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Key constraints on IT growth

Quality engineers, value upscaling will decide the industry's future competitiveness

LEARNING THE SKILLS: Training in progress at Cognizant Academy, Siruseri, near Chennai

THE INDIAN information technology industry has witnessed sustained high growth in the last decade or so. IT jobs have migrated to India at a pace not foreseen by even the most optimistic industry watchers in the early 1990s. Can the industry sustain its high growth rate? What should be done to keep its competitiveness? These are among the questions uppermost in the minds of policy makers and industry leaders.

Quality of engineers and strategies to move up the value chain are two critical factors for sustained growth, according to N. Lakshminarayanan, President and CEO of Cognizant Technology Solutions (CTS), a top Indian IT company. The quality of Indian students, he bemoans, has been gradually deteriorating at a time when the demand for software engineers has been exploding.

Quality issue

"The output from the universities has been increasing but little has been done to improve the quality of teaching or the quality of faculty,'' he laments. There are several ways to improve the quality of teachers. The Confederation of Indian Industry (CII), he says, is working with the universities, governments and corporates in this regard. He lists a number of options such as starting finishing schools, incentives to teaching staff based on the quality of their students and industry exposure for teachers to address the quality issue.

He wants the basic curriculum to be supplemented with training in soft skills as more and more engineers are set to get into technology support areas, in addition to the core IT. When the Y2K surge happened at the turn of the last century, private institutions such as NIIT, SSI and Aptech took the role of finishing schools and imparted the necessary knowledge for students to move in to the industry. "There is a gap in soft skills area and the institutions can exploit this gap. The CII too is working with the industry and academia to bring about the needed changes in the curriculum,'' he points out.

In this context, the issue of reservation of seats for backward classes in professional courses, according to Mr. Lakshminarayanan, may make a solution more difficult. "There should be no discrimination on caste, creed or other basis when it comes to admissions. These are artificial methods and the market will decide the quality of people desired. Only meritocracy will prevail in the market place,'' he asserts.

Nevertheless, he concedes the need to increase the number of engineering seats and be inclusive with respect to all sections of the society. "If the government wants upliftment in certain sections of the society, the approach should be to create counter-balancing mechanisms without diluting quality,'' he suggests.

One solution could be to have `bridge courses' or `reinforcement courses' in colleges. These could help aspiring students from backward sections to gain parity with other students in a short period, he points out.

Advantage over China

The CEO is convinced that since nation states are competing in the global market place, quality can never be compromised. China has invested heavily in education and wants to compete in the global arena. ``One advantage that India has over China is familiarity with the English language. China has been successful in dominating the markets where focus on process and repetitive production (as in textiles and toys) is critical.

The Chinese have still not demonstrated their competence in areas like software where continuous improvement and individual talents are critical. In addition, as the Chinese government is investing heavily in IT, its software industry is focusing more on its domestic market than on the international arena. The combination of such factors is likely to favour India in the medium term in the international market, he says.

A related question that arises here is: why Indian IT companies are not focussing on the domestic market. He has a ready answer.

For one, the Indian government is spending far lower than the Chinese government on IT. For another, industries like banking and insurance are also not investing in IT and technology the way their counterparts in developed countries do. "The reasons may be related to funds or difficulty in pushing through labour reforms. The domestic focus will automatically increase as the demand increases,'' he says.

Moreover, it all depends on the views taken by industry captains. "`Business leaders need to understand that technology development gives them competitive advantage,"' he says. If Tata Motors and Bharati could understand this, why not others? he asks.

Is India only taking advantage of price arbitrage because of its relatively low salaries? Mr. Lakshminarayanan does not think so. In the IT industry, there are two critical factors for success — innovation and application or implementation. "We may not have the leadership in the area of innovation but the Indian industry is playing a critical role in the implementation area and we can meet comprehensively the global demand in all areas of implementation,'' he points out.

He does not agree with the suggestion that the Indian IT industry is thriving on cost arbitrage alone. With studies predicting that the Continental Europe would show negative growth in population by 2020, the Cognizant CEO is not unduly worried about the cost arbitrage factor. The Indian brain power will still hold the edge in the evolving demographic scene, he says.

Similarly, the IT industry can be sub-classified into core operating systems and applications. The Indian industry does not have the deep pockets to develop and market products in the area of operating systems.

"We are already seeing a number of companies successfully developing products in the applications area in niche markets. An example could be banking related products from iFlex. We will witness more and more companies getting into products in the applications area,'' he says.

SHANTHI KANNAN & K. T. JAGANNATHAN

in Chennai

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