By Swapnil Morande, Shashank Shah
IT industry caters to outsourcing, not core development
The Indian IT industry influences the Indian economy significantly. The contribution of Indian IT companies to GDP has increased over six times in the last 25 years – from 1.2% in FY1998 to 7.4% in FY2022. Several industry bodies estimate that by 2025, the revenues of Indian IT companies would cross $350 billion. Moreover, the Indian IT sector provides direct employment to over 5 million people. The majority of technical graduates from Indian Higher Education Institutions (HEIs) equip themselves with essential skills connected with computer hardware and software to get absorbed in this promising sector. Their expertise in computer programming is specially sought by large corporations from developed nations. By 2024, India would have the largest population of software developers in the world. Notable Indians have also reached the helm of global software companies thereby driving more focus and interest in this industry among young students. The sector looks enticing with ample job opportunities, attractive salaries, and career growth prospects. However, it is important to note that most software firms in India cater to outsourced projects with a tiny share of core development. The latter involves original ideas for developing innovative computer applications. This is probably because the current curricula do not translate their skills beyond coding to domain research.
An urgent need to create skilled workforce
Several trends suggest that in the coming years, due to ‘location-specific risks’, the software industry may not retain its epicentre in India. Fueled by rising costs, lifestyle changes, and outgrowing infrastructure, the service industry tends to get established in places where these constraints may not be as pronounced, and labour productivity is available at lower costs. This underscores the need to strategically equip the Indian economy to shift from a service to a manufacturing focus. The National Manufacturing Policy of the Government of India aims to enhance the share of manufacturing in GDP to 25% within a decade while also creating 100 million jobs. Supply-side policy initiatives like the Production Linked Incentive Scheme introduced in 14 key manufacturing sectors with an outlay of ₹1.97 lakh crores would play a catalytic role. Consistent rise in personal savings, disposable personal income and the consequent consumer spending indicates a positive trend on the demand side. To leverage and build on these positive trends, there is a need to create a robust pipeline of skilled workforce that can continue to drive this growth trajectory.
Open-source technology platforms: Need of the hour
According to ILO, India has the largest youth population in the world with 66% of the total population below the age of 35. With nearly 8 million youth entering the labour market every year for the next decade, India has a major opportunity to use technological change and productivity growth that could create national economic clusters to tap into the global value chain – a key strategic and macroeconomic goal. The current higher education system needs to gear up for the proposed shift in sectoral contributions. Reorienting the workforce and channelizing infrastructural resources to create an ecosystem that can positively contribute to the growth of the manufacturing sector by building deployable human capital is crucial. The question is how would this happen?
Instead of reinventing the wheel, Indian HEIs can integrate diverse technology platforms with the existing curricula to ensure that graduates are deployable in Industry 4.0 roles that are vital for India’s position as a global economic power. Several software organisations offer their suite of software tools as development kits through academic empowerment programmes or innovation campuses. These technology platforms are free, flexible and provide open access to a plethora of resources. The appeal of the open-source technology platform is so strong that the top three international technology firms have invested nearly US$ 50 billion in its potential development. Though such technology platforms have gained global momentum in the last decade, India has displayed a low adoption rate. In 2022-23 alone, nearly 3 million low-skill IT jobs are expected to be lost to robotic process automation (RPA). This is indicative of the massive change in the employment landscape provided by the rapidly transforming Indian economy.
Higher Education aligned with technology platforms can help students progress from application to creation. This approach may result in accelerating innovation and giving rise to startups geared towards manufacturing. Such resource integration may help Indian students not only secure jobs but also create jobs through entrepreneurial ventures.
AI as a key to reducing manufacturing costs
Tech-integrated manufacturing can positively impact productivity and output. The use of Internet of Things (IoT) technologies and relevant software modules can minimise manufacturing costs. By 2025, 25% of large global industrial enterprises are expected to either acquire or invest in Industrial IoT. The application of Big Data can benefit the manufacturing sector by providing analytical insights. The use of Artificial Intelligence (AI) can enhance the efficiency of manufacturing processes across Indian industries. Thus, technology platforms will strengthen India’s manufacturing capabilities. This would help achieve the vision of preparing industry-ready graduates who can understand industry needs and enable India to manufacture for itself and for the world.
Software development should continue at full throttle. The parallel integration of technology platforms with higher education can pave the way for preparing an Industry 4.0-ready workforce that can contribute to a robust economy during the Amrit Kaal. Indian HEIs need to align curriculum, research, faculty, and infrastructure for achieving this end goal that would aid the effective scaling of future manufacturing efforts and make our nation Atmanirbhar.
(Swapnil Morande is Senior Associate (Energy Modelling), NITI Aayog; Shashank Shah is Senior Specialist (Higher Education), NITI Aayog. The views expressed in the article are of the author and do not reflect the official position or policy of FinancialExpress.com.)