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Can India keep pace with China?

Can India keep pace with China?

In February, Eric Rongley, the founder and chief executive officer of Shanghai-based outsourcing service provider Bleum, had wrapped up a recruiting trip to the Indian city of Chennai and was headed to the airport.

It wasn't the smoothest of rides. Traffic on

Chennai's congested roads was heavy, forcing the driver to weave his car past "cows and carts and everything" to get to the airport, Rongley recounted in a recent interview.

But things eventually got better. Back in Shanghai, Rongley walked out of the airport terminal and stepped into a waiting taxi.

Minutes later, the taxi was driving down an open highway, headed towards the city. Settling back in his seat, Rongley watched as one of the ultramodern magnetic levitation (maglev) trains (pictured above) that connects the airport with downtown Shanghai flew by, headed in the same direction.

"The contrast was really beautiful," Rongley said, underscoring the dramatic differences that exist between infrastructure in China and India.

Hearing Rongley's account of having to pass through roads congested by cows and carts to reach Chennai's airport, K.S. Suryaprakash, the head of delivery operations at Infosys, laughed.

"It's not that bad," he said, smiling.

There were places in India, such as in major cities, where infrastructure like roads and telecommunications networks was extremely good, but the quality of infrastructure varied widely within the country, Suryaprakash said.

By comparison, China has invested billions of dollars over the last decade as part of a government policy to improve critical infrastructure, such as roads, airports, and telecommunication networks.

As a result, infrastructure is generally good across China, not just in major cities like Beijing and Shanghai.

The widespread availability of good infrastructure provided a boost to outsourcing service providers in China, such as Bleum, who were angling for a bigger share of the outsourcing business from US and other companies, Rongley said.

To keep pace with these ambitions, India must grapple with the challenges of rapid growth. The expansion and improvement of infrastructure in key cities hasn't kept up with the growth of India's software and outsourcing industries.

The result was that roads had become increasingly congested and the cost of network connections, for example, was rising as demand growth outpaced supply, Suryaprakash said.

"Bangalore is really struggling," he said, reflecting on the changes taking place in his hometown. "The costs are going up and alternative locations are hard to come by."

Rising costs had yet to reach crisis levels in India, Suryaprakash said. Major Indian cities were still generally cheaper than Shanghai.

But a number of cities within a four-hour travelling radius of Shanghai offered good infrastructure and lower operating costs - making them attractive locations for IT outsourcing operations.

Efforts to improve infrastructure were underway in India and are making progress, but there was much work that remained to be done, Suryaprakash said. If the country could not resolve its infrastructure problems soon, China would increasingly become a more attractive place to do outsourcing, he said.

And time is running out.

"India has another three years," Suryaprakash warned.


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