From: partha@mse.ogi.edu (R. Parthasarathy)
Newsgroups: soc.culture.indian
Subject: Business Week Article About India
Date: 13 Jan 93 02:53:54 GMT
Article-I.D.: ogicse.48431
Distribution: world
Organization: Oregon Graduate Institute, Material Science & Engineering

This article appeared in Business Week, January 18, 1993 issue. It
has been reproduced without permission..

Partha sarathy

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             SOFTWARE FROM INDIA? YES, IT'S FOR REAL

Elsewhere, nobody would be impressed. But in India, it has been
hailed as a breakthrough: The nation's No. 1 software maker, Tata
Consultancy Services (TCS), in just one year sold 11000 copies of
E-X, a $140 accounting program for personal computers. That was
remarkable not only because most software in India - upwards of 80%
- is obtained by illegal copying but also because it shows that the
world's second most populous nation may be beginning to build a
viable domestic software market. That, in turn, puts India in a
position to begin competing in global software markets in earnest.

"In the 1980s, the Western world only knew us for supplying cheap
manpower for software development overseas," says Dewang Mehta,
executive director of the New Delhi based National Association of
Software & Services Companies (NASSCOM), a trade group. In the
1990s, the success of such packages as E-X may help change that
perception. India's domestic software market in 1992 grew by a
hearty 45%, to $ 112 million. This growth is helping India's 500
software houses hone their development and marketing skills at home
so they can sell abroad. That's already starting: In 1992, software
exports jumped 67%, to $ 144 million. NASSCOM predicts software
exports will rise to $ 350 million by 1995. 

The export boom should gather more steam from new government
incentives such as tax breaks and special duty-free export zones
for software makers. If the growth keeps up, it will mean that
India's 2.5 million computer and software professionals will have
a better chance of advancing their careers without relocating
abroad. And the 20000 university-level computer science graduates
and 12000 computer trade school graduates that India turns out each
year will have a better chance at landing jobs at home.

The emerging domestic market - and liberalized rules for joint-
venture ownership - has also encouraged foreigners to expand their
Indian operations. "India's real problem has been the lack of any
domestic market," says Anoop Garg, director of software exports for
Digital Equipment (India) Ltd. With the promise of local software
sales, such multinationals will have more incentive to invest in
Indian facilities, rather than simply import Indian programmers.
DEC, IBM, and Hewlett-Packard rushed in when joint-venture
ownership restrictions were loosened in 1991. Aided by development
contracts from their US parents, some of these ventures have become
India's top software exporters.

But hometown favorite TCS is still the biggest. One reason: Because
customers such as banks have built custom applications on top of
its software packages, TCS is now able to pursue similar sales
abroad. "Whenever TCS has bid for a project for a foreign bank, the
question asked is: `What work have you done for a domestic bank?'
" says Pawan Kumar, a TCS vice-president in New Delhi. Now, he has
an answer.

Still, Indian software makers have a long way to go. Despite the
success of E-X, "piracy is the rule rather than the exception,"
says Kenneth A. Wasch, executive director of the Software
Publishers Association., a US based trade group. Popular programs
such as the Lotus 1-2-3 are rarely purchased legally, and a report
by the Business Software Alliance, an international antipiracy
group, says that India's computer users made $ 63 million worth of
illegal copies of US developed software in 1991. The local market
is also hampered by shoddy telecommunications, lack of proper
quality control, bureaucratic roadblocks to hardware imports, and
a meager population of just 1 million PCs.

But India's pulses are fast catching up to its minuses. The World
Bank last year surveyed 150 prominent US and European hardware and
software manufacturers that ranked India's programmers as No. 1 out
of the eight countries for both on-site and offshore software
development, ahead of Ireland, Israel, Mexico, and Singapore. Other
pluses include the world's largest English-speaking population
outside the US and an average annual salary of about $ 3000 for a
skilled programmer. That's one reason why "producing quality
software in India costs 40% to 50% less than what it would cost to
develop in the US," says Jack Epstein, chief operating officer at
Parsippany (NJ) market researcher InfoTech Consulting Inc.. At
those prices, India could very well shake off its timeworn image of
snakes and spices and emerge as a land of software.

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By Sunita Wadekar Bhargava in New Delhi
Newsgroups: soc.culture.indian,soc.culture.tamil,soc.culture.indian.telugu