Indian labour will remain cheap in medium term

But because of the massive pool of people in India, wage inflation isn't likely to happen in the medium term, and outsourcing films will shift to different centres of population to maintain low wages.

The panel consisted of Ramanathan Ramanan, CMC; Pramod Bhasic, Gecis Global; Ramalinga Raju, Satyam Computer Services; and Michael Cannon, Solectron.

There seems to be a move up the chain, according to the panel. R&D is already pretty common in India, and IP creation is now a possibility in India.

Engineers graduating from Indian universities have been used far less than their academic background deserves.

The business model of outsourcing is changing, and there is now joint IP creation and joint marketing efforts. As companies find more and more services available, customers are choosing what they can outsource. Much can be done at locations outside of headquarters.

Satyam said that if it stays in the commodity business it can't make money, but if it can provide generic services, it means it can achieve more profitability. It wants to blend its activities so it can become a place where its customers can get everything.

Wage inflation will happen in India, but even so companies can make 50 per cent savings by outsourcing to India, the panel said. As the Indian firms tap into a wider base of talent across the country, they can reduce labour costs.

The population pools in India and China are massive and the pools will be long lasting, but in the medium term it won't be a problem.