The $60-billion information technology industry in India will continue to attract overseas business, despite competition from other emerging markets that also offer lower costs, says the India head of global software giant Computer Associates.
"Our costs will still be competitive. There are markets like China, Singapore, and the Philippines which offer lower costs. But they are not in the same league as India," said the software gian't India chairman Saurabh Srivastava.
"China has an issue with language, a lot of other countries don't have the same levels of competency and, moreover, a lot of them are still in process of learning business norms," Srivastava, an industry veteran and noted venture capitalist, told IANS in an interview.
According to him, the average spending on information technology by a fair-sized firm was usually two percent of the entire budget. "You will not risk saving on this two percent and endangering the rest of the 98 percent."
Though the sector, which has been hit by the global financial crisis, will grow at a modest 4-7 percent this year, Srivastava contended a turnaround should happen by next year when companies start loosening their purse strings.
"You may not see the 30 percent growth rates of the past. But for the next few years, the growth certainly would be in the range of 15-20 percent," said the alumnus of the Indian Institute of Technology (IIT) at Kanpur and Harvard University.
Co-founder of such companies as software major IIS Infotech and venture capital fund Infinity Ventures, Srivastava is not quite perturbed by the slowdown in the business. In fact, he is optimistic about the trajectory of the Indian IT growth story.
"We will grow from the current $50 billion to about $200 billion by 2020. However, companies will need to shift their stance and become more focused on intellectual property and have an increased global presence."
According to him, Indian educational institutions will also have to produce quality graduates to fuel this growth rather than creating thousands of engineers whose knowledge and skill levels are, at best, mediocre.
"In India, there is an employability factor. There are engineers who pass from second string institutions, whose quality is low, and that is a problem," said Srivastava, adding that 10 years down the line, big cities alone will not house global Indian firms.
"As infrastructure develops and connectivity increases, you will see IT companies set up shop in more tier-2 towns. But it's not just the cost factor that will drive this movement," he said.
"Realty prices will be lower. It will be easier to retain talent. Folks in India like to live closer to home, not always possible in large cities," said Srivastava, founding member of the National Association of Software and Services Companies (Nasscom).