Where to Next for India?

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These kinds of talents have put Indian companies on the threshold of what we believe could develop into one of the great economic success stories of the pan-Asian region: the great global potential of India and China together, combining the world's IT services powerhouse with the world's factory.

Anyone doubting India's capacity to play its part need only consider the source of its IT industry. In 1996, India's exports of IT services were worth about $1 million. In 2004, they were worth $13 billion. In 2000, India's share of business process outsourcing (BPO) was worth $148 million. In 2004 it was worth $3.5 billion. Any student of business knows what those kinds of growth rates mean: disruptive, challenging forces that can unseat rivals and destroy business plans.

First Steps for Building a "Chindia" Plan

These days, you must have a China strategy and an India strategy. It is essential to monitor how China and India create alliances in specific markets, alliances under what is coming to be known as the "Chindia bloc." The first signs are already clear in IT services, in automotive components, and in a few other sectors.

Increasingly, China and India will be the dominant economic stories on the world stage, a trend that may well extend through most of the 21st century. Despite mounting stakes, however, the quality of information, research, and advice on how to make key decisions related to China and India is uneven. Executives and managers need a comprehensive view not only for understanding China and India, separately as well as together, but also for gauging future threats to and opportunities for enterprise.

There are a number of important points business leaders should consider in effective decision-making:

•Accurate information on the current state of global IT competitiveness in India and China for their internal markets.

•A set of realistic scenarios that explores not only the possibility of continued rapid economic growth in India and China but also potential social, political, or other disruptions to these economies.

•A series of milestones that define pivotal issues in each scenario and of signposts that over time point to milestone outcomes to help determine when and where to invest, cooperate, compete, analyze, or ignore these countries.

Looking Ahead

The economic futures of China and India, of China and India together, and indeed of China's and India's future impact on the global economy leave many unanswered questions. Can innovation be outsourced? Is it possible to compete in Asian markets without piracy of intellectual property draining away the opportunities? Will China's and India's mounting successes in world markets create a protectionist backlash among developed economies?

The answers to these questions may well be among the most important for setting the long-term course and success of our enterprise. How you pursue them will certainly shape the quality and insight of what you find. China and India will continue to play a role in the future of technology and innovation whether large or small. For any business, working out the best way to partake in this future will be the key to success.

Jamie Popkin, group vice-president and research fellow at Gartner (), and Partha Iyengar, vice-president and distinguished analyst at Gartner, are the authors of IT and the East published in May, 2007, by Harvard Business School Press and distributed in Australia by McGraw-Hill (). The book examines how China and India are altering the future of technology and innovation.