Research firm Gartner on Monday issued a recommendation to India-based CIOs that crystallizes the severity of the technology talent shortage in that country. Gartner recommends CIOs in India consider outsourcing IT work offshore to nearby countries, including Hong Kong and Singapore.

India CIOs are fighting against Tata, Wipro, IBM, and other service providers for IT talent. And when they go to those firms to hire IT workers on contract, they're often given second-class treatment. "Service providers typically allocate the best resources to their global flagship customers that pay in dollars and yield better margins," said Gartner VP and distinguished analyst Linda Cohen in a statement.

The IT talent shortage is a particular problem in India, which is working hard to build up its infrastructure to support a growing economy -- one that's largely been fueled by providing offshore outsourcing businesses based in the U.S. and elsewhere.

There's plenty of IT work to be done within India, however. The country's Department of Information Technology recently launched the National E-Governance Program, a nationwide effort to modernize systems that support such things as tax collection, banking, land records, and legal courts. India's gross domestic product grew 9.2% in fiscal 2006, second only to China. A recent Gartner study of 1,400 CIOs worldwide showed that IT budgets in India are up on average about 16% this year, compared with 3% in the rest of the world.

Gartner recommends that India-based CIOs develop innovative programs for retaining the talent they already have; consider recruiting from small and midtier cities; invest heavily in training "even while knowing they will lose some of their training investment to competitors"; evaluate offshore outsourcing from other parts of the world; and consider second-tier and third-tier IT service providers in their own country.