If we want to do some crystal ball gazing about the future of West Bengal’s IT and ITeS industry, we must look at the global scenario and grasp the transformation that is underway. Global businesses are under constant pressure to be creative and innovative. To stay competitive or to gain a competitive edge, businesses must reduce costs dramatically, enhance productivity and quality. And, of course, focus on its core competence.
IT offshoring in India began as a cost arbitrage game. It then evolved into a quality/productivity play. One of the emerging issues is the availability of high-calibre talent. Demographic studies show that the US and Europe will show a decline in working population-to-total population ratio. In 2003, India had 543 million people below the age of 25. In comparison, the top four countries (in economic terms, purchase power parity adjusted) had 661 million people (37 per cent of the total population).
What is the future trend? In 2013, India will have 62 per cent of its population (750 million) below the age of 25. In comparison, the top four countries will have 33 per cent (625 million) in that
age bracket.
While one agrees that unless agricultural productivity improves and we become a major player in manufacturing, we will not be able to lift our people from poverty, I am often struck by the lack of appreciation of the role played by the IT services sector in India’s economic growth. In 2002, the sector had a combined turnover of $12.5 billion, roughly 2.6 per cent of our GDP. It also contributed to 10 per cent of our forex inflows and provided employment to 1.5
million people.
While it may sound ridiculous, there is no doubt that in the near future the IT services industry will be resource-constrained unless aggressive steps are taken to enhance the talent pool. Talent reservoirs are dwindling, staff turnover is rising and competition for resources is becoming fierce.
The government of West Bengal has declared its ambition to become one of the top three players by the year 2010, when it aspires to contribute 15-20 per cent to the country’s IT revenues. Even at 15 per cent, this will require a revenue of at least $8-10 billion.
I am all in favour of bold and courageous targets, without which great transformations can never be achieved. But I also believe in accountability. It is extremely important to track and report the progress every year, if not every quarter, and not leave the evaluation until 2010. It must also be appreciated that the government itself cannot achieve this goal. It can play the role of an enabler and a facilitator. It is only the IT industry in the state that can achieve this aspirational goal.
Unfortunately, all debates on the growth of the IT industry are misframed in physical infrastructure terms and miss the key issue. Of course, West Bengal, like other aspiring states, needs to invest more in infrastructure (both physical and IT). But that is not the elusive magic lamp of Aladdin. As the Red Queen said to Alice in Through the Looking Glass: “Now, here, I see. It takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast
as that!”
Physical infrastructure is only a baseline attribute. It will give any state a ticket to the game in the global IT services marketplace. Without world class infrastructure, a state will not even have an opportunity to play on a sustained basis. The winning attribute that will differentiate a winner from a player will be the availability of a vast talent pool that is trained in the latest technologies. The other winning attribute will be the ability to produce and attract entrepreneurs, leaders and managers who are creative, innovative with vision, leadership skills, courage to take risks and a passion to create centres of excellence.
The key to West Bengal’s long-term and sustainable success also lies in the ability to attract major investments in education — in engineering colleges, institutions of learning and in upgrading the quality of education right from the school level. Focusing on improving proficiency in the English language must be part of the
key agenda.
At present, there is a lot of storm in a coffee cup over offshoring. It is important not to be swayed by hype about offshoring backlash. Offshoring is here to stay and grow. India and indeed West Bengal must adjust their sails for the long and adventurous voyage ahead. It will be one of the most rewarding voyages in the digital seas in search of global markets: generating employment, creating wealth and bringing economic prosperity.
To me, the core of this strategy is simple: Invest in talent and they (investors) will come. We must have conviction that the backlash to offshoring will calm down and we must continue to invest in our future.
This sentiment is best expressed by an American poet Ella Wheeler Wilcox:
One ship sails east and another west while the
self-same breezes blow
‘Tis the set of the sail and not the gale that
bids them where they go.

The writer is managing director, Delotte & Consulting India