India’s software development and IT industry is one of the world’s biggest and successful
information technology industries. Begun in mid-70’s, it employed 1,500,000
persons in 2015 and earned revenue of $56 bn, almost equal to 12.5% of global
software services spending.
early days, Local markets were absent and government policy toward private
enterprise was hostile. But, all these conditions had led to industry’s evolution. The industry was begun
by Bombay(Mumbai)-based conglomerates which entered the business by providing
global IT firms located overseas with programmers and talented software
professionals. Their success owed to the creative and advanced exploitation of
a new global market opportunity and protection from transnational organizations
and start-ups by policy.
protected atmosphere restricted the growth of software project management and domains
expertize skills so that, despite access to a massive pool of programmers, the
industry could not expand in value-addition.
decade later, mainframe-based programming and manufacturer-specific operating
systems (OS) and languages gave way to workstation-based programming and
standard operating systems (OS) and high-level languages. These transitions
improved and modularized the programming function, i.e., programming/coding
could henceforth be done independently of the hardware platform infrastructures
and from the other functions of creating software, such as system design and
analysis. This, along with policy reforms that lowers costs of imported hardware
and software, results the Indian software development industry to shift from
supplying programmers to deliver software programs and packages. As work
shifted to India, infrastructural costs raised as a proportion of total costs.
This led the industry to relocate from Bombay to Bangalore.
the initial years of the industry’s third decade, beginning in the mid-1990s,
the introduction of the Internet facilitated the
specification of services, such as software maintenance and email management,
from the site where the software package was residing. Following
telecommunications policy reforms in 1999, this has opened new opportunities for
domestic and local firms.
2000, reforms in foreign ownership regulations, intellectual property
protection and venture capital policy induced TNC, diaspora and foreign venture
capital entry. The classical software services industry, dominated by large
local and domestic firms, has subsequently competed with firms with superior
domain expertize skills and access to finance. In consequence, the industry as
a whole is learning new leadership, more software product development and
entrepreneurship emerges as the major factor for evolution, survival and
innovation in a hostile industrial policy atmosphere. The maturing of the
industry needs a movement to a supportive government policy; maturation was
also critically provided by the modularization of the programming function through
new and advanced technologies. These changes favoured domestic firms that
provided software development services. Later policy and technological changes
induced transnational entry and led to higher value-added output.