Many people might have negative preconceptions about India. Issues like the gap between upper and the lower classes as well as the caste system are like a dark cloud that hangs over the country’s international reputation. However, India is rising as a great power in the information technology field. India’s economic growth rate has been 7.4% from 2008 to 2009 despite some setbacks like the Asian financial crisis. It is undeniable that India is becoming a great economic power. Rapid growth in India’s IT industry has created a social ripple effect and is beginning to have an impact on the caste system that has been in place for thousands of years. There are several important questions that need to be answered about this situation. For example: how has India developed its IT industry? what are the obstacles they must overcome? how can India and Korea impact each other in the IT field? Let’s look into it.
India’s competitive edge
The IT industry is a mainstay of the Indian economy. Sales in the IT sector have increased dramatically from 1,100,000,000 dollars in 1996 to 71,700,000,000 dollars in 2009. This translates into a staggering average growth rate of 40% annually. The IT industry in India has grown from 1.8% of GDP in 2000 to 5.8% in 2009. India’s competitive edge in the IT industry is in large part due to the diversity of its IT related industries and manpower. In Bangalore, one of the leading IT cities in India, there are approximately 37,000 IT enterprises including industry heavyweights like 3M, Microsoft, Intel, and Brigade Tech. There are also about 150,000 people employed in IT related jobs in Bangalore. That is why Bangalore is referred to as India’s Silicon Valley.
India’s IT human resources are also spreading around the world. 12% of all American scientists and 36% of NASA’s (National Aeronautics and Space Administration) employees are Indian. 34% of Microsoft employees, 28% of IBM, and 17% of Intel are Indian. Furthermore 20% of the manpower in Silicon Valley in the United States comes from IIT (Indian Institute of Technology).
India is quickly emerging as the main supplier of manpower in the global IT service market. India’s market share of offshore IT services accounted for 75% of 9,800,000,000 dollars in revenue for 2004. Developed countries replace their own workers with cheaper labor from other countries like India to cut costs and increase efficiency. Often times, in order to take advantage of cheap labor in other countries, developed countries relocate their factories abroad. One-fifth of the top 500 companies in the world have built R&D (Research and Development) centers in India and employ Indian workers.
Factors affecting IT development
The term "Untouchables" refers to the lowest level of India’s caste system which has strictly structured the lives and social interactions of Indians for thousands of years. Untouchables are primarily called "Harijan" which means God’s son or "Dalit" also means persecuted. The IT industry has worked to overcome this ancient system. Demands for manpower by the IT industry has led to social gaps being bridged. As the lower classes increase their incomes through IT service industry jobs, they are becoming middle class. IT companies have been permitted to fill 20% of their positions with Untouchables. The Wall Street Journal reported that 20% of the 500 to 1,000 people recruited each year are Untouchables. This more liberal approach to the rigid social structure has allowed companies in India to recruit employees based on their talent, and not on their class.
This phenomenon is based on legal precedent. India’s caste system was legally abolished in 1950. The Indian government enacted the "Protective Discrimination" law which prohibits all discrimination based on class. Since then, a scheduled hiring system was imposed as an affirmative action program to provide priority hiring for 20% of all jobs to the lower classes. At that time, Untouchables were designated as one of the scheduled castes. In 1990, scheduled caste hiring percentages were expended to 27%. Recently, the scheduled caste hiring system has been expanded further as private companies employ reverse discrimination that has caused higher classes to have more difficulty with getting a good job. In addition, the government has actively adhered to the Untouchables inclusion policy. The government gave 15% of seats to them on college exams and official document tests. Moreover, they enacted a quota system that dictates 22.5% of the lower class students and native students must be assigned.
Some IT companies ask that application forms be filled out only with a first initial and last name. An applicant is not required to report their father’s job. This is because when an interviewer sees an applicant’s first name or their father’s job, they will know the class of the applicant.
One crucial growth engine of the Indian IT industry is the high level of IT education. About 50% of high school curriculum is composed of IT courses. By grade 9, which is the same as 3rd grade middle school in Korea, students complete computer languages C, C++, and sometimes even more advanced languages. IIT in Delhi is the third highest rated technical college in the world after MIT (Massachusetts Institute of Technology) and UC Berkeley (University of California, Berkley) in the United States. There is also IIIT (Indian Institutes of Information Technology) University which was built as a joint venture between the university and industry. IIIT focuses on educating students about IT business as it fits into the reality of the IT industry and reflects the needs of the industry in its curriculum. In India, 120,000 IT majors graduate every year from approximately 1,300 universities.
India is a country where English is the most commonly used language among non-native English speaking countries. Therefore, they are eligible to use English as the official language in the IT industry. Because India’s advanced IT staff can use English fluently, many North American and European companies transfer software development or relocate services related to IT to India.
There is a 10 to 12 hour time difference between India, the United States, and Europe. This time differential means that Indian firms can cross-work with companies in the United States and Europe which allows for 24 hour production. When American workers leave the office, Indians are just getting to work. This has led to many joint projects between US and Indian companies.
Finally, cooperation between firms and universities is well developed in India. India’s industries create cooperation programs with universities and train personnel to gain expertise. For example, Infosys has connected networks in over 30 offices around the world and has built cooperative systems with India’s excellent universities.
The impact of the IT industry
India’s high-quality human resources are very popular in the international community because its wage level is about 1/5 of developed countries. US firms save about 30 to 50% in staffing costs by outsourcing jobs to India. This is one of the reasons why reverse immigration is now occurring in India.
Reverse immigration means that ex-pat Indians are returning to India. Many Indians emigrated to the United States and Europe to avoid the strict caste system or to have better opportunities to study, but many of these people are returning to India. Growth in the IT industry is one of the direct causes. From 2005 to 2006, roughly 30,000 Indian IT professionals living and working in other countries have returned. 1/3 of the researchers at the John F. Welch Technology Institute in Bangalore previously worked in the United States. People are coming back to India because Indian companies can ensure rapid promotions and offer relatively similar levels of pay. Salaries in India are much lower than they are in developed countries, but the lower cost of living makes salaries in India comparable. Many of these reverse immigrants are coming back to India to contribute to the development of the country and pass on traditions to their children.
Obstacles facing India’s IT industry
Even though India’s IT industry has experienced rapid growth, there are some serious issues that must be overcome if that growth is to continue. The weakness in India’s infrastructure has become an obstacle to the continued development of the IT industry. India has many broken roads so a great deal of time is consumed due to transportation issues. Mumbai, which is the largest commercial city, is subject to the worst traffic congestion. In addition, power shortages frequently occur in India. Power outages cause factories to stop production. India is putting in a great deal of effort to resolve these chronic shortages in power. Talegaon Industrial Complex in India is the Mecca of India’s automotive industry. Industry giants involved in auto production like GE, Posco, and JCB are concentrated here. In this area, many companies have been forced to install generators in order to prevent losses due to power outages. IIFCL (India Infrastructure Finance Company Limited) considers India’s infrastructure the most important factor in the continued economic growth of India. That is why the government has planned five years of economic development from 2012 to 2016. Through this plan, the government intends to spend 1,000,000,000,000 dollars on infrastructure development. This plan is meant to allow sustainable growth in the Indian economy and improve people’s quality of life.
Another problem with India is that the unemployment rate is too high. The unemployment rate in India rose to 10.1% in 2010 from 8.3% in 2005. The high-rate of unemployment was proportional to the growth of Indian industry despite the economic growth in India. One of the reasons is that the service industry in India accounts for 60% of the workforce. The service industry is dominated by the IT industry, but the IT industry only requires a small number of personnel. Therefore, those employed in this sector account for less than 0.5% of the total workforce. India’s manufacturing rate is also very low at about 18 to 22% of GDP. The low proportion of manufacturing has increased unemployment because many of the jobs that have been lost came from the manufacturing sector like electronics, shipbuilding, electric power, and steel.
Korea and India’s IT
South Korea and India are similar in that the mainstay of national competitiveness in both countries is rooted in their respective IT industries. South Korea’s strength is based in hardware and IT infrastructure whereas India has focused on the development of software and IT services. This selective specialization means that India and Korea can complement each other through cooperative partnerships and create mutual win-win situations. To begin with, South Korea can assist India with IT hardware and building IT infrastructure. For example, South Korea can help India by supplying PCs because the percentage of population using the internet in India is too low compared to the development of its IT industry. Conversely, India can help the software industry in South Korea. Korea’s hardware-centric IT industry can reach a limit. Therefore, it is necessary to cooperate with the service sectors which have great potential in India. Also, we can employ IT manpower from India which is relatively poor in the field of advanced software.
Today, India has drilled a hole into its ancient caste system through the IT industry. This is because the people of the lower classes are employed based on talent and not by caste as a policy. India produces the world’s top IT talent by giving opportunities to its historically downtrodden the lower classes a chance to grow beyond the circumstances of their birth. Globally, India’s IT industry is also developing because of the abundance of relatively low cost labor and fluent English-speakers in India. However, India has serious problems to overcome. Two of the most daunting obstacles are poor infrastructure and high rates of unemployment in India. After India resolves these issues, they will be able to have sustainable growth in the future. Hopefully India will soon be thought of as an IT powerhouse and not as a land of social inequality due to its caste system.