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India - the inside track on outsourcing
Inside India: On the road to offshoring in the new silicon.com special report

By Steve Ranger

Published: Monday 05 March 2007

The rocketing growth of the Indian tech industry over the last 10 years is down to two big events that many in Europe and the US would rather forget - the Y2K bug and the dot-com boom.

In the run up to the millennium companies were faced with fixing the date time-bomb they had unwittingly built into their computers years before. And, as the deadline loomed, many turned to India as a source of talent to get that ticking bomb defused.

Straight afterwards came the dot-com boom which fuelled another leap in demand for software talent. Many companies returned to India to find those extra skills.

Since that handy leg-up India's tech business has never really looked back. It's easy to be blinded by a blizzard of statistics when discussing a country so massive but the success of the industry is still pretty clear-cut. And it's this success and its consequences for the UK that are the subject of silicon.com's Inside India special report.

According to Nasscom - the voice of the Indian IT industry - the country will export $31bn in software and services in the 2006/07 financial year at a growth rate of 32.6 per cent.

In the last 10 years the Indian IT industry has grown its revenues tenfold - from $4.8bn in 1997/98 to $47.8bn now, with Nasscom predicting it will hit $60bn by 2010. Its contribution to Indian GDP has grown from 1.2 per cent to 5.4 per cent over that period.

In the 2006/07 financial year, the industry employs around 1.3 million people - and that's likely to grow to 1.6 million next year. And while that is still a tiny proportion of the country's 1.1 billion people, IT is seen as a vital engine of growth. Every IT job creates four more jobs in the broader economy.

The country churns out more than 300,000 graduates per year, which is lucky because the biggest Indian services companies are hungry for talent, adding several thousand staff every quarter. And it's not just the Indian companies that are growing - multinational corporations have announced plans to invest $10bn in the country's IT sector over the next few years.

Of course, this success story isn't happening in isolation. Over the last decade the impact of offshore IT services on UK businesses and IT departments has been growing steadily - and the pace of change is only going to accelerate.

A host of household names - Aviva, HSBC and Tesco among them - have set up their own operations in India and many more have outsourced parts of their IT support or even offshored whole business processes such as accounting or HR.

Which means big changes to how UK companies make decisions about technology and the future of their IT departments, as increasing numbers of technical jobs in this country are automated or shifted overseas where some staff can cost a tenth of what they do here.

But this march of globalisation isn't all in one direction. As the Indian economy continues to grow at around nine per cent per year the potential of the country as a new market grows too - for example millions of new mobile phone subscribers are added every month as consumer spending grows.

Over the next few weeks silicon.com's Inside India special report will explore the top offshore destinations in India. While Bangalore is still the undisputed IT capital of India there are plenty of other cities that want to steal its crown - among them Hyderabad, Mumbai and Pune. This special report will bring you stories from each of those cities and a daily diary which will chart silicon.com's day-to-day experiences of visiting and working in these cities.

It will look at the top Indian companies, how they retain staff in such a fast growing market, and how these companies and cities are coping with the tremendous growth they are experiencing.

It will include interviews with the CIOs that have decided to work with Indian suppliers and investigate how the Indian offshore model is going to develop in the next few years. It will even show you the campuses of the big offshore players - and how bad the traffic really is in Bangalore.

But most importantly it will help to explain what all this means for your IT department and your business.

Have you visited India to check out the outsourcing options? Or have you been affected by offshoring here in the UK? We want to hear your stories about India. Leave your comments below or email editorial@silicon.com.