IT in India
Date: Saturday , March 31, 2007
It is an honor for us to bring to our readers the thoughts of Noble Laureate Amartya Sen on Information Technology and India. As he rightly points out: IT business in India has benefited tremendously from its top rated educational system and the unique culture of respecting specialization in knowledge and trade. We also bring to you an article on how tech companies in India are trying to do their part as "corporate social responsibility" [pages 30, 31] in the country. This is all great but unfortunately there is somewhat a dark side to IT outsourcing for India. And it has to do with economics 101.
If you look at IT industry in U.S., or anywhere else in the world, one goal of all tech companies is to provide solutions to better businesses. Hundreds of thousands of engineers working in Silicon Valley have a constant drive to make their client's businesses more productive by building solutions for them. So any traditional business has the benefit of these smartest of engineers burning midnight oil to build IT products to make their business more productive. Technology therefore enables productivity in business and that in turn pushes economy upwards; everyone makes higher profits and whole society benefits. But, what if these IT engineers were making 10 times the wages of normal office worker or factory worker? Cost of developing IT solutions will be so high that productivity improvement gained through technology is lost in high pricing of these solutions-inevitably leading to lesser sales of solution. And if we think about it, that's where India finds itself. Due to might of dollar, best of Indian engineers work for outsourcing firms or MNC in India. They bring a huge amount of export earnings to India, but at what cost: "Low penetration and use of technology in India itself." Why? Products and solutions developed by these Indian engineers are sold at international price tags even to Indian business houses.
Therefore India's domestic technology market will not expand till normal businesses can buy technology solutions at an affordable price. Only such localization of pricing will help productivity improvements within these Indian business houses in turn yielding money and giving them a taste of technology. Remember, to become a developed country by 2020 or whenever, India needs to improve its productivity while using technology to its maximum potential. And that is what IT businesses in India owe to India. They need to spend some part of exorbitant profits they make-due to 'still' cheap labor in India-on providing affordable technology solutions to Indian businesses. This does not count as "corporate social responsibility" in traditional sense, but in long run this may be the best use of their resources allocated to "social cause"