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Software Services in India
India’s software services industry is one of the world’s most successful information technology industries. Begun in 1974, it employed 345,000 persons and by the end of 2004 had earned revenue worth $12.2 billion, equal to 3.3% of global software services spending.
According to a study by Forrester, India will continue to grow its software industry in scale, scope, and value added and it’s edge over other competing nations in the area of software development and IT outsourcing business comes from the country’s decade old experience in this area, fluency in the English language, supportive government policy infrastructure and high quality offerings.
Looking at the success of India's IT/software service industry, the central government identified ITES/BPO as a key contributor to economic growth prioritized the attraction of FDI in this segment by establishing 'Software Technology Parks' and 'Export Enterprise Zones'.
The National Association of Software and Service Companies (NASSCOM) have created platforms for the dissemination of knowledge and research in the industry through its survey and conferences. NASSCOM acts as an 'advisor, consultant and coordinating body' for the ITES/BPO industry and liaisons between the central and state government committees and the industry. The ardent advocacy of the ITES/BPO industry has led to the inclusion of call centers in the 'Business Auxiliary Services' segment, thereby ensuring exemption from service tax under the Finance Bill of 2003.
With this level of support Indian software services industry has developed skill and expertise in areas like design and implementation of management information and decision support systems, banking, insurance and financial applications, artificial intelligence and fifth generation systems. Indian software development professionals, besides being extremely cost-effective and having a good standard of English, have the experience of developing systems and applications of international quality and at world-class levels of productivity.
India has also become the most widely accepted destination not only for software outsourcing, but also for outsourcing of several other types like business and knowledge etc. A recent study has found out that more than 40 percent of software development and other types of services are being outsourced to India. In other words, India is the most preferred country for outsourcing of any kind.
With India being seen as a near synonym to outsourcing, software off shoring to India is likely to grow, not only through the continued growth of indigenous Indian firms, but also because foreign software development firms are increasing their employment in India in product development and particularly in software development services. Competition is likely to grow between multinationals based in developed countries, such as Accenture, IBM, and Siemens Business Services, and the large Indian firms, such as HCL, Infosys, TCS, and Wipro, as the Indian companies expand their global reach and the multinationals expand their operations in low-cost countries.
The primary focus of the Indian software industry has been export – sometimes in corporation with foreign companies who are established in India as a subsidiary. The main reason for the foreign companies to establish themselves in India is still the low cost of labor coupled with a highly educated workforce. The Indian IT/software service industry spans from huge world-renowned Indian companies like Infosys,Tata Consulting Services (TCS), Wipro etc. who are almost in the same league as international companies such as IBM, Sun Microsystems, Oracle, Microsoft, Dell etc. who are also present in India, to a host of small startups.
Talking of the India's software development and services industry its exports were estimated to grow by 32.6 percent to over $31 billion in the current fiscal year to March 31, according to data released Tuesday by the National Association of Software and Service Companies (Nasscom).
IT services including software development were expected to contribute $18 billion to exports in the year to March 31, while business process outsourcing (BPO) and call centers are likely to contribute another $8.3 billion, according to Nasscom in Delhi. Engineering services, research and development (R&D) services, and product development work are expected to contribute a further $5.0 billion.
Hence, within most IT areas and disciplines the world’s highest competence levels can be found in India. This can be seen, by looking at the IT quality certification “SEI-CMM Level 5”, which is the hardest certification to obtain in the IT industry. Worldwide there are only 52 companies, which have that certification – 43 of these have an entity in India. All in all the Indian software industry is only second to that of the US. The largest of the IT companies such as e.g. Infosys has its own campus with more than 45 buildings most of them 3-5 stories high, workout facilities for the employees and its own golf course – all located in the same campus area.
Indian software Industry hubs
Bangalore has the country’s largest concentrations of both national and foreign software development companies and is often compared to Silicon Valley. The city has a world-class information technology infrastructure, a skilled workforce, pleasant climatic conditions, a cosmopolitan environment and high quality research and educational institutions.
Initially the Indian software Industry, however, took of in Mumbai, which therefore is home to many indigenous software companies like Tata Consultancy Company (TCS), is based in Mumbai. The early success was partly due to the fact that Mumbai was the city, which pioneered the concept of software technology parks that had played an important role in the Indian software services success story.
Of late New Delhi has become a cluster of software production, which is almost as important as Bangalore and Mumbai. It also has the same number of Software Company headquarters as Bangalore.
Other important locations include Chennai (Madras), Hyderabad, Calcutta and Pune.
The author is a marketing executive in an offshore software development company in India. The company deals in offshore software development and offshore outsourcing. For more information visit: http://www.otssolutions.com.
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