Globalization and Indian IT industry – Part 1

Initial growth phase
In the ’80s and early ’90s the Indian IT industry used to find it tough to compete with their western counterparts in bidding for projects. Though Indian companies possessed the process and technical knowledge to deliver quality services, the perception of “made in India” brand in western world was still low-quality. The Indian IT industry benefitted from the first wave of globalization necessitated in part by the Y2K crisis. For a while we rode the path laid by this anomaly, between the then existing 2-characters (YY) date fields in the systems vs. the desired 4-characters (YYYY). What it enabled for us was the rapid development of IT infrastructure and provide finances for rapidly training our man-power for IT services. Consider for a moment, the rapid infusion of many engineering talents from non-IT backgrounds of premier engineering institutes that have made it big in IT industry.
With the IT bubble bursting in 2001 came the next round of funding. The world suddenly looking to reduce its costs, found the newly developing mass of Indian IT infrastructure alluring enough to ‘out-source’ their work here. Thus, rose the Indian BPO industry which fueled the second wave of growth in Indian ITES sector.
From mid-90s, the Indian IT majors had built enough in-roads into US and EU markets to start moving up the value chain. They had now moved beyond the maintenance and migration projects of ’90s to undertake major turnkey development projects in 2000s. Several new services related to infrastructure development and maintenance, testing, ERP/CRM were also started and many Indian companies made their forays into product development.
In my next post, I’ll be commenting on some factors that have fuelled the growth of Indian IT industry.

Anirudh Gupta


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