15 March 2010

Indian IT Industry is Dying

It was the time when India had huge English speaking population who speak better English than the other developing nations in the region like China. Today, China is no more a China that was 10 years back. Not only China, the entire region is likely to take position in providing services not only in back offices but also in high end technology like research. The growth of other countries in the region is first threat to IT (that we cannot do much).

Looking at the education in India, it seems like we are heading back. We focus on quantity and but back in quality. We are not able to scale well without compromising the quality. Today, the average cost of an engineering degree in a self financing college sums up to 0.3 million rupees. However, the return of investment for the students is very little. The students are not able to get jobs. The industry picks few of them and trains them to do low end back office jobs. The companies select them because of "low cost" strategy.

With the current state, even within India, there are small companies that are willing and ready to do outsourced work at the half the price of bigger companies. Within no time, there will be someone who is ready to offer services at much reduced price. With this trend, in couple of years, many of the big companies are ready to hit a huge margin pressure and which will be downfall of Indian IT industry. Few companies that are trying to act know by thinking on creating IP. It is too late now. But better late than never.

This is the right time that we stop scratching the itch of making big money by providing low end back office work. We need to move up in research/development and the investments need to come from the organizations. If you are in IT industry and if you read this, go and ask your management what are the plans to invest in research. Investing in research/innovation makes sense than giving you double digit hike.

So, it is highly critical that we, as a community, rethink about outsourcing. This is time to move up (or at least try to move up) providing high end technology services. Else, Indian IT industry will be a history.

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