Beyond outsourcing: Sustainable development

India has long been seen as the towering location for outsourcing, particularly in the area of information technology. Recently, however, cracks have begun to appear. Wage inflation for Indian IT workers has been reported at between 15% and 50% per year.

The intense competition for higher skilled workers has resulted in many smaller companies deciding that locations in Silicon Valley are preferable to those in Bangalore. While the IT majors still press forward, when companies like Apple cancel plans for Indian expansion, the alarm bells should ring. Many companies are looking to China and Vietnam as their next IT destinations. Meanwhile, other investment areas are underserved and may present greater opportunities for Indian and US companies. The twin areas of Infrastructure and renewable energy present huge opportunities for both Indian and US companies.

Infrastructure

With India’s growth rate of more than 8% per year, billions of dollars are annually needed for infrastructure. Telecom, ports, highways and airports are moving forward in the private sector. Already, 25 airports are scheduled to be brought to international standards through private investment of US$8 billion. Even railways, traditionally a government held monopoly, are being opened to the private sector. Licences have been awarded to foreign companies for long haul container traffic and dedicated rail lines from Delhi to Mumbai and Delhi to Kolkata, financed in the private sector, are in planning.

Wayne Rogers is a partner in the international law firm of Sonnenschein Nath & Rosenthal LLP, where his practice spcializes in cross border transactions, particularly in energy and infrastructure. He may be reached at 202-408-6478 or wrogers@sonnenschein.com.