India IT industry 2012
The Indian's Information Technology (IT) industry is a great success case in modern time. An industry that did not exist 20 years ago is now one of the most powerful in the world. It also proves that a developing country can compete globally and successfully if they know how to unleash the power of its people. Similar to the U.S, most successful IT companies in India were started by people with modest backgrounds and limited money. More than two third of them were software people who know how to use their technology talents to build a successful industry.
Today Indian IT industry contributes over 15% to the country's GDP and helps provide jobs to more than 2.5 million IT workers directly and over 15 millions “indirect jobs”. Last year, the IT industry spent 26 billion dollars in the domestic economy alone, despite the global financial crisis. IT industry also helps create more jobs, more growth in other areas (Indirect sectors) than any industry. According to the United Nations, India has a young and growing workforce that has significant rising income levels. This group consists mostly college graduates working in the technology area that has helped fuel the growth of India economy. Even India is still an agriculture economy with relatively low household incomes but the fastest growth in IT industry helps balanced regional development between agriculture and technology; It increases exports and improving product & service quality, but most of all, it boosts the country's image globally.
Although the state education system is still slow to meet industry demands, several private universities created by IT companies are taking over trainings to improve the skills of their workers. As more IT companies grow and expand, they also build several technology parks with better infrastructures, roads, housing, and facilities. These parks are mostly owned by first generation entrepreneurs who became billionaires in the process. However, the wealth created by IT industry is not restricted among company founders alone but also by many IT workers who received Employee Stock Option Plan and become millionaires themselves.
The success of Indian IT companies can be attributed to the fact that most IT workers speak English well (English is their second language) which give them significant advantage over others like China, Vietnam, Malaysia. The other success factor is the early adoption of the highest software quality standards which give them significant advantage over others like The Philippines, Ireland which have the language advantage but NOT the quality advantage. These two factors are the key drivers that move India out of the “mediocrity” of cheap labor image into the top position in IT outsourcing service. For many years, Indian exports had been restricted to unskilled labors, low cost oriented industries such as clothes, shoes, apparels and spices. However, with the advent of the IT industry, the world begin to recognize that India could compete against others on service quality too.
According to the United Nations, India's working-age population is expected to grow by 36% from 2005 to 2025, while China and the United States population are forecast to grow only about 10% but both Europe and Japan are declining by 18%. A larger workforce can promote more grow, especially when other countries are in decline and have to rely on someone to support. That is why many companies quickly move to India to take advantage of this fast growing source of workers. Today 75% of top global companies have their offices and operation centers in India with significant investments. Even during the financial crisis, when companies laid-off people and closed offices in their own countries, many were still invest heavily in India because it is where the future of business is.
The IT industry has been a leader in practicing good business management. Their commitment to continuously improve workers' knowledge and skills have created a positive image and encourage more foreign investments there. At the turn of the century, where knowledge and skills become key assets, India is the only country that know about these demands and ready to supply what the market needs. That is why today, IT companies in India have received international recognition for their business know how, especially in the service area.
Of course, many Indians have watched with pride as different countries and people look at India and Indians with highly respect and admiration. The India IT industry has contributed to what brand 'India' stands for in today's global market. Few years ago, “Made in India” means “Low quality, Cheap labor” but now it stand for “Quality Products and Services”.
Many Indian IT companies are no longer “Local companies” but “Global companies”. Their stocks are now listed in most global stock exchanges, which requires adherence to stringent global accounting rules, and this also helped build a strong brand of the companies outside India. As a New York stock market analyst put it: “For investment today, the best buy is in Indian IT companies. These companies generates significant revenues, they pay attention to technical excellence and establish standards of economic success in the country. They nurture many bright students in technical area so future workers can face the world economy as big participants, not a tiny player. In the future, IT industry can do even more because the reach of information technology is so wide and its potential is so great”.
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
