Indian IT faces challenge from China, Philippines

BANGALORE, INDIA: The India IT regulatory body NASSCOM opined that the Indian IT industry's market share would reduce by 10 per cent over the next ten years, though India continues to be the most competitive among 25 to 30 low-cost locations and has garnered a 51 per cent share of the industry today.

The reason for this decline, according to NASSCOM, would be the emergence of new geographies such as China, Philippines, and Eastern Europe, which are taking bold initiatives to grab India's share.

“The other emerging countries have become very focused in creating opportunity to become a worldwide hub for professional services,” NASSCOM President Som Mittal said on Wednesday while participating in a discussion on the NASSCOM-Mckinsey report, 'Perspective 2020: Transform Business Transform India'.

“China can become the second largest economic hub and has a potential of becoming a $200 billion industry by 2020,” he added.

Some reasons which can fail the Indian IT industry in near future would be, shortage of talent pool, poor infrastructure, un-tailored policies and laws, and lack of corporate governance related issues. On the other hand, China, is already showing positive signs in these areas.

According to NASSCOM, China has close to 800,000 English teachers, a sizable number of them from overseas. In addition, countries like China and Philippines are offering incentives to the industry, including tax benefits and better infrastructure.

Noshir Kaka, director, Mckinsey and Company said it is the right time for India to take appropriate measures to be in the league. “We have to reform - reform businesses models, education system, the governance system etc,” he said.

He further added that the issues of employability, human resource, infrastructure etc should be addressed. The entire ecosystem, i.e the government, industry, as well as NASSCOM should come together to act upon these issues.

The Chinese industry is yet very weak and small, even the talent pool available is too expensive. It is also less transparent and complex in comparison with India. This is the right time for the Indian industry to invest, build up bench strengths and foster relationships with China, suggest NASSCOM.

“The rising competition should not be taken as a threat, instead should be thought as an opportunity to collaborate,” said Mittal.