The Indian software and services industry is set to reach its long-cherished goal of $50 billion in exports in the current financial year, thus completing one of the most remarkable journeys ever ventured by a developing country. When a Nasscom-McKinsey study over a decade ago first set the target for 2008, it seemed little more than a distant dream with exports having reached just $2.6 billion in 1998-99. The 15-month delay in reaching the goal notwithstanding, the journey has put India on the global map in a way nothing else has. It has not only boosted national self-confidence and self-esteem, but also stood on its head received notions of India’s competitive advantage as a developing country. Like all historic journeys on uncharted courses, there have been many ups and downs but the essence of the story is in how hurdles were crossed, strategies changed and new strengths developed to keep up the scorching pace — a compound annual growth rate of over 30 per cent! In the process, the sector has become the most important source of white collar jobs in India.
The first hurdle that the then fledgling software industry encountered was scepticism. A lot of the success of the late-90s was attributed to the Y2K opportunity, which was seen as fortuitous and chances of sustainability questioned. But the customer proximity that Indian firms gained and the creditable performance they rendered set the off-shoring ball rolling. However, no sooner had the ball picked up momentum, than the global technology and business scene met with three setbacks — the bursting of the telecom and technology bubbles, followed by the global shock delivered by 9/11. These too were overcome and well into the decade Indian software leaders developed and brought into its own the global delivery model whereby vendors served clients from locations around the world following the clock.
Success breeds competition and its own problems. To get from $50 billion to $100 billion, India must remain ahead of emerging and potential competition. It must also overcome the challenge posed by protectionist tendencies in developed country markets, especially the US. Sometimes these get masked in campaigns about data secrecy and security, triggered by the odd sting operation. The dream run of 30 per cent plus growth till early 2008 was sharply halted by the global financial crisis. In the past, such hurdles were crossed with deft moves. The first dragon slayed was the question of quality which was overcome by going in extensively for certifications like CMM. The second demon was security, which was also overcome by putting in place and demonstrating systems and processes which have offered global-class security and more. Somewhere along the way BPO came up from behind to grow even faster than software, and just when questions were being raised about the future of low-value call centre work, that part of the business began migrating to other geographies and higher-value knowledge process outsourcing gained momentum. In a system where regulations stifled industry, software was able to get off to a flying start on the policy innovation of software technology parks. It was then carried right through by the innovative drive and initiative of firms which have now become some of the most admired corporate giants of the country. The challenges are not over; if anything, they will get tougher. But going by the industry’s ability to innovate and change, the next decade could be even more spectacular.
