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More often than not, China is seen as India’s competitor in many global markets, and with good reason. But for equally good reasons, some firms have been eyeing it as an investment destination, and none more fruitfully than IT majors Infosys, TCS, Wipro and, now, HCL Technologies. TCS, for instance, plans a third development centre to service an expanding clientele that includes multinationals and local firms and intends to raise its manpower to around 5,000 by 2010. And HCL has just stepped in for enterprise software and engineering and application testing, with local subcontracting.

The Chinese forays, along with those in the Philippines and Malaysia, represent the low-cost end of the investment spectrum by IT majors, with the upper end focussed on delivery centres in Canada, east Europe and Mexico servicing clients in the developed markets. Such investments reflect the IT industry’s attempts to turn into opportunities two challenges that will continue to haunt the industry for some time to come. Of these, the fluctuating rupee and its impact on export prices is being tackled by value-added offerings, and by moving the services closer to client markets. Locating investments in low-cost emerging economies such as Mexico, Algeria, South Africa or near client markets also helps IT majors partly meet the second challenge, shortage of skilled labour in India. Alongside, some firms have sustained training programmes that enable them to maintain high standards of recruitment. Infosys and Wipro accept less than 2 per cent of their applicants that include science and engineering graduates. At an industry level Nasscom plans to standardise skills for the IT sector through a competence test.

Other sectors, such as bio-technology, healthcare and food processing face shortages of scientists, doctors and engineers while banking and finance are also hit by lack of professionals. So far, the tendency has been to look to New Delhi for solutions to both crises. The past few months have shown that monetary policy cannot keep exchange rates on even keel under market conditions. Second, expanding the volume of skilled labour through the education system is, at best, a long-drawn process whose quality cannot be assured. The best bet is for industry to make do with what exists, as the IT sector is doing. An initiative of IL&FS and Ficci to upgrade Industrial Training Institutes (ITIs) needs to be emulated by other bodies such as the Indian Banks Association and medical/scientific councils to upgrade skills in their respective sectors. While the Centre and States dither over resources to bolster the education system, industry cannot wait for the results of that endeavour, which may be too long in coming.

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