UK must act now to kick-start innovation

Most of the UK population has had dealings with an Indian call centre at some time or another. It is now an accepted part of everyday life.

The notion of offshore outsourcing has attracted controversy in the past, but the backlash seems to have subsided, and the Indian software and services market is riding high on a very large wave.

Last month, Indian outsourcer Tata Consulting became the first Indian IT company to generate $1bn (£510m) in a quarter, marking a significant milestone.

And next week Indian trade body Nasscom will tell its annual forum that the Indian IT sector has increased its revenues 10-fold in the past decade, from $4.8bn (£2.8bn) in 1997-98 to $47.8bn (£24.6bn) in 2006-2007. Nasscom president Kiran Karnik believes India will hit an export target of $60bn (£30.7bn) by 2010.

A report from investment bank Goldman Sachs published last week predicts the Indian economy will grow at eight per cent until 2010, overtaking those of Italy, France and the UK by 2017.

There is no question that India’s climb to economic prominence has been impressive, but it has significant issues that need to be overcome if its assent to global dominance is to be realised. Unlike its European counterparts India is still a developing country.

Its infrastructure is patchy at best. As India’s reliance on computers and technology increases so does its requirement for electricity, and at the moment the infrastructure simply cannot cope. Most IT firms in Bangalore have their own generators because power cuts are so common.

It also faces increased competition from other emerging offshore destinations, such as China. It has skills issues, weak information security and is not known for innovating.

At the moment India is still regarded as the place to go for low-cost services. If you want the real innovative technology, businesses are still tending to look closer to home.

But India knows it needs to sort out its infrastructure, and its drive and determination will undoubtedly make that a reality in the not-too-distant future. Once this happens, India’s status will change and it will look to innovation to propel its growth and dominance still further.

The UK’s position as an innovator is under threat. If the country wants to protect its position in the economic and innovation stakes, now is the time to do something.