By Tom Krazit
Tuesday, May 16 2006 09:43 AM
URL: http://www.zdnetasia.com/news/business/0,39044229,39359976,00.htm

CORONADO, Calif.--Fueled by a steady stream of engineers emerging from its schools, India will continue to increase its share of the research and development services market, according to the chairman of one of the country's largest outsourcing firms.

"The U.S. will graduate more sports therapists this year than engineers," Azim Premji, chairman of Wipro, said at the Future in Review conference here Monday. "Engineering and medicine are the two most preferred professions in India, by far."

Software services still account for the largest percentage of Wipro's revenue, at about 60 percent, Premji said. But the company has become the world's largest independent provider of research and development services for other companies, and it hopes that the segment will account for 40 percent to 45 percent of Wipro's revenue over the next few years, Premji said in a brief interview following his public discussion with Rafiq Dossani, a senior research scholar at Stanford University.

Research work enables Indian engineers to improve their skills, and it can be more profitable for India's services companies, Premji said. Over the last two years, India's government has improved the country's intellectual-property laws to the point where foreign companies are much more comfortable turning over some of those crucial activities, he said.

This is a huge advantage for India over China, the other destination for companies looking to outsource work, Premji said. China has a better manufacturing base and national infrastructure, but it has nowhere near the intellectual-property protection that is needed for higher-end work, he said.

Premji predicted that India is about to invest heavily in new roads, airports and ports that will help convince more companies to set up operations there. Right now, congestion is becoming a huge problem, as India's workers purchase more and more cars. India's outsourcing industry employs 1.1 million people directly and provides jobs to 3.5 million people overall through peripheral companies, he said. Wipro expects the industry to grow about 27 percent during the next several years.