. Offshoring / Outsourcing to India happens due to quality that Indian software houses churn out with high percentage of predictibility…Recent McKinsey survey also shows that low cost advantage is not a big factor anymore….
Can you elaborate on last point you mentioned…
hi..i’m malai i accepted your think.
but indian people education system is totaly mugup.
so, if we change this stage,indian software system will go very
high
Good article.
Also, India has been able to deliver quality work.
trak.in
sorry took me some time to come back with a clarification. I am defining Experience inflation and misrepresentation where resumes are being doctored and misrepresent the experience and expertise. Too many candidates claim technical knowledge in areas where they really don’t have any. It includes falsifying documents for educational, training and wages.
What a terrible dutch! Who translated this page? I hope the english of the indians is better…
Hey, nice blog..so much useful..can you please expand it to current IT trends in India & focus some more on the slack-down issue.. would love to hear more from you..Thank you, so much..
Indian must possess certain intrinsic characters which contributes the glory and honour in IT field. Can any Indian tell me what they are ?
* Lack of prospect in other fields drives all talent to IT
* Devaluation of Rupee would mean better relative salaries
* Devaluation of a common engineer… most companies in the manufacturing sector hardly value their engineers because in the protected economy they have been so used to buying old tech from the west and selling it as new so they never had any value for inovation, and they continue to do so.
But otherwise given our bad education system, mediocracy and lack of risk taking in IT companies (shit we have nothing close to China in IT products, web service), we are pretty much shitting ourself with false glory….period.
Message: We are in total shit unless we come out of our day dreaming and stop blowing into our fragile ego’s we are leaving behind a Somalia for our next generation.
excellent work! It would be more efficient if you explain in much detail
2) The highest number of English speaking people. (one of the rare positives of Indian invasion by British)
There are lots of other English speaking countries in all over the world. But they cant work in Software Industry. Even in US there are a lot of native speaker of English but still they r not able to work in Software. The actual reason is we are sharp minded & dedicated to work. Yes English makes easier to communicate with US & Britain but that can not be reason no. 2. it should be the last reason because keeping a knowledge is not equal keeping English. If somebody have knowledge he/she can have interpreter but somebody speak English doesn’t mean he/she can have knowledge. Hence, we have vast knowledge this also because of root of our culture that should be no. 1 or 2.