The Indian IT services industry has grown significantly over the past few decades due to globalization. Factors like low costs and a skilled workforce gave India an initial advantage, but investments in skills, quality processes, and partnerships with global technology companies helped the industry develop and access international markets. As the industry matured, Indian firms offered high-quality outsourcing services to clients and grew rapidly, especially during periods like the Y2K transition. Continued success depends on constantly upgrading skills, focusing on employees, balancing quality and cost, managing global supply chains effectively, and innovating vendor relationships.

1. Genesis of the Indian software industry :
a Lesson in Globalization
Paradigm Shifts in Vendor Partnering in
the Indian I.T. Services industry
Or alternatively titled as
Copyrights: PB : 2019
Updated version of Invited Talk delivered at the College of
Continuing Education, Globalization & Engineering Course at
Purdue University, USA in Sept 2007
By Parasuram Balasubramanian, Founder & CEO

2. Genesis of the Indian software industry :
a Lesson in Globalization
Which country is
the world’s
largest cut flower
exporter ? [about
50 % of global
exports by value]
Netherlands
It is also the largest importer of flowers in the world !

3. Genesis of the Indian software industry :
a Lesson in Globalization
• What does globalization mean to you ?
• How has it impacted your life ?
• Where is this headed ?
Cross border trade has grown exponentially in many
countries. Per capita Income has increased.
Employment opportunities have undergone structural
changes with reduced job security. Skill enhancement
is a life long challenge for many.
The growth of I T services industry in India is
explained in the context of globalization

4. Indian IT Software and Services Industry
Source : NASSCOM
In billion USD
Genesis of the Indian software industry :
a Lesson in Globalization
Annual growth of 30 % over a decade
2003-04 21.6
2004-05 28.4
2005-06 37.4
2006-07 47.8
Source: NASSCOM

5. 2003-04 830,000
2004-05 1,060,000
2005-06 1,293,000
2006-07 1,630,000
Genesis of the Indian software industry :
a Lesson in Globalization
Source : NASSCOM
2008 estimate of 2.0 million
professionals
Source: NASSCOM

6. Indian IT Software and Services Industry
Source : NASSCOM
Genesis of the Indian software industry :
a Lesson in Globalization
Source: NASSCOM
Software Export as a
percentage of India’s
Total Export
Critical to the nation’s economy
Source: NASSCOM

7. Genesis of the Indian software industry :
a Lesson in Globalization
Magic Quadrant for North American Offshore Application Software 2007
Completeness
of vision
Ability to Execute
Wipro
TCS
Infosys
EDS
IBM
Accenture
CSC
Perot
HP
Deloitte
Bearing
Point
Unisys
Source: Gartner (August 2007)Source: GARTNER 2007

8. Source: cartoon by Jeff Koterba in Omaha World Herald March 5 2004
The Indian I.T. Services industry has taken
advantage of global connectivity offered by internet

9. Genesis of the Indian software industry :
a Lesson in Globalization
Infrastructure Management
Application Development
Application Maintenance
Business Process Management
Network & Data Security
System and Data Base Administration
Package
Implementation
Consulting
It is a 300 Billion
dollar industry in
2007. Almost half
of it in United
States .I.T.
Services
Segments

10. Genesis of the Indian software industry :
a Lesson in Globalization
Infrastructure Management
Application Development
Application Maintenance
Business Process Management
Network & Data Security
System and Data Base Administration
Package
Implementation
Consulting
I.T.
Services
Segments
These segments have
evolved over decades.
They were unbundled over
years. The skill sets
needed have diversified
and have given rise to
specialization over time.

11. Genesis of the Indian software industry :
a Lesson in Globalization
In three decades,
v how has India become a powerhouse in the global software
services industry ?
v What has been its origin ?
v How was it nurtured ?
v Why has it grown at an annual rate of 30 % for more than a
decade ?
v Where does it find the manpower ?
v When technology skills can become obsolete in less than five
years and training is expensive how does India cope with it ?
v In short what is the secret of its continued success ?
What are the facets of globalization ?
How have they played a role in the above ?
We will
explore these
topics in this
session

12. Genesis of the Indian software industry :
a Lesson in Globalization
Factor Advantages of/for India
v Large pool of scientific talent
v English language skills
v Low cost of labor
v Low investment needs for the IT
services sector
Necessary but not sufficient
requirements for an industry to
develop

13. Genesis of the Indian software industry :
a Lesson in Globalization
Factor disadvantages till 1970s
Lack of
v Robust data and voice communication networks
v State of the art hardware to train staff
v Access to international markets
v Access to investors, funds
v Project Management and delivery capabilities

14. Genesis of the Indian software industry :
a Lesson in Globalization
Historic Prelude…
1975 : After 25 years of democracy, Emergency is
declared in India , following an electoral defeat
of the Congress Party.
1977 : emergency is lifted . Public opinion swings in
favor of a coalition government with a
nationalistic fervor.
1978 : The new Janata Government asks multinationals
to leave India. IBM and Coca Cola are heavily
impacted.
1979 : IBM India employees form a new company called
CMC to maintain IBM equipments.

15. Genesis of the Indian software industry :
a Lesson in Globalization
Historic Prelude…
Early 1970s
Tata Registry formed
earlier to provide
shareholder services,
grows to Tata Computing
Centre and then evolves
into Tata Consultancy
Services.
Provides services to
companies outside the
Tata group.
Is hungry for growth.
Mid 1970s
Senses the widening gap between the
government and IBM . Creates a
structure and platform for Burroughs
Corporation to enter India.
Enters into an agreement to provide
services to Burroughs Customers in
India.
Develops considerable competency in
Burroughs platform of System
software, Languages and Applications.
Leverages this skill base to partner
with Burroughs to provide services to
Burroughs Customers abroad
Late 1970s
Burroughs Corporation sees the
opportunity and seeks to form a
joint venture with the Tatas to
form a new company called Tata
Burroughs Limited.
Many other Indian companies
follow suit and enter into similar
partnership with Digital
Corporation, Wang etc..
TCS decides to widen its skill
base to IBM, Tandem and other
platforms. Positions itself as
vendor neutral and capable of
cross platform work.

16. Genesis of the Indian software industry :
a Lesson in Globalization
The labored 1980s
Consequently the IT services industry develops mainly as a Manpower
Services Provider and not as a Project bidder.
Margins are low. Growth is slow. The silver lining is the extensive
development of Unix skills in India.
v The going gets tough. Government policies make it hard to
import computers that are necessary to develop skill base.
Foreign travel is restricted.
v The telecommunication infra structure in India is primitive. Not
conducive to provide quality offshore services.
v Banks are unwilling to provide support to the software industry
as it is not sufficient collateral.

17. Genesis of the Indian software industry :
a Lesson in Globalization
The opportunity of early 1990s
The IT sector grabs this opportunity to expand aggressively. Imports state of
the art systems; trains staff and seeks to enter international markets with
project outsourcing. In the process the industry discovers the magic of
Quality, Processes and Best Practices.
v India faces a massive crisis of low foreign exchange reserves
and the possibility of defaulting on international loans.
v The Congress government takes a bold step to deregulate,
liberalize, privatize and globalize the Indian economy. MRTP and
FERA Acts withdrawn or diluted. Moves away from socialism.
v Taxes are lowered. Import impediments are removed. Foreign
investment and tie ups are welcome.

18. Genesis of the Indian software industry :
a Lesson in Globalization
The golden decade of 1996 -2005 and beyond..
The Indian vendors offer cost effective services at
a much higher quality level to clients. It becomes
the magic key that opens the international markets.
The IT industry invests heavily in Quality Processes and
Certification. ISO 9000, Six Sigma and CMM of SEI at Carnegie
Mellon University become the buzz words. They help to assure
high quality deliverables to international clients.
[27 out of 54 companies in the world with CMM
Level 5 certification are in India]

19. Genesis of the Indian software industry :
a Lesson in Globalization
The golden decade of 1996 -2005 and beyond..
The Indian IT firms set up large
scale factories to cater to the Y2K
service demand.
They recruit and train thousands
of young engineering graduates in
a short span of time.
They make use of this opportunity
to penetrate wide and deep into the
global markets.
The Y2K issue was time
critical with potential to
cause billion dollar losses.

20. Genesis of the Indian software industry :
a Lesson in Globalization
The golden decade of 1996 -2005 and beyond..
The IT firms leverage their Y2K client
base and systems knowledge (acquired
while solving the Y2K problem) very
well to consolidate market share.
They expand and invest heavily in new
skill development initiatives to offer full
suite of services.
The explosive growth of
internet ,intranet and web
based solutions, feed global
demand, since 2000

21. 1999 2000 2001 2002 2003 2004 2005 2006 2007
No. of
Employees
15,356 25,255 36,750 52,715 72,241
Revenues
m USD
121 203 414 545 754 1063 1592 2152 3090
Net income
m USD
17 61 131 164 195 270 419 555 850
Genesis of the Indian software industry :
a Lesson in Globalization
Infosys Technologies : Growth [an example]
Rapid growth in staff strength has brought
numerous HRM issues in its wake

22. Recruitment
& Training
l Campus Connect
l Four months of training, post graduation
l Soft skills enhancement
l Continuous skills enhancement
l Domain Certification
Retention
l Multi platform work opportunity
l Multiple geography and domain
l rapid role and career progression
l competitive wages, stock options
Risk
Management
l onshore facilities
l local talent engagement
l distributed work management
Genesis of the Indian software industry :
a Lesson in Globalization
Current Challenges in Supply Chain Management
Challenge Response

23. Genesis of the Indian software industry :
a Lesson in Globalization
Globalization means
A borderless world where
products and resources can
move with ease
1. Markets are unprotected.
2. Cost efficiency and Quality of
Service reign supreme.
3. Where produced does not
matter.
4. Customization required.
Firms must learn to
1. Unbundle, Dismantle
and replace expensive
work components
2. Manage operations
spread across the globe
3. Innovate on Supply
Chain Management
4. Be nimble
Move from Vendor Management to
Vendor Partnering

24. Genesis of the Indian software industry :
a Lesson in Globalization
Vendor Partnering Models
We can recognize these vendor partners in two
broad categories, example:
(a ) Value Enablers :
Travel, Transportation ,Visa Services,
Security, Cafeteria, Facility Management, Real
Estate, Architects, Infrastructure Products and
Services etc.
(b) Value Enhancers :
Hardware, Software, Network and related services
Vendors

25. Genesis of the Indian software industry :
a Lesson in Globalization
Mastering Vendor Partnering Models
TCS relationship with Burroughs commenced as a Value Enabler for the
Indian market. Very soon it grew into the Value Enhancer mode for the
global market.
(a ) Value Enablers :
They facilitate effective delivery of a firm’s full and current capability
to its customers. If they are not effective it is likely that the firm
would under-perform.
(b) Value Enhancers :
They are Value Enablers as well as catalysts for enhancing the value
set of the firm. The firm can increase its service offerings and reach
out to new markets and customers because of this partnership.

26. Genesis of the Indian software industry :
a Lesson in Globalization
Mastering Vendor Partnering Models
Burroughs entry into India was facilitated.
TCS develops skill sets on Burroughs platforms.
(Value Enabler to Value Enhancer role)
Provides services to Indian customers. So does TBL
TCS and TBL reach out to international customers.
Multiplatform skill sets of TCS enable it to score over TBL
(Value Enhancer role with Client firms)
Tight coupling with a hardware vendor has not helped TBL
TCS goes public in 2004. Becomes the largest IT firm.
TBL ( now Tata Infotech) merges with TCS.

27. Purchase
Effectiveness
Quality
Assurance
Continuous Cost
Reduction
Relationship Growth with Value Enablers…
v Fair SLAs
v Standardize Processes
v Share Information on Demand
variability
v Share Gains of Productivity
v Flexible Coupling to facilitate
Win Win solutions
Best Practices

28. Purchase
Effectiveness
Skills
Development
Service Offerings
Joint Solutions for
the Market
Relationship Growth with Value Enhancers..
Best Practices
1. Technology Standardization
2. Bundled Service Components
3. Fairness in contract clauses
4. Process and Document standards
5. Quick Settlement
6. Price Flexibility

29. Genesis of the Indian software industry :
a Lesson in Globalization
Summary
In Information Age, criteria for success are
1. continuous investment in enhancing people skills
2. focus on motivational and aspiration needs of employees
3. relentless and simultaneous commitment to quality
and cost of service
4. nimble supply chain management
5. innovation in vendor partnering
6. execution excellence

30. Genesis of the Indian software industry :
a Lesson in Globalization
Warning:
Trespassers
will be
recruited !