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New worries for the Indian tech industry

?? The Changing Rules of Global Competition |


| Political showdown coming for India's techies ??

February 08, 2007

New worries for the Indian tech industry

Steve Hamm

This is a group of people that never relaxes and never takes anything for granted. Maybe it's because of all of the bitter disappointments since independence. That kind of cultural shaping tends to keep large numbers of people on their toes. There has been plenty of talk at the NASSCOM conference about India's infrastructure challenges, soaring salaries, and too-rapid staff turnover. But when I ran into NASSCOM president Kiran Karnik, he laid a couple of new ones on me.

1) The problem of getting and keeping enough engineering professors in the colleges to educate the software programmers and hardware designers of the future. With the tech industry booming, newly minted PHDs are being lured directly into industry. Those who chose an academic career are looked down upon--as if they're only doing it because they couldn't get an industry job. Karnik says first-year faculty members make only about $500 per month in salaries, about one-third of their classmates who go into industry. Companies are trying to help out by offering fellowships to young professors, but it's not enough. Wouldn't that be a killer for the Indian industry? Smothered by its own success.

2) The special tax breaks for the tech industry are due to expire in 2009. Karnik says the new Special Economic Zones help the larger companies but don't do much for the startups that could produce the next wave of innovation and job creation. He's lobbying for the tax breaks to be renewed. This is a toughie. The Indian government is saddled with a ton of debt, and the tech industry would be a bountiful source of tax revenues. But would the tax burden kill the goose that laid the golden egg?

11:01 AM


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