Ask any investor about India’s strengths, and they will likely give you the usual answer: cheap outsourcing for software and services. But today, after years of being sold short, the country is starting to show off some other skills.

India has successfully expanded into animation and drug development, thanks to a new wave of entrepreneurs like Kiran Maumdar-Shaw, who overcame tremendous odds to grow Biocon, India’s most successful biotech company. These innovators also have the right connections: for his stealth-mode startup in Bangalore, Raj Gupta, a 20-year veteran of India’s semiconductor industry, wooed some of Silicon Valley’s most prestigious venture firms.

At the same time, a flood of highly educated and highly trained Indians are leaving jobs in the U.S. and Europe to come back to India to start their own companies. “I would not be surprised if the next Microsoft comes out of India,” says entrepreneur Tarun Anand. After completing his master’s in computer science at the University of Texas at Austin, Mr. Anand dropped out of the Ph.D. program, eager to get his career started.

He joined Microsoft’s U.S. headquarters, serving on the design and implementation teams for Windows NT, Windows 2000, and .NET. But developing someone else’s technology wasn’t enough. Now, the 32-year-old is evangelizing innovations at his own software company, ISS Retail, which counts U.S.-based Fortune 500 companies among its clients.

But for all its positive change, India’s poverty, illiteracy, and a lack of basic infrastructure are still crippling. The daily commute to the remodeled office buildings is a painful reminder of the gap between what India is and what it can become. The road is clogged with cars and cattle. Drivers ride their brakes and their horns, and at night the edges of major roads are lined with the hungry and homeless.

Honing IT skills will not only affect a child's future, it will make a big difference for India. Estimates indicate that by 2020 there will be 47 million more qualified and skilled people in India than jobs available; these people could perform outsourcing work for places like the U.S., Japan, and China. These three countries combined will have about 47 million jobs with no qualified candidates to fill them, says Rajandra Pawar, co-founder and chairman of NIIT, a pioneer in IT training in India and elsewhere.

From the work force’s perspective, “There are now endless opportunities here,” observes ISS Retail’s Mr. Anand. “I hope the trickle of Indians who have come back to build an innovative company becomes a flood.”