India’s ‘cost’ advantage threatened

CHENNAI: US IT entrepreneurs of Indian origin warned that India is losing its cost advantage for outsourced and off-shored development work in the IT and ITES areas to other countries. Countries such as Vietnam, Russia, Morocco, Egypt and Cambodia are beginning to present tough competition to India that is relying on its model based strictly on the cost advantage factor. Decrease in salary levels in the US and the strengthening of the rupee against the dollar are some of the factors that has led to the decline in India’s cost advantage.

The entrepreneurs were in Pune to attend a ‘Silicon Symposium’. Prakash Bhalerao, an entrepreneur, angel investor and venture capitalist from San Jose said that India’s cost advantage has been slipping from 1:6 to 1:4 and now 1:3.5 vis a vis the US. "Companies like Ethiopia, Cambodia and Vietnam are all wanting to get into the area of IT enabled service centers and are therefore wooing investment," he said

He suggested that India should now move onto building intellectual property, create a global presence and global brands. He also felt that India could capitalize on the opportunities available in the microelectronics segment. Bhalerao suggested the formation of a task force by Indian universities and the government to ensure that the country becomes a global leader by the year 2020.

(CyberMedia News Service)