The series “Competitiveness in the IT sector” is doing great. In case you’ve missed the Intro and the one on India vs. Philippines, you can check them out here:
Competitiveness in the IT sector – Introduction to the Series
Competitiveness in the IT sector -India vs. Philippines
This blog will discuss India vs. Kazakhstan
Why are we discussing Kazakhstan? A blog on economic times discussed the lesser known relationship between India and Kazakhstan: “The matrix of Indo-Kazakh relations is quite sound, India’s largest trade partner ($918 million) or 75 per cent of total trade with Central Asia. In many areas of development i.e. resources, demands, expertise, and capabilities, India and Kazakhstan are complementary to each other … Clearly, their chemistries are likely to click as they may seek convergence to work on the complementarities and focus on manufacturing industries based on innovation.” Both countries are classified as LCC and Kazakhstan has a higher ranking on the competitive Index, which is why it makes sense to compare the two.
One of the main factors in price competitiveness is pay and productivity. When you look at the overall scenario on the Global Competitiveness Index when it comes to Pay and Productivity, Kazakhstan stood on 22nd rank while India stood at 47th place. But when it comes to the IT sector in particular, India looks more promising. Let’s consider a few factors that support this.
I ran a search on Payscale on the average salary of a software engineer in Astana, Kazakhstan and in Bangalore, India. This was for a software engineer specialising in ASP.net and having an experience of 5 years. The results:
Source of Information: www.payscale.com
Source of Information: www.payscale.com
According to this, the average salary of software engineer in India is 9,121.14 USD, whereas a software engineer with the same qualifications will cost you 26, 808 USD in Kazakhstan. Nearly 2.5 times more. We do know however that this factor alone is not enough to say that India is more competitive than Kazakhstan. When it comes to IT, there are many important facets to be considered other than cheap labor. Innovation, education, intellectual property assets and more come in to the picture if we are to assess competitiveness in the IT sector.
In this context, I drew up a comparison of the two countries on The Global Innovation Index:
| Pillar/Sub-Pillar/Indicator Name | India | Kazakhstan |
| Human capital and research | 20 | 29.6 |
| Education | 26.8 | 50.9 |
| Tertiary education | 10.5 | 21.8 |
| Research and development (R&D) | 22.6 | 16.1 |
| Infrastructure | 34.6 | 43.3 |
| Information and communication technologies (ICT) | 38.6 | 65.7 |
| ICT access | 30.5 | 68.4 |
| General infrastructure | 38.9 | 35.8 |
| Ecological sustainability | 26.3 | 28.3 |
| Business sophistication | 26.4 | 27.2 |
| Knowledge workers | 13.7 | 38 |
| Innovation linkages | 37.3 | 18.8 |
| Knowledge absorption | 28.1 | 24.9 |
| Communications, computer and information services | 20.8 | 11.4 |
| Knowledge and technology outputs | 30.1 | 21.9 |
| Knowledge creation | 15.2 | 8.7 |
| Patent Cooperation Treaty resident applications | 2.3 | 0.5 |
| Knowledge impact | 35 | 36.6 |
| ISO 9001 quality certificates | 12.3 | 2.7 |
| Knowledge diffusion | 40.1 | 20.4 |
| Communications, computer and information services exports | 100 | 2.4 |
| Creative outputs | 25.9 | 21.1 |
| Intangible assets | 37.9 | 33.5 |
| Creative goods and services | 17.3 | 13.6 |
| Creation of online content | 10.3 | 3.9 |
| Innovation Output Sub-index | 28 | 21.5 |
This draws up a fair comparison of the two. In terms of Education of workers, ICT (Information and Communication technologies) and ICT access. But there is no room for contest when it comes to Communications, computer and information services exports – India is the undisputed leader here. Also, when it comes to ISO 9001 quality certificates, Patent Cooperation Treaty resident applications, Innovation Output Sub-index, and Knowledge diffusion (the adaptations and applications of knowledge documented in scientific publications and patents,) India is way ahead.
Kazakhstan realises this and the Ministry of Education and Science of the Republic of Kazakhstan are making efforts through the Technology Commercialization Project (TCP), which is assisted by the World Bank. The upcoming high-tech science park in Astana holds definite promise as well. Deputy Prime Minister of Kazakhstan, Yerbol Orynbaev, spoke of the park saying: “The park envisages creation of a belt of corporate research centers, institutes and large high tech companies that will closely cooperate with scientific centers and schools of Nazarbayev University will be created in the near future. Memorandums with giant companies such as Microsoft, Samsung and Hewlett-Packard to create their research centers in the science park have already been signed.”
Verdict:
Kazakhstan definitely looks poised to be a good bet for an offshore IT destination. Yet, facts show that India is has a greater competitive advantage when it comes to Innovation and Pay. Keeping all these factors in mind, a company can weigh the factors that are most beneficial for its unique needs and make an informed decision. Please do let me know if you have any other questions on this and I would be glad to help!
