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
|Mobile phones shipped in 2006:||60 million|
|Mobile phone subscribers in 2006:||149.6 million|
|Projected mobile phone subscribers in 2007:||220 million|
|SMS text messages sent in 2006:||59.8 billion; SMS contributed about 6% of service revenues to Indian mobile network operators|
|Internet users in 2005:||60 million|
|Internet hosts in 2005:||143,654|
|Projected broadband penetration in 2007:||3.2 million households, or 1.6 percent of total households|
|PCs shipped in 2006:||5 million, 25% year-on-year growth from 2005|
|Notebook PCs shipped in 2006:||1 million|
|Average annual salary of IT professionals:||662,310 Indian rupees (US16,209)|
|Per capita public sector IT spending in 2006:||US$1.29|
|Projected IT spending for 2007:||US$16.6 billion, 24 percent increase over 2006. Figure to grow to US$32.6 billion by 2011|
|Projected SMB IT spending for 2007:||US$8 billion, 24 percent increase over 2006|
|Number of IT workers in software and services in 2006:||1.3 million, 23 percent increase over 2005|
|Industry revenue growth:||The Indian IT and IT Enabled Services (ITES) sector, including domestic and exports segments, is expected to exceed US$47.8 billion in annual revenue in fiscal 2007, an increase of almost 28 percent over 2006|
|Domestic demand for IT and BPO:||Financial services and telecommunications account for over 70 percent of demand in 2004|
|Revenue from business process outsourcing (BPO):||US$148 million in 2000, US$3.5 billion in 2004|
|Number of graduates every year:||More than 400,000 technical graduates, 2.3 million graduates in other disciplines, and over 300,000 post-graduates|
|Total revenue of top 5 Indian providers for fiscal 2006:||US$11.34 billion. As a combined entity, this places them--Wipro, Infosys, TCS, HCL Technologies, and Satyam--as the seventh largest services provider globally, behind CSC's US$4.68 billion in revenue|