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India may be a global IT leader, but the fact is, we don’t have the right environment to encourage IT production in the country. This has emerged from a Economist Intelligence Unit (EIU) study. The Global IT Competitiveness Index ranks India 48th in the world, down two places since last year. The study done in 66 countries, ranks US as the most competitive country followed by Taiwan and UK. Interestingly, India is tow places ahead of China but both countries have lost ground since last year. While India ranked 46 in 2007, china was 49. EIU along with Business Software Alliance (BSA) examined six key attributes of a country before drawing up these conclusions. These were: the business environment, IT infrastructure, human capital, legal environment, R&D environment and support for the IT industry. Each category was given a weightage and based on the scores a ranking was done. India ranks 50th in overall business environment. “It’s tougher to do business here compared to Sri Lanka or Philippines,” says Jeffrey J Hardee, VP Asia, BSA. The countries that do well in all the six indices usually have some of the most high-performing IT industries. What goes against India is that inspite of opening up its economy, it’s still not very investor friendly. There are numerous bug bear like a torturous bureaucracy, rigid labour laws, limits on foreign investments in certain industries. What also goes against India is the bad IT infrastructure. We score a pathetic 1.3% and rank 62nd in the world on this. That’s because India’s PC penetration is as low as 1.54 PCs for every 100 people compared to 6.9 in China. Also, broadband subscription stands at 0.56 per 100 people. Most of it is concentrated in the cities. Moreover, India’s market spending on IT is only 20%. “But things are changing, as last year alone 5 million PCs were shipped into India,” assures Harden. Another are where India scored only 0.6% is in its R&D is an abysmal $15.6 per 100people compared to $300 in Japan. Similarly, private sector R&D spending is as low as $4.4 per 100 people compared to $61.3 in China. However, what goes in our favour is the human capital. Our skilled workforce has drawn most of the big IT companies to open their R&D centres here. Also, there is good support for the IT industry in the country. But we need to work hard on all the six indicators to improve our ranking. Indeed, China, one of India’s main competitors in the IT space, has ranked lower the past two years, but it’s working hard to improve its position. “It’s investing rapidly on It infrastructure. Changing policies to make the country more investor friendly. Investing on human capital to ramp up their skill sets. Changing laws to curb piracy and making foreign companies comfortable with local standards of IP” says Hardee. They may not be able to beat India next year, but we need to work hard to keep ahead. Courtesy Times of India October 24, 2008 |
India slips 2 places in IT competitiveness
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