Doing Business in India – Part 1

09 Dec

A recent McKinsey Quarterly report on Offshoring says that India’s lead in offshoring stems from its pool of well-trained, low-cost engineers for IT services, but this pool is smaller than it appears, and there’s a risk that it may run dry in the most popular offshoring locations.

It says that the leading issues (opportunities?) facing Indian offshoring industry (IT & BPO) are:

  1. Variability of educational standards across institutions
  2. Poor English
  3. High rates of emigration among graduates of the top schools
  4. Low number of engineering graduates, especially when compared to the foreseen demand
  5. Scarcity of middle managers and…(get this…)
  6. Poor quality infrastructure

The solutions suggested are:

  1. Raise the quality of university education – defining curriculums that reflect current and future demand in employment; developing better certification procedures and promoting higher standards of quality for colleges; support the expansion of top-quality private schools; Offering grants to study the coveted disciplines (like engineering); standardization; focus on English; opening IITs in each state
  2. Move beyond offshoring hot spots – into Tier 2 & tier 3 cities; provide incentives & marketing support to companies willing to do so
  3. Improve the infrastructure – airports, communications networks, utilities (roads, housing, sanitation, electricity & water)
  4. Move beyond IT and software – into industrial R&D and medical research and back-office functions

The report goes on to say:

“Thanks to the dynamism of India’s IT services, the country is the world’s preeminent offshoring destination. But other low-wage nations are now broadcasting their potential as offshore locations, and demand will quickly exceed India’s supply of talent suitable for international companies. To stay on top, India must not only produce more top-quality engineers but also improve the suitability of other graduates. Finally, it has to show companies the depth and quality of its talent in areas other than IT—especially R&D and back-office work in industries such as finance and accounting.”

Read the full report online (free subscription required) at

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Posted by on December 9, 2005 in Biz/Tech, Books


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