Posted on May 7, 2012 by Indiabourse — 1 Comment ↓
A Chinese friend recently drew an interesting parallel in a conversation. He compared the impact of China's manufacturing industry on the average Chinese and that of India's IT industry on the Indian masses. China has made a mark in the manufacturing industry and along the way it has transformed the lives of almost every Chinese citizen. Is this true of India's IT industry? I did not have a ready answer and the Chinese never persist with conversations where there might be even the slightest chance of the other person losing face.
India's IT sector has served the country very well over the last couple of decades. It has brought in much needed foreign exchange and generated employment for millions of Indians. Indian IT companies have risen to the top echelons of the industry. There is no denying this.
Until 2008 the industry had never seen a dull year but the last few years have been quite rocky. Nasscom, the industry body has indicated that an annual growth rate of 11-14% is still achievable for the industry as a whole in the coming years. However stock analysts were alarmed earlier this year when many of the top Indian IT companies failed to issue revenue forecasts for more than two quarters for the first time in their corporate lives. Despite this few people doubt the industry's resilience and one can be confident that India will remain synonymous with IT atleast for a couple of generations.
Indian IT giants have a truly global presence. Whether it is Uruguay or Uzbekistan, Bournemouth or Brisbane, there is hardly a city in the world that has not received IT engineers from India to work on a client project.
As mentioned in a previous post, every Indian IT company has a significant footprint in China. Having failed to bag big business from Chinese SOE's they are sustaining themselves mostly with business from their existing international clients which have presence in China. Projects from domestic Chinese clients are notable exceptions in their order books. China is perhaps the only geographical territory in the world where Indian IT companies do not serve the top players in every industry. It is very clear that the market for IT services in China is being reserved for homegrown players who are still in their infancy.
Coming back to our conversation, what does a successful industry mean to the country and its people? How much of India has benefitted from India's IT industry? Is the global success of a handful of companies sufficient to brand India as an IT superpower?
It has been a couple of weeks since our conversation and the thought has still not left my mind. What are the likely indicators of a country's IT superpower status?
I started with researching PC penetration rates. India has a PC penetration of less than 5% whereas China's average IT penetration is 30% and in urban areas it is close to 60%.
Next, I looked up broadband penetration. India's broadband internet penetration is 1.2% currently and set to reach 2.8% in 2016. In the same period, China will be reach 20.9%.
Lastly I checked out the size of the IT market in the two countries. The estimated size of the domestic Indian IT market for 2012 is a respectable US$ 20.7 billion. And the size of the Chinese domestic IT market is —– hold your breath – a whopping US$124.4 billion!
Now, is India really an IT superpower? I don't know the answer to this question but the next time I hear an Indian businessman, politician or bureaucrat trying to showcase India as an IT superpower to a Chinese audience I will certainly wince.
A Chinese friend recently drew an interesting parallel in a conversation. He compared the impact of China's manufacturing industry on the average Chinese and that of India's IT industry on the Indian masses. China has made a mark in the manufacturing industry and along the way it has transformed the lives of almost every Chinese citizen. Is this true of India's IT industry? I did not have a ready answer and the Chinese never persist with conversations where there might be even the slightest chance of the other person losing face.
India's IT sector has served the country very well over the last couple of decades. It has brought in much needed foreign exchange and generated employment for millions of Indians. Indian IT companies have risen to the top echelons of the industry. There is no denying this.
Until 2008 the industry had never seen a dull year but the last few years have been quite rocky. Nasscom, the industry body has indicated that an annual growth rate of 11-14% is still achievable for the industry as a whole in the coming years. However stock analysts were alarmed earlier this year when many of the top Indian IT companies failed to issue revenue forecasts for more than two quarters for the first time in their corporate lives. Despite this few people doubt the industry's resilience and one can be confident that India will remain synonymous with IT atleast for a couple of generations.
Indian IT giants have a truly global presence. Whether it is Uruguay or Uzbekistan, Bournemouth or Brisbane, there is hardly a city in the world that has not received IT engineers from India to work on a client project.
As mentioned in a previous post, every Indian IT company has a significant footprint in China. Having failed to bag big business from Chinese SOE's they are sustaining themselves mostly with business from their existing international clients which have presence in China. Projects from domestic Chinese clients are notable exceptions in their order books. China is perhaps the only geographical territory in the world where Indian IT companies do not serve the top players in every industry. It is very clear that the market for IT services in China is being reserved for homegrown players who are still in their infancy.
Coming back to our conversation, what does a successful industry mean to the country and its people? How much of India has benefitted from India's IT industry? Is the global success of a handful of companies sufficient to brand India as an IT superpower?
It has been a couple of weeks since our conversation and the thought has still not left my mind. What are the likely indicators of a country's IT superpower status?
I started with researching PC penetration rates. India has a PC penetration of less than 5% whereas China's average IT penetration is 30% and in urban areas it is close to 60%.
Next, I looked up broadband penetration. India's broadband internet penetration is 1.2% currently and set to reach 2.8% in 2016. In the same period, China will be reach 20.9%.
Lastly I checked out the size of the IT market in the two countries. The estimated size of the domestic Indian IT market for 2012 is a respectable US$ 20.7 billion. And the size of the Chinese domestic IT market is —– hold your breath – a whopping US$124.4 billion!
Now, is India really an IT superpower? I don't know the answer to this question but the next time I hear an Indian businessman, politician or bureaucrat trying to showcase India as an IT superpower to a Chinese audience I will certainly wince.
