Premji says competition is catching up with India

IT major Wipro's chief Azim Premji today cautioned the industry that competition globally is hotting up and warned the sector against falling into a mind trap of 'India Advantage'.     

"We have talked a lot about India advantage. That makes me extremely worried. It's a huge amount of thumping on the back (by Indian IT industry)," Premji at the fifth India Innovation Summit 2009,  organised by the Confederation of Indian Industry.     

He said BPO (business process outsourcing) exports from the Philippines this year would be "pretty close" to that of India's. Five years ago, BPO exports from the Philippines were probably 10 per cent of what India exported.     

That shows that competition is universal and "we just cannot take success for granted", he said.     

The growth of India's IT exports has come down to 12-14 per cent in 2008-09 from a compounded annual growth rate of 30 per cent-plus till the previous year. If one went by guidance of leading companies and less-leading ones, growth is going to be a huge challenge in 2009-10.      

Echoing Premji, Infosys CEO S Gopalakrishnan said: "We have to be always on our toes. We cannot be complacent about the lead we have, we cannot be complacent about competition."

Both Premji and Gopalakrishnan said in the short term they see a none-too-promising prospects for engineers.     

The IT industry's growth rate in the current financial year is going to be "very muted", Gopalakrishnan said.     

Recalling his interaction with Vice-Chancellor of Chennai-based Anna University, Premji quoted the latter as saying that as much as 40 to 50 per cent of the graduating engineers from some 300 affiliated colleges in 2008-09 would not get jobs.     

This figure is expected to go up to 80 per cent in regard to those who pass out in the current financial year, Premji quoted him as saying, and indicated that carry-over of such a large number of unemployed engineers would lead to salaries for engineers plunging.     

He said earlier engineers never experienced failures in job markets, had four-five job offers at a time and could change their jobs "overnight" but that's not the case now as there has been a fundamental change in suppy-demand equation.     

Gopalakrishnan said, "Employment opportunities for new graduates is going to be very limited," but stressed the need for continuously improving quality of education, adding once the recovery happens and growth comes back, there would be a surge in demand of graduate engineers again.