According to Gartner, enterprise IT spending will reach $25 billion in 2006, up from $20.3 billion in 2005, and business spending on computer hardware, software, and communications products will grow at a rate of 20.8% over the next four years. Along with China, India is poised to make a huge impact in the worldwide IT realm in coming years. Gartner reports that “the rapid maturing of information development in China and India will see trade between the two explode and result in firms gaining competencies that can be applied across emerging markets globally.”
That potential isn't being ignored on U.S. soil. India's prospects look so enticing to Microsoft that the company plans to invest $1.7 billion in India over the next four years, with half of the investment being pumped into the expansion of Microsoft’s research and development centers.
“Our business has grown in India as a result of the strong technical and skilled resources available in the state,” said Chairman Bill Gates at a recent Microsoft event in Bangalore, inaugurating the company’s new seven-story India facility. “This new building signals our confidence in the future of this relationship and our intent to provide our employees with the best possible environment and resources. Our partners and we have 4,000 professionals in India today. We will increase it to 7,000 over the next three to four years.”
Also onboard the Indian train is Intel, which unveiled a multiyear plan to invest more than $1 billion in India, including $800 million over the next five years to expand business operations there. The microprocessor behemoth is targeting expansion of its research and development center in Bangalore, as well as marketing, education, and community programs.
Intel chairman Craig Barrett also took the wraps off plans for a $250 million Intel Capital India Technology Fund to help stimulate local technology innovation and growth. A similar-sized investment was announced in October by Cisco President and CEO John Chambers, who says his company will invest $1.1 billion in India over the next three years, including $750 million for the expansion of its R&D operations there.
Methods For Success This increased focus on India and its massive potential for IT expansion and innovation comes as no surprise to many within the industry, as India has long been an outsourcing hotbed and should continue to be one for years to come. A recent report from Nasscom-McKinsey estimates that the country’s combined BPO and IT outsourcing market will grow at a rate of 25% per year to reach $60 billion by 2010.
“They strive to have a much bigger workforce that has a much higher level of expertise over there than here,” says Sanjeev Aggarwal, senior analyst for Small & Medium Business Strategies at Yankee Group. He says that areas such as network development are particularly rich with talent, resulting in Indian data centers that run smoothly and efficiently.
Indian outsourcing companies are placed in well-built office parks that have all the infrastructure and connectivity required to reach the outside world. “These types of companies are very progressive because they are servicing outside companies,” explains Aggarwal. “They need to have top-notch infrastructure and top-notch IT servers and desktops and storage and connectivity. Those data centers would compare with anything here or may even [rank] one notch above them, in terms of redundancies and [other areas].”
Smaller businesses in India, especially those that service the Indian market, tend to have much older technical infrastructures than companies that make their money outside of India. However, older equipment in India doesn’t tend to affect companies there as much as it does in the United States because Indian personnel are able to stretch the lifetime of their equipment beyond the limits of what we might consider useful.
According to Aggarwal, another difference is that data center employees in India tend to be more adept in varied technologies than employees here. “You’ll see more Linux there because they have people who can toil around with the Linux code and open source and make it work.”
Some might explain this tendency toward broader expertise as a requirement to compete in a country teeming with technical talent. Yet recent research from Duke University reveals inaccuracies in statistics that claim the United States produces 70,000 engineers every year while India produces 350,000 every year. Duke found that the United States is graduating about 222,000 engineers per year, compared to India’s 215,000. And according to a McKinsey partner, only 25% of technical graduates in India are “suitable” for working in the offshore IT industry.
Aggarwal notes that although there is plenty of emphasis placed on certifications for job applicants, experience is similarly valued. However, for smaller companies, balanced applicants are becoming more difficult to snag. “The dilemma that one faces is the people who are more experienced and more certified want to work for the multinational companies and outsourcing companies [instead of] the Indian companies that are servicing Indian clients. They have a harder time getting more talent.”
Ditch The Meetings? Although India’s data centers increasingly mirror their U.S. counterparts in terms of technology and processes, subtle variations in the way personnel conduct their business can equate to timesaving. Sumit Gupta, who has worked in IT in both the U.S. and Bangalore, says that cultural informalities in India let workers cut to the chase when dealing with particular IT-related issues.
“What could take a meeting of 10 to 12 people here could be done [there] by two or three people just talking in a cubicle,” Gupta says. “Here you call a meeting, you cc: a whole bunch of people who have nothing to do with the topic. People who have little to contribute to the topic end up showing up at the meetings, asking irrelevant questions and taking off on tangents that could have otherwise been avoided.”
by Christian Perry
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