1. Why has India been able to build a thriving software industry? What are the country’s advantages in this market? What are the country’s disadvantages?
Answer: India has been able to build a thriving software industry due to its good educational system which has enabled India to produce a large number of well and highly qualified software engineers. India’s low labor cost has also contributed to the growth of the software industry by increasing the demand for software experts by foreign firms. E.g. USA and European firms import Indian software experts due to the low wages (labor cost). The country’s advantages in the market include the economic reforms which ...view middle of the document...
In sharp contrast to even a decade ago, Indian business, government, and consumers have ready access to the newest software products and imported hardware.
The very high standards of management practiced in Indian IT firms and the tremendous employment opportunities offered by the industry have had significant effects on the confidence aspirations and work ethic of young professionals in India. The leading software firms have pioneered a movement to modernize Indian management practices, adopting practices of creative organizations with less hierarchical structures and strong work ethics. In order to comply with international norms to participate in international capital markets, IT firms have set new standards in accounting and corporate governance. They have offered unprecedented high-paying employment opportunities for the young and educate labor force, particularly for women professionals.
3. Given the predicted shortage of qualified workers, what can India do to ensure that its software and BPO industries remain competitive?
Answer: More troublesome are looming shortages of qualified workers. In that situation outsourcing is most important to ensure that its software and BPO industries remain competitive. The Indians software industry has thrived because of its labor cost advantage: when the Indian tech boom commenced, U.S. programmers were paid about three times as much as those India. However, salaries of Indian programmers are rising as much as 15 percent a year because of heightened demand for their talents, so India’s labor cost advantage has been eroding. A recent Mckinsey & Company study suggests that the software and BPO industries could suffer labor shortages of a much as 500,000 workers as soon as 2010, if current growth rates continue. If so, the boom may end in Bangalore, and firms may shift their software development BPO activities to other countries. Indeed, Infosys, Wipro, and Tata Consultancy Services have begun to outsource low-level software maintenance and development work to China, where programmers are cheaper. And other countries where English is widely spoken, such as the Philippines, also pose new threats to India’s dominance. For Example, Siemens Has shifted 1,500 customer service jobs from India to the Philippines to take advantage of lower wages and lower turnover rates that is...