‘US and UK do not have the capacity to produce BPO services domestically’

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‘People still prefer piracy to paying for world ci...

: With recession taking a toll on IT exports of the world’s two fastest growing economies, the key to the problem may lie in the development of domestic markets. ‘New Industries from New Places’ a book co-authored by Neil Gregory (advisor to the VP for financial & private sector development, World Bank group) throws light on the Indian software and the Chinese hardware market. In an interaction with Aseem Thapliyal, Gregory sees great growth potential in the Indian software market. At the same time, he warns of any complacency on the infrastructure front by the new government, if India wants to race ahead of others to become the world’s largest software destination. Excerpts:

As India and China form part of the BRIC nations, do you foresee any alliance between the two on hardware and software front?

We found that China’s software industry is larger than that of India as it is more focused on the domestic market. Indian software market constitutes around 10% of the global market, whereas the Chinese hardware market forms around half of the world market. I don’t actually see a big potential for Indian software in China. I don’t see whole lot of synergies there. Japan is the biggest English language speaking market in terms of software. Chinese software programmers find it comfortable to work in Japan. I think there is a potential for Indian software companies to hire Chinese programmers and access the Japanese market. China and India are going to be the two fastest growing economies in the coming five years .I think both countries will benefit from this with Chinese manufacturing comes to India and Indian manufacturing going to China as well.

What has led to China being a specialist in the hardware market?

I think China had cheap labour in the beginning. But with time, these costs have gone up probably higher than India. But advantage for China has been that it has been able to put together SEZs where companies have access to infrastructure, land, loan facilities, transportation and power. The result has been formation of clusters where a lot of suppliers of different components exist in the same zone. It has been efficient for companies in terms of costs as all linkages in different parts of supply chain have come very close. So China is a major force to reckon with in terms of hardware market.