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What's next for India's outsourcing industry?

Stephanie Overby | Jan. 8, 2014
CIO.com talked to Som Mittal, departing president of India's National Association of Software and Services Companies, about immigration policy and protectionist politics in the U.S., political and economic instability at home, and what the future holds for the Indian IT services industry.

There will be a lot more innovation happening as India leverages technology to serve its own citizens, particularly within smaller startups who are developing India-centric solutions that will be applicable to other developing countries. That's why at NASSCOM we developed a program, sponsored by Google, Microsoft, and VeriSign, aimed at creating 10,000 tech start-ups in India over ten years.

CIO.com: What other sorts of initiatives is NASSCOM backing to deal with issues like talent development and growth in tertiary cities?
Mittal: We need to do far more work at NASSCOM to rally our stakeholders around how IT can be leveraged in India for India. We launched a digital literacy initiative with the goal of making sure that one person in every household where fiber reaches will be digitally literate. If that happens, that will change lives.

We formed the IT Sector Skills Council to make sure graduates coming out of colleges are more industry-ready. Technology is changing so rapidly, we have to work harder to make new employees more productive. We offer short programs post-college to provide them with some specialization early — for example in software development, infrastructure management, or embedded systems-rather than just a generic skill set.

Today we have seven large cities where 90 percent of the work happens. But those centers are staffed by people who came from different towns and cities. Having those hubs was important for customers who wanted to visit and need to be in a city with international flights. But our customers are more experienced now and our models have matured.

Customers do not insist on a specific location anymore. We're seeing the emergence of tier two and three towns. By 2020, 40 percent of our work will happen at new centers in Jaipur and Coimbatore, for example. The biggest problem there is that, while we have enough entry-level resources, we have to move middle managers there.

CIO.com: What do you make of the emergence of potential competitors to India such as the Philippines, Sri Lanka and China?
Mittal: There will be competition. But if you look at what's happening in the Philippines, for example, a large number of customers doing work there also do work in India. They look to the Philippines as a business continuity and disaster recovery site. Many of our Indian companies have centers there.

China has the scale to compete with India, but the majority of the work they do is for Japan and north Asia. They do some work for the U.S., but it will take some time before they have mature processes and management.

We employ 25,000 Chinese professionals helping multinationals manage their IT infrastructure there. But China still has to address a couple of issues. They do extremely well with manufactured products, but customers tell us it is difficult to do services work with them. They also have to work on intellectual property and security issues.

 

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