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Ashutosh Sheshabalaya On Indian Issues
India'S Software Success More Than Just Millennium Luck
by Ashutosh Sheshabalaya

Published in March 18, 1999 issue of The Financial Times, London
Sir, in 'Silicon Subcontinent' (FT, March 15, 1999), Krishna Guha and Paul Taylor overstate the importance of Year 2000 work for the Indian software industry's success.

Year 2000 contracts accounted in 1998 for 23% of Indian software exports. This is relatively insignificant in the face of the over-50% growth rate for exports as a whole. In other words, even if we were to count Year 2000 contracts in 1998 as a one-time bonus, export growth in other software segments would still have been a respectable 15-20% a year.

In fact, the writers do acknowledge that the 50% growth rate has been maintained for 'the past eight years', that is, well before any serious Year 2000 efforts began. This sustained growth explains why India has now outpaced onetime competitors like Ireland, eastern Europe, Russia and the Philippines combined.

There are more abiding reasons for India's software success than just a lucky draw with the millennium. Not least of these is the continued availability of qualified engineers in India, in the face of a growing (and demographically strengthening) shortage of skills in the West.

Since the mid-1990s, numerous Indian companies have also sought to migrate up the value chain, with an emphasis on productivity and quality. India has the world's highest number of ISO-9000 software companies. The best known of these (including most of the companies named in your article) have acquired the prestigious but very rare CMM Level 4 and 5 certifications from the US Software Engineering Institute. Such quality credentials helped Infosys make its dazzling debut on Nasdaq. Other Indian companies are expected to follow suit.

Even though wage differentials between India and the West will continue for some time, overall costs are rapidly narrowing, especially at the mid- to upper end of the software skills spectrum. This is precisely the area targeted by many software firms in the country. Some examples of these are leading American high-technology companies Motorola, Honeywell, GE and Citicorp, which have their CMM certified operations not in the US, but in India.

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