The document discusses the history and development of the information technology (IT) industry in India. It notes that the opening of the Indian economy in the 1990s allowed the domestic IT industry to grow and compete with foreign giants like IBM. It traces the emergence of IT outsourcing and business process outsourcing (BPO) during this period. The role of the government in developing IT is also examined, along with trends in the growing BPO sector and problems faced by the IT industry like stifling innovation. The document argues that privatization is necessary to improve the performance of industries compared to government-run organizations.

1. PRIVATISATION IN
INFORMATION TECHNOLOGY

2. HISTORY OF INFORMATION
TECHNOLOGY IN INDIA:
 WTO agreements, the throwing open of Indian
economy by the Narsimha Rao government and the
globalization effect that served to provide the necessary
impetus to the Indian IT industry
 The wave of nationalism might never have swept the
nation and giants of the likes of IBM would have had a
stranglehold in the field of IT in India. With the economy
opening up in the 90s, IBM in India would have just
killed competition at first sight. We might never have
had the opportunity of seeing the likes of Wipro, Infosys
and TCS as they stand today.

3.  Although the IT industry in India has existed since the
early 1980s, it was the early and mid 1990s that saw
the emergence of outsourcing. One of the first
outsourced services was medical transcription, but
outsourcing of business processes like data processing,
medical billing, and customer support began towards
the end of the 1990s when MNCs established wholly
owned subsidiaries which catered to the offshoring
requirements of their parent companies. Some of the
earliest players in the Indian outsourcing market were
American Express, GE Capital and British Airways.

4.  The ITES or BPO industry is a sector in India that has
been in existence for a little more than ten years.
Despite its recent arrival on the Indian scene, the
industry has grown phenomenally and has now become
a very important part of the export-oriented IT software
and services environment. It initially began as an
activity confined to multinational companies, but today it
has developed into a broad based business platform
backed by leading Indian IT software and services
organizations and other third party service providers.

5.  During the years 2003-04, the ITES-BPO segment
achieved a 54 percent growth in revenues as compared
to the previous years.
 In the future, the BPO segment is expected to employ
over 1.1 million Indians, according to studies conducted
by NASSCOM and leading business Intelligence
company, McKinsey & Co. Market research shows that
in terms of job creation, the ITES-BPO industry is
growing at over 50 percent. Surveys of the Indian
ITES/BPO industry have shown the following trends:

6.  Customer care: Customer care and support services
will continue to lead in terms of revenue generation.
 Finance: With the financial services segment moving
into value added domains like insurance claims
processing, financial management services and equity
research, this segment is expected to clock the highest
growth.
 HR services: HR services are also expected to grow in
the future.
 Payment services: This segment has also been
identified as a high growth area within the industry, and
is expected to generate high revenues.
 Administration: Revenues from the administration
services segment are expected to increase in the future.
 Content development: The content development
services segment which includes engineering and
design services, digitization (GIS), animation, network
management and biotech research, is expected clock a
large turnover in the future.

7. ROLE OF GOVERNMENT:
 Industry of information technology had been always remains in the
hands of private players. Government has been playing a role of
developer as well as facilitator in the fields of IT. There is
Department of information technology which is regulating the IT
industry in India. IBM was the first private player who entered in
this industry.
 Objective of the Department of Information Technology:
 To make India, a Global Information Technology Super Power and
a front-runner in the age of Information revolution.
 To bring the benefits of electronics to every walk of life and to
develop the Indian electronics industry as a global player.
 Vision of the Department:
 To make India an IT Super Power by the Year 2010. The vision
translates into a mission – ‘Move works to India '. The Vision
objectives are:
 Creation of Wealth
 Employment Generation
 IT led Economic Growth

8. Role of the Department of IT:
 Pro-active facilitator.
 Pro-active motivator.
 Pro-active promoter.
 Spread of IT to masses.
 Ensure speedy IT led development.
 To facilitate and catalyze adoption of E-governance packages in the Central
and State Governments, as the nodal agency for the implementation of the
National E-Governance Action Plan.
 Evolve and implement policy packages to proper growth of electronics and
hardware manufacturing.
 Increase PC penetration in the country.
 Increase utilization of internet in the country.
 Growth of domestic software market
 Development of local languages in Information Technology.
 To encourage use of IT to increase productivity.
 To explore use of IT as a means of generating employment.

9. PROBLEMS FACED BY IT:
 The stifling innovation: IT almost by definition is about innovation; the only
constant in this industry is change. The industry is worth more than USD 2.5
trillion annually worldwide and yet faces constant attempts to thwart its
success.
 1. Whether it’s the lies of the entertainment industry or the cynical people
designing business strategies around patents rather than actual innovation
(or even work) or companies spreading fear, uncertainty and doubt about its
competitors or companies pursuing increasingly spurious lawsuits to
“protect” their businesses, it has the same effect. Comparatively tiny vested
interests are threatening the continued growth and prosperity of the vast
majority, until we stop seeing this rubbish as “good business” and recognise
it for what it is - a shakedown, everyone’s future is at risk, that is.
 2. The obsession with technologies and methodologies over results: The
fundamental disconnect between a technologist and a business person
often narrows down to focus.

10.  3. Arrogance: Here’s a tip - if you’re trying to explain technology to someone
and they don’t seem to understand, treating them like they’re stupid isn’t
going to help anyone, you, least of all. It doesn’t matter if they really are
stupid; the IT industry’s reputation for arrogance has been earned by the
frequent display of grossly unjustified arrogance by many IT practitioners.
And if you think arrogance makes you “strong”, just stay the hell away from
me. Besides making an average (non-arrogant) geek’s life miserable, quite
a few major companies have been destroyed due in no small part to
arrogance.
 4. Hype over substance: There’s no getting around it - IT is exciting. The
rate of change and the explosion in computing power have opened so many
possibilities; it’s dizzying, sometimes literally. It seems that “irrational
exuberance” is an occupational hazard in IT. Sure, it’s a great way to get
media attention and investment capital but it seriously hurts your credibility if
you can’t deliver on the hyperbole.
 5. Constantly focusing on “the now”: While IT development is arguably about
creating the future, I’m always astonished at how many colossal blunders
are perpetrated by thinking only about the present. The Y2K issue was
created by programmers deliberately introducing an appalling limitation into
systems essentially because it wasn’t a problem for them - someone would
fix it in the future. Arguably, this turned out to be true but this issue is a
perfect illustration of how short-sighted thinking in IT could have long term
consequences.

11. PRIVATISATION IS THE ONLY
SOLUTION
 Economic growth is vital for any country. The existing systems, whether
political, economic or social, in India are collapsing and destroying the very
talent and potential of the people. If governments wish to reduce poverty,
they need to improve the environment in which private institutions operate.
Creating efficient, dynamic, and growing private sectors seem the only way
to increase the rate of economic growth. The capability is there, just needs a
little push from the right sources and in the right direction. That is possible
only when the right infrastructure, environment and management are
available.
 Government-run institutions and business are poorly operated and
managed. This is due to the poor quality of government institutions, the high
level of corruption, influence of special interest groups, lack of competition,
dedication, competence and sincerity on the part of all who hold powerful
positions. They may become interested in improving them only if they are
politically sensitive. They are also prone to corruption; employees may be
selected for political reasons and on the basis of recommendations rather
than for commercial purposes or merit basis. The government may at times
run a company for social goals rather than commercial ones. Then public or
nationalized industries can be prone to interference from politicians. This
breeds inefficiency and incompetence.

12.  Privatization means transfer of risk by the government or public
sector to the private sector by giving up management control and
usually ownership (at least majority shares) in an enterprise. It
differs from commercialization as in this case the government
retains business risk and ownership but makes changes in the way
the company operates so that it runs on business principles.
Privatization or de-nationalization helps to establish a capitalist
economic system, competition, readily available products and
services, high quality, more exports, better services, more
opportunities, growth, etc. The primary objective of privatization
should be to find the private owner who is most likely to improve the
performance of the company.
 Due to the poor performances of our government-be it in the field of
political governance, education, industry, etc., it becomes very
important to resort to privatization of these institutions and systems.
An example to support would be privatization of many companies
producing consumer goods. People had to queue, sometimes for
days, to get cement, rice, sugar, milk, etc. Now it’s readily available
and at times maybe cheaper where competition prevails. Many of
the improvements we take for granted now are the result of
privatization.

13. SUGGESTIONS:
 The effects of a change in technology on organizational
structure and power were investigated in a longitudinal
study of the introduction and diffusion of a computerized
information system. Employees increased their power
and network centrality following the change in
technology. In particular, early adopters of the new
technology increased their power and centrality to a
greater degree than later adopters. Results of cross-
lagged correlation analyses suggest that centrality
precedes power. While the diffusion process occurred
via the network structure, it also imposed changes in
the structure. Adoption patterns were found to be more
closely related to network structure after the change
than prior to the change.

14.  Despite this diversity, little attention has been paid to the effects of
technology over time. Cross-sectional research has typically
focused on existing technologies and corresponding formal
organizational structures. The majority of these cross-sectional
studies treat technology as the independent variable, based on an
assumption that organizational technology is inflexible and,
correspondingly, that there is a need for structure to adapt to the
requirements of technology. These assumptions are questionable.
Technology can be a flexible organizational strategy that can be
modified by an organization's structure, in particular, the informal
structure. Structural arrangements act as the conduits of
technological change and, as such, may influence organizational
technology as well as be influenced by it. Investigation of the
effects of a change in technology may illuminate the process by
which structure affects technology, or vice versa.
 Few studies relating technology to structure have considered the
relationship between organizational structure and power. Structural
position is an important source of power in that it provides access
to people, information, and other resources.

15. NAME OF PRIVATE PLAYERS IN
INDIA:
 Infosys
 Wipro
 Patni computers
 IBM
 Microsoft
 Sun micro system
 HCL