Swiss information and communication technology (ICT) firms are developing closer ties with Indian counterparts to boost trade and plug a skills gap in Switzerland.
India’s rapidly growing ICT sector presents a potentially lucrative market for Swiss specialists, while Switzerland estimates it will face a shortfall of 32,000 skilled workers in the field by 2017.
Companies and experts gathered in Zurich on Monday to explore ways of forging deeper links, with the umbrella bodies from both countries signing a memorandum of understanding to promote bilateral trade.
The conference also heard of obstacles standing in the way of closer cooperation between the two countries.
In Switzerland, the biggest hurdle is the paucity of work permits handed out to non-European Union workers. This year, the Swiss authorities will hand out just 8,500 visas to non-EU employees who want to work in Switzerland for more than a few months.
With most visas restricted to just 90 days, Indian companies face the constant headache of allocating manpower resources to projects in Switzerland.
Search for talent
“It is very difficult to plan projects when you never know how many visas you will get until late into the year and not knowing exactly how long the project will run for,” Andreas Knöpfli, president of the Swiss ICT trade body Swico, told swissinfo.ch.
The lack of home-grown resources also creates problems for Swiss companies. One firm at the conference, ITPC, opened up operations in Pune, India, at the beginning of this year precisely to gain access to large numbers of qualified workers.
“In Switzerland it is difficult to find highly qualified people,” chief executive Vincenzo Boesch told swissinfo.ch. “Recruitment companies repeatedly offer workers from Eastern Europe who would need to relocate for only one project.”
He added: “A second benefit of operating in India is that salaries are lower, which means we can do more projects for a better price.”
The ITPC website states that clients can save 35 per cent on projects sourced between India and Switzerland and 50 per cent on jobs conducted in India alone through the company.
Too little trade
The issue of foreign workers pouring into Switzerland since its labour market was opened to EU nationals in 2002 has proven a hot potato in election year.
Business leaders argue that labour from other countries is necessary to keep the economy forging ahead. But others are concerned at the growing proportion of foreigners in Switzerland – more than 20 per cent of the population are non-Swiss – and the strain on the country’s infrastructure.
Such constraints have not slowed the rate at which Indian ICT companies operate in Switzerland. The value of such trade rose from SFr350 million ($420 million) in 2009 to SFr450 million last year.
But this still represents a tiny percentage of the $73 billion (SFr61 billion) of business conducted by the Indian ICT sector worldwide in 2010.
Rajendra Pawar, president of the Indian ICT business federation Nasscom, said the two countries could do more to link small and medium-sized enterprises (SMEs), particularly those that service the financial services, telecoms and healthcare sectors.
“There are a lot of highly specialised niche operators that can provide small pieces of ICT solutions for big companies. We have to get these SMEs from both countries interacting so they can get the best out of their innovative products,” he told swissinfo.ch.
“Matching these competencies is a bit like putting together the pieces of a jigsaw and we still don’t have a formula of providing a platform to make this work.”
Switzerland is busy building an ICT industry with the area between Zurich airport and the city being optimistically labelled a new “Silicon Valley”.
Although there are 500 firms in the area, backed by research at the Federal Institutes of Technology in Zurich and Lausanne, Pawar described Switzerland’s ICT industry as relatively “stagnant” compared with India.
Breaking down barriers
A lack of competition was one of the reasons Thomas Sebastian, an Indian national, expanded his Indian ICT company PIT Solutions into Switzerland in 2005. Some 90 per cent of the firm’s customers are Swiss, serviced by a handful of employees in Switzerland and 200 in India.
“Most Indian SMEs are put off from coming to Switzerland because of the high cost of setting up a business [mainly real estate and labour force prices],” Sebastian told swissinfo.ch.
“Swiss companies are also quite conservative and not really interested in partnerships because they fear they will lose their clients. But there are more opportunities in Switzerland than in Germany or Britain because there are fewer competitors in the market, which keeps prices buoyant.”
Nasscom and Swico face the challenge of breaking down such barriers to Swiss-Indian commercial ICT links.
“If we fail to attract highly qualified professionals to Switzerland, they will simply go to work elsewhere,” said Swico’s Andrea Knöpfli.
Swiss-Indian trade ties
Commercial relations between India and Switzerland can be traced to the establishment of the Volkart Trading Company in Bombay in 1851.
There are now some 127 Swiss companies with a strong presence in India. Conversely, Indian firms have been less willing to set up shop in Switzerland, with around 100 firms present – mostly with limited activities.
A number of large Indian ICT companies have set up operations in Switzerland, such as Infosys, Cognizant, Polaris and Birlasoft.
The value of the Indian ICT investment in Switzerland rose from around SFr350 million ($420 million) in 2009 to SFr450 million last year.
Accumulated trade across all sectors between the two countries had risen from SFr1.56 billion in 2004 to SFr3.5 billion by the end of 2008.end of infobox