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India's IT services success story has been an inspiration to emerging economies, with many looking to emulate its success.
A September 2006 survey report jointly written by KPMG and the Economist Intelligence Unit validated the view of India as "a world apart in outsourcing".
For example, companies in India appear to be more open to outsourcing all kinds of business functions compared to their peers in the region. While the rest of Asia cited "cost savings" as the No. 1 benefit of outsourcing, India respondents said "allowing the company to focus on its core competencies" was the main driver.
Dane Anderson, CEO of Springboard Research, offered an explanation for this divergent view. "I think a lot of Indian companies are having a hard time keeping up with [the country's] growth.
"For example, the latest outsourcing deal between IBM and a large wireless operator indicated that [the latter was] trying to grow with the market but to develop the IT operations to do that was a little hard, so I think that if they can plug in an outsourcing solution, they probably can benefit from that growth a bit faster," said Anderson.
But he also pointed to other reasons such as the success of the Indian IT industry in offshoring. Anderson said: "The fact that India has shown the power of outsourcing and offshoring...percolates throughout the country a little better.
"And there are also the HR challenges--to keep people and pay people. It's really tough in India now, and if they can even outsource that challenge to a provider, I think that makes it easier for them to cope," he added.
According to the World Economic Forum's Global Competitiveness Index (GCI) for 2006, India ranked 43rd among 125 countries covered, achieving "remarkably high scores in capacity for innovation and sophistication of firm operations".
"This is especially true of the quality of scientific research and the number of scientists and engineers, which are increasingly supplying highly skilled professionals to the private sector," stated the report.
Authors of the GCI report also noted that although India was found to have made good use of technology, penetration levels of the latest technologies remain "quite low by international standards, reflecting India's still low levels of per capita income and high incidence of poverty".
Here is a quick look at India's IT profile
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