People power to make India global winner by 2020

Over the next decade and beyond, India will emerge with a key workforce surplus and its people-based offerings, led by the IT services companies, will be winning global marketshare just as the Japanese auto companies have been doing since the 70s.

Come 2020, India that is way behind its next-door neighbour China in terms of most economic measures, will be ahead in one respect.

According to a recent study conducted by the Boston Consulting Group, India will have a surplus of around 47 million people in the working age group, in comparison to China, which will be facing a deficit of 3 million workers.

China's situation will be similar to that of most rich countries. The US will be facing a deficit of 17 million people in the working age group, Japan 9 million, UK 2 million and Spain and France 3 million each, by 2020.

"This places us in an advantageous position as, if groomed and trained properly, this workforce will cater to the whole world in the field of information technology and India will continue to remain as the global supply base for the IT industry," Neeraj Aggarwal, principal, Boston Consulting Group, told reporters on Thursday.

He said India's IT exports are currently growing at a compound annual rate of 40 per cent "� what the Japanese automotive industry marked in the 70s. Just as the Japanese auto companies steadily increased their global market share, Indian IT companies are likely to do so in the world IT industry, he said.

According to BCG, Indian IT companies are moving ahead along the value chain by working in critical areas like system integration, infrastructure management, testing and IT consulting.

The report said that the better valuation of the Indian majors was being driven by higher employee productivity by the top tier players. "People driven businesses can be evaluated by economic profit per employee in which the Indian IT services firms are doing very well," said Aggarwal.

"The value of the Indian IT majors like Wipro, Infosys, and TCS is expected to be $120 billion by 2012 while the value of the global IT companies will be the same by that time," the report said.

Indian large IT firms' economic profit/employee cost is 46 per cent each for Infosys and Wipro, 21 per cent for HCL and 18 per cent for Satyam, the report said.

"Indian average employee profit is 21 per cent as against the global 10 per cent, which is a good sign in the long run," said James Abraham, director, BCG.

Like the automotive industry where market leader GM with a sales volume of 9 million units per year and a profit margin of $2.8 billion (2005) is being challenged by Toyota and Honda who have lesser sales volume but much higher profit margin, the Indian IT companies are passing through a similar phase.

"The market caps of Indian IT companies is smaller in comparison to their global counterparts like IBM, Accenture and EDS, but their price to revenue ratio is much higher," he said.

Recent trends indicated that more and more companies in the IT product space in the US which were earlier very conservative towards offshoring, were now beginning to think of offshoring and this is an opportunity for Indian players.

This apart, MNCs headquartered outside India were also expected to shift larger chunk of their workforce to India.