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The Outsourcer

The Outsourcer: The Story of India's IT Revolution

Dinesh C. Sharma
Copyright Date: 2015
Published by: MIT Press
Pages: 296
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  • Book Info
    The Outsourcer
    Book Description:

    The rise of the Indian information technology industry is a remarkable economic success story. Software and services exports from India amounted to less than $100 million in 1990, and today come close to $100billion. But, as Dinesh Sharma explains inThe Outsourcer, Indian IT's success has a long prehistory; it did not begin with software support, or with American firms' eager recruitment of cheap and plentiful programming labor, or with India's economic liberalization of the 1990s. The foundations of India's IT revolution were laid long ago, even before the country's independence from British rule in 1947, as leading Indian scientists established research institutes that became centers for the development of computer science and technology. The "miracle" of Indian IT is actually a story about the long work of converting skills and knowledge into capital and wealth. WithThe Outsourcer, Sharma offers the first comprehensive history of the forces that drove India's IT success.Sharma describes India's early development of computer technology, part of the country's efforts to achieve national self-sufficiency, and shows that excessive state control stifled IT industry growth before economic policy changed in 1991. He traces the rise and fall (and return) of IBM in India and the emergence of pioneering indigenous hardware and software firms. He describes the satellite communication links and state-sponsored, tax-free technology parks that made software-related outsourcing by foreign firms viable, and the tsunami of outsourcing operations at the beginning of the new millennium. It is the convergence of many factors, from the tradition of technical education to the rise of entrepreneurship to advances in communication technology, that have made the spectacular growth of India's IT industry possible.

    eISBN: 978-0-262-32833-3
    Subjects: Economics, Business

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. Preface
    (pp. ix-x)
  4. Acknowledgments
    (pp. xi-xii)
    Dinesh C. Sharma
  5. List of Acronyms
    (pp. xiii-xviii)
  6. Exchange Rate of Indian Rupee vis-à-vis U.S. Dollar (End-of-Year Rates)
    (pp. xix-xx)
  7. Introduction
    (pp. 1-6)

    In 1982 an Indian software entrepreneur went to America to participate in a technology trade show, hoping to sign up customers for software applications he had developed. His business meetings would often start with questions about India, because most people he met still regarded his country as some faraway land. One comment that left him dumbfounded was “India does software? We thought people still live on trees there!” The reason for such reactions was obvious. The only India-related news on American television that week was a clip of naked sadhus readying for a dip in the Ganges during a religious...

  8. 1 Indiaʹs First Computers
    (pp. 7-38)

    The emergence of India as an important player in the global technology and outsourcing business is often attributed to economic liberalization policies unveiled in 1991. Liberalization was indeed a turning point in the economic history of the country as it chose to move away from the socialist economic path it had followed since achieving independence in 1947 and embraced market-oriented reforms. The genesis of the information technology industry, however, can be traced back to several decades before this milestone in India’s history. The post-freedom economic policies were focused on developing an industrial base to achieve self-reliance in key infrastructure sectors....

  9. 2 The Beginning of State Involvement
    (pp. 39-54)

    The 1960s represented a landmark in development of modern science and scientific institutions in India. All of the major scientific programs that India would make its mark in blossomed during this period—atomic energy, space technology, self-sufficiency in food production (the famous Green Revolution), information technology, and so on. While Bhabha was busy building nuclear reactors and research institutes in fundamental physics, another physicist, Vikram Sarabhai was engaged in launching sounding rockets. The launch of Nike-Apache—a NASA-built two-stage sounding rocket—in 1963 was a scientific project to study the ionosphere over the earth’s magnetic equator that passes over Thumba...

  10. 3 The Rise, Fall, and Rise of IBM
    (pp. 55-76)

    Calcutta was not only the birthplace of the earliest indigenous computers, it was also the entry point for computer multinationals. IBM World Trade Corporation (IBM WTC), a subsidiary of IBM Inc. that handled business outside the United States and Canada, started its India operations through a marketing and support office in Calcutta in 1951. A card manufacturing unit in Bombay followed a couple of years later to cater to the punched-cards requirement of IBM’s data processing installations in India and other Asian markets.

    A newly independent nation seeking to develop infrastructure and setting up heavy industries appeared to be high...

  11. 4 The Dawn of the Computer Age in India
    (pp. 77-104)

    Computer or information technology touches lives of millions of Indians in ways they may not be fully aware of. Nearly one million tickets are booked on the Indian Railways (IR) everyday using its extensive, computerized passenger-booking system. Half of these tickets are booked online by passengers from the comfort of their homes and offices or from cyber-cafes. Millions of Indians withdraw, deposit, or transfer money from their bank accounts across the length and breadth of the country irrespective of the bank or branch they patronize, courtesy the network of ATMs and the National Financial Switch connecting major banks. Identification data...

  12. 5 Discovering a New Continent
    (pp. 105-130)

    The departure of IBM from the Indian market in 1977 came at a critical juncture. The computer industry was undergoing a tectonic shift from mainframes to minicomputers and microprocessor-based systems. But Indian companies could not take advantage of this change fully because of high import duties on components and capital goods, restrictions on import of technology, and caps on industrial capacities. In order to meet the demand for computers in the country, entrepreneur-driven companies had no option but to develop their own design capabilities. Some of them could introduce near-contemporary machines in the local market. This gave birth to an...

  13. 6 Software Dreams Take Flight
    (pp. 131-156)

    The burst of activity in the Indian hardware market in mid-1980s onward that followed import liberalization led to some structural changes in the computer industry. The emergence of the software sector, as distinct from hardware business, was a major change. The PC—and not mainframes and minicomputers—were now the dominant systems in the market. The computer was not merely a tool of data processing in business, industry, and government but also had become a consumer product. The demand for applications to meet needs of existing and new users of computers in different sectors was high. Still the domestic market...

  14. 7 The Transition to Offshore
    (pp. 157-184)

    A single government scheme—for Software Technology Parks (STPs), which envisaged the use of satellite data links for exporting software—is often credited with the rise of Indian software industry in the post-liberalization period of the 1990s. But this journey began much earlier.

    Anecdotal stories and press reports about good and relatively cheaper software talent available in India had begun surfacing in business circles internationally by the mid-1980s. The new computer policy and economic liberalization under a young prime minister had attracted attention in the Western world. In September 1985, the widely read trade magazineElectronicsfeatured policy changes in...

  15. 8 Turning Geography into History
    (pp. 185-206)

    An Indian accountant sitting in Pune is preparing tax returns of a consultant in New York. A customer executive of an American bank in New Delhi is helping customers in London place a request for a demand draft. A help-desk executive in Gurgaon is assisting a British customer change his travel plans on a European airline. A stock market researcher in Bangalore is doing equity research for a brokerage firm on the Wall Street. A fresh commerce graduate in Jaipur is processing the mortgage application of a nurse in Connecticut. A lawyer in Mysore is preparing a case brief for...

  16. 9 Conclusion: The Making of a Digital Nation
    (pp. 207-218)

    From a stage when scientists and policymakers in India thought the country needed just two computers to its positioning as a leading global technology outsourcing hub, India has traversed a great distance in a short span of time. In 1977 India had hardly one thousand computers of different sizes. In early 2014, the number of computers was estimated to be 100 million. The number of telephone lines in the country in 1982 was 2.30 million—all landlines. The waiting period to acquire a phone connection was forty-seven months. In early 2014, India had close to 900 million mobile phones, with...

  17. Notes
    (pp. 219-240)
  18. Index
    (pp. 241-274)