A surging, chaotic power

Poised to overtake China as the world's most populous country, and accounting for 30 percent of the world's software engineers, India has entered the 21st century with great potential and challenges. For many reasons, it is in the U.S. government's interest to enter into partnerships with reliable Indian companies.

The scale of India's challenges is daunting. Unreliable electrical power, poor roads, harsh climatic conditions that demand rugged equipment and costly services from a monopoly services provider are the major obstacles. The central government will invest $50 million to create satellite-based community Internet access in up to 1,000 population centers in the next two years. It is also partnering with Massachusetts Institute of Technology's Media Lab to promote low-cost wireless Internet access.

Human capital is a more complex matter. The existence of 17 official languages magnifies the challenge of providing basic education in information and communication technology skills. At the university level, the demand for skilled ICT engineers and managers is outstripping the capacity of the educational system.

On the other hand, retention of skilled young people is improving — more than half of the graduates of the best computer institutes now stay in India. Low labor costs continue to be an Indian advantage, belying the fact that more Indian companies than U.S. companies have earned the top rating from Carnegie Mellon University's Software Engineering Institute.

India's 1 billion people are only beginning to be affected by this change. Bullock carts overloaded with sugar cane still creep past the telephone access shops that have sprung up in every village — the drivers and shop operators unaware of the valuable information about crop markets that lies just beyond their reach in cyberspace. Progress is slowed by a difficult working relationship between the public and private sectors. The crafty denizens of the derisively named "babucracy" are skillful at retaining their middleman status and delaying the potential of e-government to streamline import and export processing, issue permits and otherwise strengthen India's national economy.

As a result, the private sector has moved forward where there are fewer obstacles. Call centers, a leading service export, are assisted by cost structures for overseas connections, but held back by regulation in domestic markets.

In the meantime, Indian companies and the U.S. companies who have partnered with them are weathering the slowdown in the global information technology industry better than many of their peers. They have been aided in this success by strong onshore/offshore partnerships that are creating a virtuous cycle of human, intellectual and financial capital flows between expatriate and domestic Indian professionals.

The opportunity that this situation creates should not go unexamined by the United States, the world's largest buyer of programming services.

McConnell, former chief of information policy and technology at the Office of Management and Budget, is president of McConnell International LLC (www.mcconnellinternational.com).