Challenges faced by Indian Software Industry

1. Indian software industry has become expensive due to the rapid increases in the cost for the manpower.These days the salaries of the middle to top management of any organization are comparable to the costs in the developed nations, add to that the salaries of the lower levels such as the team leaders and the developers has also increased at around 10-20% every year. This increase in the salaries with out correspondent increase in output levels per person is eating into the profit levels of the software services companies.
2. Though initially India provided "less expensive - highly skilled "manpower; currently it has ran out of that "skilled" manpower and the whatever manpower is available is either not "skilled enough" or very expensive.
3. Indian Education system is not able to output the skilled manpower in terms of skill level in the numbers required. The quality is sore point when comes to the education. There are only a few Indian universities and institutions which can be regarded of international quality. The better educational institutions are highly subsidized by the government and hence the development of the same has not been as good as it could have been and money making has been the sole criteria when it comes to the private sector institutions. There are some good institutions in the private sector as well but they are as expensive as any in the developed nations.
4. Infrastructure in India has not been able to keep pace with sustained development in the software industry. e.g. the rental in the housing markets have increased nearly 4 fold in last 5 years, however the incomes for these software professionals have not increased in the same proportion. Further added is the traffic levels in the software dominated cities is another example of the bottlenecks in the infrastructure.
5. Due to the high Dollar inflows into the county due to its lucrative stock market return the Indian Rupee has become very strong compared to the Dollar. The government is also not keen to improve the situation due to the high prices of crude petroleum in the international markets since the petroleum products are highly subsidized in India and any weakening of Indian Rupee will add to the subsidy burden.
6. The Eastern European countries provide as much cost benefit as Indians do and they currently are as competitive as Indians are in cost. Similarly other Asian countries are exhibiting better cost benefit advantage compared to Indian Software Industry.
7. The Advantage for the Indian software industry has been its early beginning, and a large English Speaking populations - the highest in the world. But due to the globalization of economy that advantage is not significant anymore. We have Indian software professionals working in non-English speaking countries similarly now manpower from less expensive non-English speaking countries is trying to compete for the big bucks of Software Services Industry.