What's in store for the Indian IT sector in 2006

Or rather - what the Indian IT sector has in store...

NASSCOM released its Strategic Review 2006 earlier this month. The press release foresees really bright and rosy things for the IT sector in FY 2006. Continuing growth, more jobs, newer companies and existing companies opening new branches and very importantly - Growth in the domestic Market.

What does this signify???

The IT sector, for the past few years, has been working wonders for Indian Economy. IT in India started more than 20 years before, with a string of Indians starting companies. The situation they find themselves today - I'm sure they wouldn’t have imagined it then. Today companies with net values running more than 1 billion US$ - is pretty common. All is fine...

In their long history (20+ yrs is long right?!?!), the maximum growth these companies have experienced would have happened in the recent, say, 5 or 10 years. That is pretty much acceptable, since companies are expected to grow in that fashion. Every year - they have to grow more.

But the biggest question is this. Today are they facing more competition than ever before??? There are more and more Indian companies coming up these days - and they obviously compete against each other to clinch deals with US and European Multinationals. The intensity of competition has only increased with time. Look beyond India - Indian companies find competition from companies based in countries like Singapore, Malaysia, Brazil, Argentina and biggest of them all China!!!

Next - does India have the man power??? Silly question - some might argue!!! We have the volume to cater anybody's needs, I agree. But what about quality? You need an analytical mind, capable of doing complex math, etc and etc - you find them all in Indians. But hey a major percentage of the best of the lot is outside India. Being in the industry - I have come across people of different foreign companies commenting about the lack of quality man power in India. We do produce loads of engineers - how good are they???!

How much does Indian software industry work on R&D??? Something I really don’t have any information on!!! But I haven’t heard about this anywhere too. There might be people working on ingenious products and projects. But how many?!?! I believe that this is where the future lies. Things like corporate support, government support and what not to help flourish R&D in the Indian software industry.

A word of caution about the domestic market in India. We are, in simplistic terms, catering to the needs of someone else’s needs presently – they’re just finding the best rates in India presently. This might change, might not!!! That is something out of our hands. But the government and the industry must take enough steps to take IT to the masses and open up newer domains in the Indian market, something under our control to provide work and income for our people.

Considering these factors - will NASSCOM's astrology hold well in the year to come??? Time will tell. I accept that if these things hit my mind - people at NASSCOM might have thought about them too. All that I feel presently is that in spite of these factors (and considering the damage these can inflict on our performance) if the future looks so rosy, the whole thing can be painted red if people at responsible positions take measures to help eradicate these shortcomings.