Infrastructure woes may hurt IT sector

By agencies   |   Wednesday, 31 August 2005, 07:00 Hrs
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MUMBAI: Global IT research firm Gartner has warned that India's booming software and BPO export industry may suffer in the long run if the country does not invest enough on improving infrastructure and training manpower.

''Unless infrastructure issues are addressed and there is a strong movement forward, there could be an impairment for future growth of offshoring (IT and BPO services),'' Gartner said.

It said though the IT services sector is projected to grow at 35 percent and the BPO sector by 45 percent, the infrastructure hurdles will have a negative impact on the industry.

''A whole host of companies are coming here thinking that in India they can do any thing. But when they land here, airport and transportation is a problem, there is power outages and there are security concerns.'' ''In the long run it will bring down the present boom and enthusiasm from firms abroad,'' it cautioned.

However, it said Indian companies are increasingly competing with foreign firms in the country and are increasingly going out and taking on global IT majors in the world market.

''They (Indian companies) have to use IT in an effective manner now more than in the past to achieve the same productivity level that have a U.S. or UK Company.'' Referring to attrition, it said the rate in the Indian BPO and IT industry was between 50 percent and 60 percent according to recent estimates.

''Rapid staff turnover remains a cause for concern for the majority of the rapidly growing IT and IT-enabled services sector in India. Only 284,000 professionals were employed by the IT/ITeS industry in 1999-2000, and the numbers had increased to one million in 2004-05,'' it said.

According to a Gartner statement here, by 2008, investments in information and communications technology (ICT) would be dominated by the telecom sector with a whopping 83 percent, followed by hardware 9 percent, IT services 7 percent and software 1 percent.

Investments in telecom form the largest chunk at 80 percent, while ICT spending is only 2 percent in the country, it said.

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