Can India beat China in IT?

While some say that we have nothing to fear from our neighbour, it could be argued that the dragon will soon give the tiger some sleepless nights

Can India beat China in IT?

While some say that we have nothing to fear from our neighbour, it could be argued that the dragon will soon give the tiger some sleepless nights

Talk about IT and sooner or later you have to mention India, which hosts Bangalore, the silicon plateau. And sooner or later, the talk has to turn to China, which, along with India is one of the upcoming economies in the world.

And when one talks about China and India, one has to also answer some important questions. Which country is bigger? How long will India be able to take on China? Will China's superior power soon make India a spent force, a has-been?

Roaring dragon

NASSCOM has been contemplating this question for a while, and its August 2007 whitepaper 'Tracing China's IT Software and Services Industry Evolution' addresses some of these questions. NASSCOM, which says it has been following the development of the IT software and services industry in China since 2001, says in the 2007 document that China has the potential to develop a large IT-BPO industry and cites three reasons domestic market potential, a sizeable workforce and the government's emphasis on services, especially IT-BPO.

But while NASSCOM acknowledges China's might, this white paper also says that 'However, currently the IT-BPO industry in China is still in its early phases of evolution. Frequent comparison with India and commentary positioning China as a substitute destination is quite misplaced'.

Here and now

Sometime this month, 'NASSCOM PERSPECTIVE 2020: Transform Business, Transform India' was unveiled along with knowledge partner McKinsey & Company. This document shows that China's might is growing. 'China will represent around 50 per cent of the BRIC opportunity, followed by India at around 25 per cent' says this document while mentioning that the BRIC (Brazil Russia India China) domestic outsourcing opportunity will grow to $380 billion to $420 billion.

The document also says that '...India must retain its advantage over other global sourcing locations such as China...and working tirelessly for its implementation will bring this goal well within grasp'

Foreign angle

While NASSCOM is known for the depth of its research, it represents India, one of the parties, and as Alistair MacLean once said, dreams of glory are notoriously treacherous counsellors. So it is helpful if we were to consult some third party which is sufficiently detached from both India and China.

Happily for us, we got our hands on the World Economic Forum's 'The Global Information Technology Report 2008u00c3u00a2u00c2u0080u00c2u00932009' which deals with 'Mobility in a Networked World' This document studies various countries and looks beyond BPO and IT. This report says that 'With regard to the largest Asian emerging markets, China leapfrogs 11 positions to 46th, overtaking India (which is down four positions at 54th) and the rest of the BRIC countries for the first time.'

Regarding India, this report says that '...On one hand, India's business readiness (27th) remains impressive, thanks to high-quality management schools (12th), significant corporate spending on R&D (29th), and a broad base of suppliers...On the other hand, like China, India ranks a low 114th in the individual usage category because of a very spotty ICT penetration.' Most damningly, the WEF report says that 'The quality of the infrastructure environment is poorly rated (76th), despite India's ranking 3rd worldwide for the availability of scientists and engineers and 27th for the quality of its research institutions.

If India doesn't set right these stumbling blocks, it will only be a matter of time before China beats us hands down.

QUICK TAKE
>>India will have to work hard to beat China
>>China (46) beats India (54) in the WEF's Networked Readiness Index
>>China has climbed 11 while India has fallen 4 when compared to last year's WEF Networked Readiness Index

Reaching for the sambar
When I visited Beijing in December 2006, I heard a lot of stories about China. Here's one:
When China wanted to setup a software park in Shanghai, they asked a senior IT industry veteran from one of India's top software companies what they would have to do to woo Indians. Apart from the crucial issuesu00e2u0080u0094like land and bandwidthu00e2u0080u0094this industry veteran told the Chinese that many IT professionals were South Indian and loved their idly, vada and sambar. Imagine this Indian's surprise when he visited the software park after a few months and found a shop selling hot dosas and other South Indian dishes!