Kathmandu:

IT revolution has benefited, it seems, no country more than it has India. Information revolution pushed India to forefront of global economy. Today we hear almost as much about Wipro and Infosys as we do about Microsoft, Oracle or IBM. Early in 1992 Infosys was a small firm with less than 300 employees. Today the firm, lead by N R Narayan Murthy, has over 40,000 employees. Last year HR division of Infosys processed over a million applications and hired 10,000 of them. When it comes to profit, last year the Bangalore based giant closed with revenues of whopping Indian Currency 4852.95 crore. Financial statistics of other Indian IT companies like Wipro and Tata Consultancy Services (TCS) are equally formidable.

What is the driving force behind this tremendous boom in Indian IT industry? Well, there are several factors that buoy up Indian IT industry. At the forefront, however, is India’s comparative advantage in terms of low-cost labour. This advantage coupled with astuteness of visionary Indian managers as well as bulky pool of world-class techies, has turned India into IT powerhouse.

Majority of products and services produced by Indian IT firms are exported to the United States, as domestic market in India is still very small. To fulfil their IT requirements big companies in the US and Europe rely on Indian firms rather than their own domestic software vendors. This is only because they want to keep the costs down. Unfortunately, software development is a very expensive process. A huge chunk of this cost goes into paying salaries to programmers and software developers.

Software engineers in India are not only inexpensive but also exceptionally talented. Salaries

of Indian programmers are very low compared to their American and European counterparts. Consequently, the overall cost of software development project is enormously reduced if it is done in India. Therefore Indian IT firms are bringing in more and more assignments from outside. The US and European companies are more than happy to outsource their jobs to India. After all, it is their cost that is going to be cut down. It is a win-win situation. So, not only are they buying software from India, they are outsourcing even their business process to India. Rise of call centres in Indian cities reflect the growing trend of business process outsourcing (BPO) in India.

Although the robust infrastructure and the pool of highly-skilled IT workers are definitely important reasons, it is obvious that primary reason of flow of IT jobs from developed countries to India is its comparative advantage due to low-cost labour. This advantage is diminishing but it is still the most dominant factor. But does not Nepal have cheaper labour as well? It surely does. So why isn’t Nepalese IT industry thriving. There are of course a good many reasons. First reason being it’s poor infrastructure. For instance, the connectivity is so weak that it’s tedious to move high-volume data to and from the US frequently. Government is not paying serious attention to the infrastructure development. The proposed IT Park in Banepa is a distant dream. Another reason could be the lack of professionalism and intense desire for growth among Nepalese entrepreneurs. Call it a bad luck, but they seem pretty content with small-scale market within Nepal and are short of vigour as well as competency to enter the International market.

We need to put in new life into our bleak IT industry. We won’t make it big if we confine our operations only within home because Nepal has a meagre internal demand for IT services. To rake up substantial revenues we have no way but to tread into the international market. To woo our foreign customers we must demonstrate that we have the capability to deliver quality products and services at a low price. To accelerate the growth in IT industry we need endeavour along three dimensions.

First we need a highly qualified manpower. Our universities and educational institutes should develop programmers who are proficient in English. Rigorous curricula and availability of specialised courses in universities would make our programmers competent in diverse fields of computing. Likewise, research works should also be encouraged because that will foster innovation.The next thing we need is a pro-business government. The government should set up venture capital funds, so that entrepreneurs with good ideas can start new business. It should also make necessary arrangements for IT companies to easily borrow from banks. Good roads and other facilities will encourage MNCs to come in. Like wise it can use its diplomatic connections abroad to promote companies back home. The third thing we need is manager with grand vision — managers who understand dynamics in international business and recognise what the western clients really want; who can boost our brands at global scale; who can negotiate and win the contracts from companies in foreign countries.

Probably, India may no longer lead the global IT industry solely because of its low-cost operations because salaries of IT professionals are rising in India. The towering cost is becoming the Achilles heel for Indian IT industry.

Soon American and European companies will begin looking around for low cost alternatives. Nepal can very well tap into this opportunity.

The author works as a software engineer for an American outsourcing company.