The new business of information technology (IT) and related products is eminently suited to be another thrust area in India’s export basket. It is a field in which India has strong competitive advantages.
India’s knowledge rich manpower is her first advantage in this highly manpower and knowledge intensive business. Widespread computer education has given the basic support here. The fact that supply of software professionals is quite limited in countries like the US, Germany, Russia, Australia, New Zealand, France and Japan compared to their software needs goes in India’s favor. This coupled with the price competitiveness of India throws up tremendous possibilities. The country is able to make competitive offers in terms of price and quality. The low capital requirement of the business is another attraction for India a capital scarce country. India already enjoys 12 per cent market share in overall world software exports. The country has already built up international reputation in the field.
Another favorable factor is that domestic competition in the business is healthy. There are already more than 200 firms engaged in software export, ensuring robust competition in the business. The major players in the field like TCS, Infosys and Wipro have become global operators. And many big corporations like Reliance, ITC, Mahindra & Mahindra, L&T, SRF, JK, the Oberoi, and Sundaram Fasteners are making a beeline to enter the business.
The point below illustrates how India is gaining ground in the global IT business.
India Gains Ground n Global ITBusiness:
Indian software exports account for 14 percent of India’s total exports. By 2008, software exports are expected to account or 35 per cent of India’s total exports.
The nation has set a target of 50 billion dollar worth of software exports by the year 2008. Software exports by the year 2008. Software exports were around $ 8 million in 2001.
The geographic spread of India’s software exports is US heavy with 62 per cent of business coming from that country, followed by Europe with 24 per cent, Japan with 4 per cent ad the rest of the world with 10 per cent.
Around 10 per cent of Microsoft’s programmer workforce round the world comprises Indians.
The software Technology Parks (STPs) have also contributed in a big way to the growth of the IT business. STPs offer cluster advantage where a large number of small units can get the benefits of common facilities.
STPs have made heavy investment in importing contemporary, state-of-the-art computing systems to enable entrepreneurs to share these facilities and start their work without investing large capital.
The share of software exports from STPs in India’s total software exports has touched 70 per cent.
To meet the industry demand for greater quality of data-com services, submarine cable connectivity is being built.
Of late, there has been a significant change in the structure of software exports. The offshore component (work done India) has gone up in the last five years.
Major Indian companies are now capable of handling larger projects involving 200 to 300 man-years.
India’s limitations in IT: India’s position in IT, however, is not all that rosy. There are several limitations to be sorted out. For example, India is still a small player in the global trade in software. In the availability of qualified manpower too, Indian firms now face problems. Although India boasts of a large supervisor of software manpower to which 55,000 people from technical academic institutions get added every year, the gap in quality is widening. Our competitiveness is further handicapped by high overseas call rates and limited band width availability.
The domestic market is not growing at the desired rate. It is inhibited by low computer penetration due to high hardware prices, poor telecom infrastructure, lack of IT awareness among the general public and non-availability of application packages in local languages. As pointed out earlier, a strong domestic market is a big supporting factor to play the global game.