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China, a big threat to Indian IT reign

By Suman Guha Mozumder in New York
April 08, 2005 18:53 IST
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Despite all round praise about India's strength in the information technology sector, the industry needs to guard against complacency so it is not be overtaken by countries such as China as the world services hub, said B Ramalinga Raju, founder and chairman of Satyam Computer Services Ltd.

Delivering a talk at the Indian Consulate in New York, Raju said that China could well threaten India's present preeminent position as IT services giant if the country's industry does not guard against complacency and fails to make innovations.

"One of the risks that the industry is facing that is not visible on the surface is that complacency might set in where the success is taken for granted. If that were to happen -- and it could easily happen -- then Indian companies and India as a country can easily be overtaken by China," Raju said.

He said the only way to stay out of this situation is to continuously strive for innovation. "We have done so far well in India and therefore we enjoy a head start, but India should build on those foundations to stay ahead of other countries including China," he said.

"In my opinion the future will depend on how innovative the country is in integrating solutions for the future and how quick it is to respond to the essential needs," Raju added.

He said that India today suffers from lack of good physical infrastructure and there is a lot of promise in the next few years for improvement although one needs to watch whether they will take shape.

"If India does not build on the lead that it has today, then other countries might overtake it," he said.

Close to 100 professionals, most of them Indian Americans attended the luncheon presentation by Raju at the Indian Consulate here April 6.

Satyam officials said that Raju was in town to meet with customers and agreed to give the talk at the request of the consulate.

Raju, who traced the growth of the Indian IT industry that accounted for an estimated $100 million in exports about 15 years ago to something like $18 billion last year, said that the Indian IT export was growing at around 34 percent annually. "Even if it grows at 30 percent a year, by the year 2020 the country would cross a trillion dollar in exports," he said.

Would this be sustainable? Raju admitted that in normal course it would not be sustainable. "If India does what it takes to succeed in future, if India becomes more innovative, if it creates values in ways that are not fully understood now, then one can possible say that such opportunities clearly exists," Raju said.

Raju said that he believes that in the next 5 to 10 years part of the IT industry in India would have to move from cities to rural areas because of rising costs. "In the next 5 to 10 years as much work moves from New York to Hyderabad, you will find work also moving from places like Hyderabad to the Indian villages. That is beginning to happen," he said.

Part of the reason for this, he said, was the rising cost of staff in India "I think the potential exists, but it all depends on what companies do and how," he said.
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Suman Guha Mozumder in New York

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