India's service economy must plan for Phase 2, says Deloitte

Manufacturing News, Source : The Manufacturer US
Published : 29 Jan 2007 19:36

A new Deloitte white paper suggests people, infrastructure, and technological innovation will make all the difference.

In the last decade India has reemerged as one of the world’s leading economies; however, the very strengths that led to its distinctive growth could potentially slow its pace of development. Regulation, people, and technological innovation have all contributed enormously to the country’s success, but it’s time to abandon manual-intensive processes, and to strengthen India’s educated workforce and fix infrastructure. In doing so, technology will better enable India to be a stronger and more sustainable services economy. This according to a new white paper from Deloitte Touche Tohmatsu, India: Linking into the global services economy.

“India had enough of the right ingredients to become the services-driven economy it is today, including a suitable regulatory environment, available workers at the right age, and connectivity to global technology infrastructure,” Deloitte Touche Tohamtsu CEO William G. Parrett told an audience at the World Economic Forum at Davos on Thursday. “But these are the very ingredients that need more attention more quickly.”

According to Mr. Parrett, all three are top of mind for the Indian government and business leaders but are becoming distinct advantages for other developing countries. Mr. Parrett said, “India’s success can only be achieved by strategically managing its strengths the Indian way but with a keen eye on its competitors.”

The Deloitte white paper considers India’s workforce, including the fact that India’s educated workforce is a fraction of the country’s population. It suggests that future sustainability will depend heavily on turning this around, particularly in more technology-intensive areas.

“While 3.1 million English speaking graduates help the country attract IT outsourcing opportunities, and 350,000 new engineers graduate each year, many Indians lack the skills to participate in the service economy, and continue to be employed in low skilled, rural occupations.

“Imagine if an additional 10 percent of the population, or some 110 million people, became literate, how positive would that be to the pace of development—not to mention securing India’s position as a leading services economy,” said Mr. Parrett.

Another critical element mentioned in the white paper is the need to continue building infrastructure to enable technology to really drive India’s development. Cited are challenges well recognized by India’s government, including roadways, erratic power grid, and limited availability of clean water, which can individually or collectively slow growth and development.

“It is no secret that regular blackouts are commonplace across the country. As improvements are made, so too will the distribution of technology-based infrastructure across many industries,” said Mr. Parrett. “Further, there is no doubt that technology services will remain a key driver of India’s future economic growth, as technology is needed to overcome some of the challenges that are paradoxically affecting the country’s growth.”

Mr. Parrett remains optimistic about India’s future and stressed that many positives prevail. He said, “India’s promise is boundless. It’s a matter of design, and being diligent and systematic in building on the strengths it already possesses.”

Read India: Linking into the global services economy

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