India Needs Education Push to Stay Ahead of China in IT

To ensure that India is not overtaken by China as a global outsourcing destination, it must make a huge push in education and infrastructure said Kiran Karnik, president of the National Association of Software and Services Companies, or Nasscom. China is unlikely to surpass India "in any significant manner over the next three to five years," said Karnik. "When I look in the rear view mirror, I don't see anyone there yet but I know they are out there and that they can move very fast... China must not be ignored."

The Asian Development Bank last month noted that education in India was lagging seriously behind its rapid economic growth with only 12,000 training and vocational institutes, compared to half a million in China. India, which has the largest pool of English-speaking graduates outside the U.S., who are willing to work for salaries far less than those paid in the West, has become a world leader in IT outsourcing as Western firms have sought to cut costs by moving many of their operations overseas.

Outsourcing has been vital in helping drive India's economic boom. India's IT software and services revenues totaled $30.2 billion in 2006, up from $5.8 billion in 2000, with growth being driven by exports.

China trails far behind with IT software and services revenues totaling $12.2 billion in 2006, but that is up from just $2.4 billion in 2000, Nasscom said, with growth still driven by its domestic market. "We know China is moving ahead very rapidly" thanks to its "systematic and planned approach to rapidly developing key sectors of its economy, its substantial domestic market and sizeable educated workforce," Karnik said. "They are learning English at breakneck speed," he added.

Karnik said the two Asian giants could learn from the experiences of the other, with infrastructure development strong in China and standardization of quality a key asset in India.

India's outsourcing success has brought growing competition not only from China but from other nations including South Africa, Vietnam, South Korea and Mexico.