Can India keep pace with China?

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August 26, 2004 (IDG News Service) -- SHANGHAI -- In February, Eric Rongley, the founder and CEO of Shanghai-based outsourcing service provider Bleum Inc., had wrapped up a recruiting trip to the Indian city of Chennai and was headed to the airport.
It wasn't the smoothest of rides. Traffic on Chennai's congested roads was heavy, forcing the driver to weave his car past "cows and carts and everything" to get to the airport, Rongley recounted in a recent interview.
But things eventually got better. Back in Shanghai, Rongley walked out of the airport terminal and stepped into a waiting taxi. Minutes later, the taxi was driving down an open highway, headed toward the city. Settling back in his seat, Rongley watched as one of the ultramodern maglev (magnetic levitation) trains that connects the airport with downtown Shanghai flew by, headed in the same direction.
"The contrast was really beautiful," Rongley said, underscoring the dramatic differences that exist between infrastructure in China and India.
Hearing Rongley's account of having to pass through roads congested by cows and carts to reach Chennai's airport, K.S. Suryaprakash, the head of delivery operations at Infosys Technologies (Shanghai) Co. Ltd., laughed.
"It's not that bad," he said, smiling.
There are places in India, such as in major cities, where infrastructure like roads and telecommunications networks is extremely good, but the quality of infrastructure varies widely within the country, Suryaprakash said.
By comparison, China has invested billions of dollars over the past decade as part of a government policy to improve critical infrastructure, such as roads, airports and telecommunication networks. As a result, infrastructure is generally good across China, not just in major cities like Beijing and Shanghai.
The widespread availability of good infrastructure provides a boost to outsourcing service providers in China, such as Bleum, which are angling for a bigger share of the outsourcing business from U.S. companies, Rongley said.
To keep pace with these ambitions, India must grapple with the challenges of rapid growth. The expansion and improvement of infrastructure in key cities haven't kept up with the growth of India's software and outsourcing industries. The result is that roads have become increasingly congested and the cost of network connections, for example, is rising as demand growth outpaces supply, Suryaprakash said.
"Bangalore is really struggling," he said, reflecting on the changes taking place in his hometown. "The costs are going up, and alternative locations are hard to come by."
Rising costs haven't reached crisis levels in India. Major Indian cities are still generally cheaper than Shanghai, Suryaprakash said. But a number of cities within a four-hour traveling radius of Shanghai offer good infrastructure and lower operating costs -- making them attractivelocations for IT outsourcing operations.
Efforts to improve infrastructure are under way in India and are making progress, but there's much work that remains to be done, Suryaprakash said. If the country can't resolve its infrastructure problems soon, China will increasingly become a more attractive place to do outsourcing, he said. And time is running out.
"India has another three years," Suryaprakash warned.

Reprinted with permission from

IDG.net
Story copyright 2008 International Data Group. All rights reserved.

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