Securing the Future of Indian IT

At the Nasscom 2006 conference, a panel discussion centers around India. The market there is cheap, but can it innovate? Thirty percent growth each year is fine, but obstacles loom.

MUMBAI, India—India could be home to the worlds dominant IT firms in 20 years–if. That was the theme of a panel discussion during the first day of the Nasscom 2006 conference here.

Arun Maira, chairman of the Boston Consulting Group, India, said that India could do in IT what the Japanese have done in the automobile industry, displacing American IT powerhouses just as Japans car makers have superseded Detroit automakers as the worlds leaders.

"Indian companies are low-cost and small just like the Japanese were," said Maira.

"But what will be the shape of the industry in the next 15 years? Big changes start from small things," said Maira.

The consultant asked the audience whether in 20 years an Indian IT company could have the worlds highest market capitalization. A significant number raised their hands.

Maira noted that things can change greatly in 20 years, pointing out that in 1985, the Soviet Union was a superpower and Japan was thought by many to be on the verge of global economic dominance.

In 2005, however, the Soviet Union has dissolved, while China and India are seen as ascending the worlds economic throne in the next century.

But Indian companies must make adjustments to secure their place in the sun, said Maira.

"Indian companies have the low-cost base. There is not much variety and innovation yet."

Several panelists agreed that changes are needed.

Pramod Bhasin, president and CEO of Genpact, warned, "The day another country is cheaper than India, then well go there. We must improve processes. Its more important than cost arbitrage."

Vineet Nayar, president of HCL Technologies Ltd., seconded, "India will have to become more efficient, or China will do to India what India has done to the U.S."

"Software products will become more like appliances. You need to pay according to value." Customers are fed up by the value were delivering to them," said Nayar.

Maira said Indian companies must be on the alert for new answers.

"Were flying into a fog and the old instruments wont work," adding, "Todays business is like driving on an Indian road. Unless you are course-correcting all the time, you are likely to have a fatal accident."

Next Page: Ramadorai remarks.