India 48th in Global Index of IT Competitiveness

BANGALORE, INDIA: India ranks 48th in the world in the 2008 IT industry competitiveness index, moving 2 places from its 2007 ranking of 46 in the index. India has an overall score of 28.9 on the IT competitiveness index. These are among the findings of a new study issued by the Economist Intelligence Unit (EIU) and sponsored by the Business Software Alliance (BSA).

The study, now in its second year, assesses and compares the information technology (IT) industry environments of 66 countries to determine the extent to which they enable IT sector competitiveness. Although the top 20 economies remain the same from one year ago, nine countries moved up and 11 went down in the rankings. Three countries in the top five are new: Taiwan, Sweden and Denmark. The top five countries in order of ranking in Asia Pacific are Taiwan, Australia, South Korea, Singapore and Japan respectively.

The EIU examined the following key attributes of a country in analysing its environment for the IT sector:

* An ample supply of skills: IT talents and skills developed geared for future. Orienting technology courses to cater to new demands.

* An innovation-friendly culture: strong support for private sector investment in R&D.

* World-class technology infrastructure: advanced IT and communications infrastructure, hardware, hi-speed Internet and network security.

* Protection and enforcement of IPRs: a robust legal regime that protects intellectual property, such as patents and copyrights and actively enforces against infringements.

* An open, competitive economy: a stable and open business environment to encourage competition.

* Carefully calibrated government support: government leadership that strikes the right balance between promoting technology and allowing market forces to work.

Those countries that perform well in these six ‘competitiveness enablers’ generally are home to high-performance IT industries. High performing IT sectors directly contribute more than 5% to the gross domestic product of most advanced nations. They also drive momentum in the wider economy by helping organizations and workers to be more efficient and productive.  

“This year’s index shows that a country’s IT competitiveness rankings can fluctuate on the index very rapidly” said Keshav Dhakad, Chair of the BSA India Committee. “The ability of local governments and IT industries to deliver jobs and a better quality of life through information technology is strongly affected by how they handle the six drivers of competitiveness. The government has made progress, however there is still a greater need to develop a stronger legal and R&D environment; complemented with a better IT infrastructure to help Indian firms become more competitive and leaders in the technology space.

"The recent evolutionary trends in the domestic IT industry towards product development for both national and international markets are very encouraging and healthy. It is clear that the demand for IPR, government support and robust infrastructure will only grow as India makes inroads into the world product market to become greater than a billion dollar industry within less than a decade.  India cannot afford to lose this opportunity”.

The study finds that India performed strongest in business environment and support for IT industry development with a score of 59.3 percent and 54 percent respectively, which is an encouraging indicator.  Areas of improvement include IT infrastructure and R&D environment in the country which are relatively low in the IT industry competitiveness index.

"There is a strong link between the presence of IT competitiveness enablers and the strength of local technology economies," confirms Denis McCauley, Director, Global Technology Research with the Economist Intelligence Unit. "Governments and industry leaders must pay close attention to these factors if they want to reap the benefits of a globally competitive IT industry."

Other findings of the research include:

* Investing in people is mission-critical for domestic IT industries. Sourcing talent will be among the toughest challenges IT producers will face in the coming years.

* Competitive broadband markets help cultivate strong IT sectors. Without fast, reliable, and secure Internet access, technology firms cannot interact effectively with partners and the research community, nor can they sell their services online.

* A legal environment that protects intellectual property rights (IPR) and takes a robust approach to cybercrime is essential. The US, Australia and Western European countries have the most effective systems in place to address IP protection and cybercrime, but gradual improvements are also evident in tough places like China.

* Globalisation and the Internet will ‘liberate’ R&D. Ecosystems, online or otherwise, that bring together talent, technology, venture capital, and good universities, supported by a risk-taking ethos, will be the best incubators of innovation.

The IT industry competitiveness index covers 66 countries. The index is organised into six distinct categories of quantitative and qualitative indicators, numbering 25 in all. The category and indicator weights were formulated by the Economist Intelligence Unit’s modelling team using, as a guide, individual correlation coefficients of each indicator against a measure of IT labour productivity. The result is an overall index score and category scores for each country.