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December 17, 1999
The Indian information technology sector needs 2.2 million quality professionals to become the IT hub it hopes to be by 2008, says a study by McKinsey and Company.
"The most difficult challenge for India is to find, train and retain the right 2.2 million professionals to fuel IT growth in the country," said Rajat Gupta, chief executive officer of McKinsey.
Currently, India produces only 70,000 it professionals a year even as it faces tough competition from the developed world and southeast Asian countries to retain the talent, Gupta said releasing the McKinsey-NASSCOM report at the Indian IT strategy summit here today.
The report projected annual revenues of 87 billion dollars against the present four billion dollars, 2.2 million jobs and market capitalisation of 225 billion dollars (against 27.3 billion dollars now) for the Indian IT sector by the year 2008.
The National Association of Software and Service Companies had commissioned the McKinsey study, to develop a vision and strategy for the software driven IT sector in India for the next decade.
The study stated that the Indian IT sector could account for 35 per cent of India's exports by 2008, an annual foreign direct investment of about five billion dollars and contributing of over 7.5 per cent of the GDP growth by the same year.
According to the report, out of the 87 billion dollars possible, IT services could fetch 38.5 billion dollars software products $ 19.5 billion, IT-enabled services $ 19 billion and e-business $ 10 billion.
However, to realise these numbers, Indian corporates need to follow certain steps, including radically transforming their capabilities and explore fundamentally new ways of doing business. They will need to increase their sales and marketing presence in international markets and set up local software development centres in key regions, such as North America and Europe, the study said.
Besides, Indian corporates need to move up the value chain to become 'full services' players, acquiring IT consulting and interactive media companies.
McKinsey had a list of dos for the government too:
It needs to build solid telecommunications infrastructure and a new, transparent regulatory authority. The government also needs to change regulations currently hampering venture capital funding for hi-tech start-ups.
"McKinsey's analysis suggests that India's failure to create a world class telecom infrastructure could result in a loss of almost $ 23 billion in exports and 650,000 jobs in 2008," said NASSCOM President Dewang Mehta.
McKinsey believes that at least half-a-dozen Indian IT service companies could become leading multinational players.
India could also see the rise of niche category leaders in software products such as web-based applications and services such as business intelligence and enterprise application integration.
IT-enabled services such as remote call centres and back-office services will also offer immense opportunities, creating almost a million new jobs over the next decade.
Furthermore, Indian e-commerce start-ups will parallel their US counterparts in driving innovation and industry landscape.
"This means that by 2008, India could become a hub of innovation in the IT sector," Mehta said.
But, of course there remains the problem of "finding, training and retaining" a couple of million top software professionals.
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