The Indian software services industry

The Indian software exports have grown in spectacular fashion. Its success has, for the most part, been a combination of resource endowments, a mixtur e of benign neglect and active encouragement from a normally intrusive gove rnment, and good timing. The bulk of the Indian software exports have consi sted of fairly mundane services such as low level programming and maintenan ce. The marked reliance on access to low cost human capital has prompted co nsiderable scepticism about the ability of the Indian software industry to sustain its performance, given the rapid growth in the demand for engineers and the relatively inelastic supply of engineers. This paper reports on th e results of research on the Indian software industry. We use a variety of sources, including a questionnaire survey of Indian software firms, and fie ld visits and interviews with industry participants, observers, and US base d clients. Although, maintaining the current rate of growth will pose a num ber of challenges, these challenges are not insurmountable. Not only can th e available pool of human capital be expanded by tapping and training the v ery large pool of English-speaking college graduates, the leading Indian fi rms are making strong efforts to move up the value chain by acquiring bette r software project management capability and deeper knowledge of business d omains, and reducing costs and improving quality by developing superior met hodologies and tools. Moreover, the greatest impact of the software industr y on the Indian economy may well be indirect, in its role as an exemplar of the new business organisational form and as an inspiration to other entrep reneurs. (C) 2001 Elsevier Science B.V. All rights reserved.