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Oct 26 2000

It's quality that has done the trick
by Pankaj Jalote

DEVELOPING nations in Asia and Latin America want to replicate India's story.

Indian software exports, as is well known, have grown from less than $100 million before 1990 to over $5 billion in 2000.

What is not well known is that revenue per person per year has grown from less than $20,000 to over $50,000 in most large companies in the last five years. This is not simply due to inflation.

Though the industry is still focussed on tapping the huge software services market, most of the big players have moved from lower value services to higher value services.

The story of the Indian software industry has spread far and wide.

From the presentations that representatives of various Asian and Latin American countries made at a recent workshop in China on IT industry in developing countries, it is clear that many developing countries want to emulate the Indian story.

Within India, however, many continue to view the industry's success with a mixture of admiration and scepticism. There is a lingering doubt about whether the industry is inherently strong or it is just tapping a window of opportunity which will soon be tapped by other Asian countries with large population and better infrastructure.

Strengths
India has moved rapidly on the quality front. Indian software organisations adopted the ISO model soon after it came and then when the Capability Maturity Model (CMM) started becoming more important, rapidly transitioned to the CMM.

This has given the Indian companies solid project and process management strength these models are supposed to bring.

This is a tremendous strength that is not easy to emulate. For example, China, despite the fact that it has about a 1000 software companies in Beijing area alone, has probably none at level 4 or 5 and is now actively looking at CMM as part of the country-level strategy to tap the global market.

The situation in the rest of Asia (not counting the developed countries) is similar. The situation in Latin America is no different. In fact, outside the developed countries, it is only India that has companies that have been able to successfully implement these global quality models.

The second strength is the business expertise that now exists in the industry. With time and experience, managers who deal in projects with clients across the world, have developed good understanding of business practices in other countries and have acquired domain knowledge and an understanding of the cultural context of the customer.

These are the factors that are essential for moving from low level technical services to higher level services, i.e. for going up the value chain. They are also essential for customer satisfaction, which, in turn, is essential for business. Many Indian software companies boast of repeat business of over 70 per cent - a huge asset when trying to grow at a rapid pace.

At the same time, the senior management seem to have transformed from thinking like a India-based supplier to being a global player. This has brought in organisation management and business practices that are in line with the developed world.

Finally, Indian software companies have developed the ability to change rapidly with technology. This has been amply demonstrated by the quick movement to Java and e-commerce related technologies.

These three solid strengths - processes, business skills, and reprogammability are not easy to acquire. Perhaps the biggest factor has been the export orientation of the industry. This has helped the industry in being receptive to technology, and has brought quality consciousness.

The second reason is that the software industry grew without government help. Perhaps the only thing that the government did was to get out of the way by liberalising imports and exports in the early 90s.

Contrast this with the situation in other developing countries - almost all countries in Asia and Latin America are looking for government funding and help for developing the IT industry.

Business leaders have played a key role. After the standards set by TCS, Infosys, Wipro, HCL, etc., no company today aspires to be just a few-crore company.

All this does not mean that the industry or the country can rest on its laurels. The lead will remain for a few years at best. There are many areas where the limits are reaching, particularly on the trained manpower front, and the use of IT with the country itself.

The author is a professor of Computer Science and Engineering at IIT, Kanpur. His email id : Jalote@iitk.ac.in

http://www.economictimes.com/today/26netw06.htm