Is India losing its IT edge?

High costs and high attrition could drive Indian software companies to set up shop in other countries. That's what Infosys CEO Gopalakrishnan believes.

Well, Malaysia could be one of them. The Malaysian government is gearing up to take advantage of India 's problems.

 

The information technology park in Kuala Lumpur could rival the dozens of India's IT parks. Called the Multimedia Super Corridor or MSC, this 15 kilometre wide IT park was set up by the Malaysian government a decade ago to herald its presence in the IT space.

 

And the initiative is starting to pay dividends. The IT park has attracted over 1800 domestic and multinational companies on the back of zero corporate tax, unrestricted employment of foreign workers, single window government clearance and of course, the world class infrastructure, both inside and outside the IT park.

 

The MSC strategy is to promote Malaysia as a low cost, low attrition center for outsourcing. MSC officials say the high costs in India are unsustainable, and the high attrition rates, unacceptable. The only problem here is the availability of local quality talent. And to address this issue, MSC has tied up with Infosys to train Malaysian graduates.

 

Dato Narayanan Kanan, Sr VP -  Industrial Development, Government of Malaysia said, "We are learning from the problems India is facing. That is why we do not encourage poaching. It then becomes a vicious cycle."

 

Satyam already has a presence in MSC. And it seems pleased with the experience so far.

 

P Kunda, Satyam Malaysia said, "The Malaysian government response, be it to infrastructure, or helping us out with resources, is just fantastic. It's a long term growth story."

 

And while the recent Frost & Sullivan survey still ranks India as the no.1 choice for outsourcing, experts believe this advantage could quickly disappear.

 

Aroop Zutshi, Sr Partner, Frost & Sullivan said, "We ourselves are facing 30-35% attrition. It's a huge issue and could lead to many companies looking at other countries."

 

It may be then be just a matter of time before Indian IT giants move to greener pastures.