Intelligent Enterprise

If China and India aspire to recognition and respect for their increasing prowess in technology, they must do better.

The World Economic Forum recently released its annual Global Information Technology Report for 2006-2007. The hallmark of the report is the Networked Readiness Index (NRI), which seeks to benchmark countries in their capabilities in information and telecommunication technologies (ICT). Denmark, Sweden and Singapore take the top honors for 2006-07. India (ranked 44) and China (ranked 59) are both placed somewhat dismally – and losing ground to boot (India down 4 spaces, China down 9 spaces).

There can be many reasons for poor standings – the Networked Readiness Index comprises three sub-indexes measuring a total of 67 variables – but there is a clear and common indictment for China and India: in a word, Infrastructure.

For India, a country that touts itself as the "back office of the world" – and China, one that is striving hard to stake that claim – information and telecommunications infrastructure is of, well, "foundational" importance. ICT infrastructure is the bridge that connects these distant countries to the world, technologically speaking, and poor ICT infrastructure is a strong disincentive for worldwide businesses to rely on services based in India or China. India scores over China in most of the factors comprising the index (including infrastructure), but that is scarce consolation given the overall standings. Perhaps more damaging than the poor standings themselves – these can be partly accounted for by reasons that are historical and long-term in nature – is the drop in standings, which is something neither country can afford.

Unfortunately, poor infrastructure is a broader issue not limited to information and telecommunications. In a scathing story last month, BusinessWeek reports that, unable to depend on government-maintained infrastructure (roads and public transportation) Infosys, India's leading offshore provider, spends $5 million each year to transport its employees to work. In other words, Infosys is forced to sacrifice $5 million yearly – not an insignificant amount – much of which could otherwise be fruitfully invested or returned to investors.

Numerous factors such as wage inflation, security perceptions and trade restrictions (including visa limitations) already pose a challenge to the long-term IT (and other) growth prospects for India and China. One way to offset these challenges is by accelerated optimization of services – key to which is improving the IT and general infrastructure. For example, merely receiving World Bank loans for infrastructure is not enough; the political and economic leadership of these countries must rise to the occasion and push through measures to properly deploy these loans.

Incidentally, the U.S., which held the top spot in the Networked Readiness Index last year, drops 6 places to claim the 7th position, and Canada drops 5 places to claim the 11th position – clearly, it's time to "buck up" here at home as well.