india - future warehouse of it in the world

8/14/2019 India - Future Warehouse of IT in the World

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India - Future Warehouse of IT in the World

Abstract

India has the world's second largest population and one of the fastest growing economies in theworld. India has a promising future, given the unprecedented growth in economy and its

clout in the global issues. India is now riding on the wave of a gigantic boom in computer-drivennew economy. Many developed countries of the world are seeking the huge pool of English-

speaking, talented software professionals in India. As the world is transforming towardsknowledge society, India too is moving proportionately, competing with the world. The increase ofInternet users and the advancement of information and communication technology in India hasboasted the development towards e-commerce in global economic society. In IT sector, India isbooming as a super-power. In the last few years, India has made rapid strides in the IT sector,especially in the software services and IT-enabled services. In this paper, we analyze the picture

of IT industry in the very near future in India and contribution of India in world's InformationTechnology Sector.

Introduction

From the 1950s, IBM had a virtual monopoly of computers in India. The 360 series release of1960s was the major work-house of the large organizations. They even maintained a chain ofprogrammers who could write down softwares for their machines. However, in 1978, whenGeorge Fernandes, in the Ministry of Industries at that time, commanded IBM to take local share-holders into its subsidiary, the company refused strictly and went back after winding up all itsoperations in India. Its ex-employees then set-up Computer Maintenance Corporation, with theprimary object of maintaining IBM computers.

During the period of 1995-2000, the Indian IT industry had recorded a C.A.G.R. (CompoundedAnnual Growth Rate) of more than 42.4 percent, which is almost double the growth rate of ITindustries in many of the developed countries. Foreign companies, particularly Americancompanies, have played a vital role in making India an emerging IT super-power in the world.These MNCs account for nearly 22 percent of Indian software exports. According to the latestNASSCOM estimates, in 2001-02, multi-national infotech companies exported software worth Rs.6,500 Crore from India. Country's total software export was pegged at Rs. 29,400 Crore. In termsof investment and growth, U.S. companies like Cognizant Technologies (largest export revenueearning MNC), IBM, Oracle, GE, Cisco, Compaq, Intel, amongst others, led the MNCs in theInformation Technology sector. Nine out of top-20 Indian IT firms are from United States. Theseaccount for over 37 percent of the turnover of the top-20 firms operating in India. Despite theirsignificant contribution to the IT sector, these companies have to face a number of proceduraland operational problems in India.

However, the volume of e-commerce in India is far below the levels achieved in USA, which wasabout 1 percent of the total GDP in 1999. Further, the expected volume of e-commerce in India in2001 (US $ 255.3 Million) is also below the levels expected to be achieved, which in comparisonto Australia (US $ 3 Billion), China (US $ 586 Million), South Korea (US $ 876 Million) and HongKong (US $ 685 Million), is quite less.

Time has changed the way businesses are carried out. What was supposed to be known to fewand limited to the home-towns, appears to be an ancient methodology of carrying out the work.


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The present day brands work on world-wide scale, that is they are successful in not just one

particular region but have deepened their roots in all the corners of the globe that you can thinkof.

Information Technology is what constitutes the most important sector in the present day trend of

carrying out business. It is because you can not be present everywhere to monitor the work, butwith networking and communications, you can always stay in contact with the other businesssites of yours.

ICT Approaches of India

A spate of reforms post-1991 economic crisis have given impetus to the Indian economy,particularly to the ICT sector. As part of the reform agenda, the Indian Government has takenmajor steps to promote ICT including the creation in 1988 of a World Market Policy, with a focuson software development for export; tele-communications policy reform; privatization of thenational long-distance and mobile phone markets; and development of a more comprehensiveapproach to ICT. Although India's success is commanding increasing attention and investment, ithas yet to result in the distribution of social and economic benefits across a broader base of the

population. Challenges - including the perception of an unfavorable regulatory climate, anoverloaded judicial system, poor infrastructure and costly access, and limited use of ICT - remain.The emerging shift in government strategy, toward knowledge-intensive services, has created aclimate more conducive to addressing enterprise, domestic infrastructure, education, and the useof ICT to meet development needs.

Policy: India's focus on self-reliant industrialization in the 1970s and 1980s has been replacedwith reforms aimed at positioning India in the world economy: the foreign direct investmentprocess has been streamlined, new sectors have been opened up to foreign direct investmentand ownership, and the government has exempted the ICT industry from corporate income tax forfive years. These reforms have helped India to become increasingly integrated into the globaleconomy through growth in the export of softwares and skill-intensive software services, such ascall-centers.

In 1986, the Indian government announced a new software policy designed to serve as a catalystfor the software industry. This was followed in 1988 with the World Market Policy and theestablishment of the Software Technology Parks of India (STP) scheme.

As a result, the Indian software industry grew from a mere US $ 150 Million in 1991-1992 to astaggering US $ 5.7 Billion (including over US $ 4 Billion worth of software exports) in 1999-2000representing an annual growth rate of over 50 percent.

The establishment of the Telecommunications Regulatory Authority of India (TRAI) was a keystep towards effective implementation of telecommunications reforms. In 1992, the mobile

phone market was opened up to private operators; in 1994, the fixed services market followed;and finally in 1999, national long distance operations were opened to private competition. Prior tothese reforms, the Department of Telecommunications had been the sole provider oftelecommunication services.

In addition, to attract foreign direct investment, the government permitted foreign equity of up to100 percent and duty-free import on all inputs. Government-created technology parks also offeredprofessional labor services to clients, a cost-effective program for India since ICT labour is soinexpensive by global standards.


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Infrastructure: Teledensity in India has reached 3.5 percent of the population. Approximately1 percent of house-holds have fixed-line connections, compared to 10 percent in China. Themobile sector has approximately 3 million users, growing at 100 percent per annum, and isexpected to outstrip the fixed-line market in the near future. The number of Internet accounts isaround 1.5 million, growing at 50 percent per annum. India also has very high penetration rates ofterrestrial TV, cable and radio. Voice and data wireless solutions, for both domestic and exportmarkets, are increasingly produced and used locally.

Access to telephones in Indian villages has improved in the last five to six years through theintroduction of the Public Call Office (PCO) run by local shopkeepers. More than 60 percent of thevillages in India have at least one phone. This also includes over 800,000 Village PublicTelephones (VPTs). Worldtel is undertaking a pilot in four states to secure financing to upgradethe Village Public Telephones so they will soon be Internet-accessible.

In some urban locations, India's Software Technology Parks (STPs) provide infrastructure,buildings, electricity, telecommunication facilities and high-speed satellite links to facilitate exportprocessing of software.

India also has a number of progressive computerized networks in place, including a Stock

Exchange, the Indian Railways Passenger Reservation System, and the National InformaticsCentre Network (NICNET), which connects government agencies at the central, state and districtlevels.

Enterprise: India's well-established framework for protecting intellectual property rights hasbeen an important inducement to business investment: well-known international trademarks havebeen protected by Indian laws, even when they were not registered in India. In 1999, majorlegislation was passed to protect intellectual property rights in harmony with internationalpractices and in compliance with India's obligations under TRIPS.

Much of the initial domestic demand stimulus for ICT and ICT services industries in India hascome from government: 28 percent of total IT spending to date can be attributed to governmentand public sector expenditure. Major areas of government expenditure include: financial

services, taxation, customs, telecommunications, education, defense and public infrastructure.As a result of the growth in ICT use in India, the ICT industry itself has also increased its

domestic economic activity, for example, a number of ICT companies have developed accountingand word processing packages in Indian languages. The potential impact of this growth on thedomestic economy is much broader than developing software for export only.

Human Capacity: In spite of relatively low literacy rates among the general population, Indiahas several key advantages in human capital: a large English-speaking population and world-class education, research and management institutions - a direct result of investment in self-reliance in science and technology. In addition to establishing Indian Institutes of Technology(IITs) in various cities around India to create a large pool of technical skills, the government has acomputer policy to encourage R&D in personal computers. The IT training sector continues to

grow at a rapid rate: total training revenues in 1998 were estimated at US $ 225 Million, 30percent up from the previous year. However, one of the biggest challenges to the Indian softwareindustry remains the difficulty in attracting and retaining talented professionals.

Content & Applications: India has a large population with great linguistic diversity. Creatingand maintaining locally relevant content for a country with 418 languages is a challenge.Nevertheless, local language content is slowly making ICT more relevant and accessible to abroader cross-section of the population. For example, India's Center for Development ofAdvanced Computing has recently launched a scheme called iLEAP-ISP to create a free


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multilingual word processor to be made available to all Internet subscribers. On other fronts,some states such as Tamil Nadu have launched their own initiatives to support thestandardization of local language software through interface programs that can be adapted toword processors, dictionaries, and commercial keyboards for use in schools, colleges,government offices and homes.

An emphasis has also been placed on the development of relevant e-government applications inIndia. Some states such as Madhya Pradesh and Andhra Pradesh have started to introduceapplications which allow citizens to have faster and more transparent access to governmentservices, for example, the provision of information on laws and regulations, and the procuring oflicenses and official documents online.

Strategic Compact: Public-private partnerships, catalyzed by the IT Ministry, have played a keyrole in India's ICT related development. One of the positive results of this effort has been the ITAct of 2000, which was based on the recommendation of the National IT

Task Force, and aims to set the overall strategy for the IT sector. In addition, the governmentand the private sector are starting to come together to foster ICT development. For example, a

joint effort by the Computer Science Automation Department at the Indian Institute of Science and

a Bangalore-based private company have developed Simputer - a cheap micro-computer thatenables illiterate users to browse the Internet.

India's development and contribution in world's information technology sector is of highestreputation. Cities like Bangalore have become the favorite (most preferred) destinations of all thebig banners like HSBC, Dell, Microsoft, GE, Hewlett Packard, and several Indian multinationalfirms like Infosys Technologies, Wipro and Microland, who have set-up their offices in the city. Itis because the city offers good infrastructure, with large floor space and great telecom facilities.This can be judged on the basis of the high growth statistics of India and the changing outlook ofthe companies towards India.

It is because of this growth that many popular brands that have not yet build up there stableoffices in the country are making it fast to have a destination in India too. For example, Sun

Microsystems, a global IT major, announced in Bangalore to double the present workforce of thecompany's Sun India Engineering Center (IEC) from the present 1000 to 2000 in the next twoyears time. IEC, which is the largest R&D center for Sun outside the US, would also focus ondeveloping products in India to suit the needs of the Indian market, which would be benchmarkedglobally.

This speedy growth of IT sector is undoubtedly due to the efforts of Indian government and theother developments that took place in the other parts of the globe.

The country has seen an era when after the IBM shut-down its shop in India in 1950, themainframes that were imported into the country were all from Russia. Western computers couldnot be imported because of an American embargo on export of high-technology equipment toIndia, which was considered an ally of the Soviet Union. Slowly, with time, the country could

develop its first powerful parallel computer in 1991 known as CDAC, by connecting together astring of less powerful computers.

With time and the continuous growth across the world, the country continued struggling and cameup as the world leader in Information Technology Sector. The industry has grown up to US $ 5.7Billion (including over $ 4 Billion worth of software exports) in 1999-2000, with the


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annual growth rate not sliding below 50 percent since 1991. India exports software and servicesto nearly 95 countries around the world. The share of North America (U.S. & Canada) in India's

software exports is about 61 percent.

The Indian labor is not only cheap but is technically skilled too to the world-class level. It is due tothe Indian Education System that includes in its course curriculum the practical knowledge of the

latest technology that is developed in world along with the fluency in English Language thatimparts compatibility in an Indian technician to communicate and work throughout the world.

Further, the geographical location of India serves to its advantage of being exactly halfway roundthe world from the US west coast, which is another reason why India is preferred destination ofmany big brands.

Also, the presence of a large number of Indians, especially engineers, in the US gave India aneasy entry into the US software market.

What adds more to the dominance of India in Information Technology Sector is the government

policies, like the enactment of cyber laws to protect and safeguard the interest of software

companies in India.

Setting up of the Software Technology Parks of India (STPI), by the Ministry of InformationTechnology, Government of India, and the International Technology Park in a joint project by theState Government, the TATA Group and the Singapore Consortium to promote and facilitate thesoftware exports is another major step towards the growth of Indian Information TechnologySector.

Similarly, an industrial park, known as Electronic City, set-up in 1991 takes more than a hundredelectronic industries including Motorola, Infosys, Siemens, ITI and Wipro, in an area of around330 acres.

The Export Promotion Industrial Park, built near International Technology Park, gives anexclusive 288 acres of area for export-oriented business. GE has its India Technology Centerlocated at this park and employs hundreds of multi-disciplinary technology development activities.

The other promotional activities that brought up India to this position include the IT CorridorProject. Conceptualized by Singapore's Jurong Town Corporation Private Ltd., the IT CorridorProject was initiated by the Department of IT and the Bangalore Development Authority in orderto develop state-of-the-art facilities for the development of knowledge based industries.

Thoughts of Some of the World's IT Leaders about India

"Economic growth will force better governance, and better governance will feed more economicgrowth."

- SV, NYC, USA

"The people and communities at large feel that they don't have the ability to make a difference."- Juzar Singh Sangha, Bedford

"India has to take more care of the village population who are still struggling to live properly."- John Karondukadavil, India, Living in Poland, Jaslo


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"India can become a superpower if she concentrates on the technology market niche."- Devyani Prabhat, Jersey City, USA

"India must counter its skills and wage crisis."- Pallavi, Sydney, Australia

"Hopefully, India will lead the world towards a more humane and tolerant future."- Nilesh, Antwerp, Belgium

"India needs to take strong and clear-cut decisions to emerge as a global player."- Nivedita Nadkarni, Madison, USA

"India is a country gaining economic ground in the world."- Justin, Bristol, UK

"Indians now have to develop a sense of national pride."- Leila, USA

"India will never be a super-power, much less a global power."- Jonathan, Boston, USA

"India has had a sharp increase in the estimated number of HIV infections."- Sezai, Eskisehir, Turkey

"India's economic success is built on the sacrifices of previous generations."- Shekhar Scindia, Edison, NJ, USA

"While India's economic growth is encouraging, its sustainability is doubtful."- Sigismond Wilson, Sierra Leonean in Michigan, USA

Conclusion

India is a perfect solution for all those companies, which seek cheap, yet technically-skilled laborwho have innovative minds and state-of-the-art infrastructure to work over a project, and theample facilities provided in perfect working conditions. For the rest, cyber laws are there tomonitor and safeguard everyone's interests related to IT sector.

All these reasons contribute to make India the most adored destination for many companies. So,we can conclude: -

India is poised for an explosive growth in ICT;

India is emerging as a global R&D hub;

India will witness changes from brain-drain to brain-gain;

Millions of jobs will be created in ICT and other emerging technology areas;

Quality issues will have to be addressed;


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Private world-class institutions will emerge with global collaborations;

India will reclaim its ancient heritage of the world's most-advanced knowledge-basedcivilization called "Bharat".

India will become warehouse of IT in the world.

india - future warehouse of it in the world

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