A model for analysing IT industry success.
 
The four generic processes of ‘variation’, ‘ selection’, ‘retention and diffusion’ and the ‘struggle over scarce resources’, results in the evolution of a system, whether at the level of the organization or indeed the wider community which has the ability to transform the fortunes of an industry and a country. This model adapted for the Indian IT sector by Prof Mitra of the University of Essex based on the original work of Prof H.A.Aldrich assumes a new significance with NASSCOM’s recent study in collaboration with AT Kearney of the fifty locations for IT and BPO in India which can have a bearing on the growth of the industry in the next ten years.
The selection of seven leaders with the traditional suspects – Bangalore, Chennai, Mumbai, Hyderabad and the National Capital Region now joined by two high growth entrants to the big boys’ club, Hyderabad and Pune demonstrates the development of a successful innovation eco-system in each of these cities where strong entrepreneurial talent supported by excellent academic institutions and proactive government initiatives has also led to many of the established global and Indian players making a beeline for investment in these locations. The next group, aptly titled challengers have demonstrated in the recent years that they have what it takes to attract firms and capital while the followers are lacking in one or more of the characteristics but have still progresses well enough to join the queue for investments. The aspirants who make up the fifty locations still have some way to go but the recognition of the tremendous impact that this sector can have on the fortunes of the community is a good starting point to set in motion a detailed plan to target and attain success.
The four process model argues that structural attributes in a society appear extremely important to motivate entrepreneurs and drive innovation. These social and economic factors include capital formation, organisational learning, changes in institutional relationships, supportive government programmes, reassessment of intellectual property, and new approaches to innovation. The extent to which government and other institutions recognise the important of these attributes would be the key factor in the next stages of the evolution of Indian IT industry and will indeed determine how many of the identified locations really make the grade in the next ten years. Each of the challenger and follower locations need to develop a detailed blueprint to develop their own unique variations and establish a talent pool through aggressive industry-academia partnerships that will attract large firms to establish new bases there and also foster entrepreneurial activity funded by venture capital and private equity.
The entrepreneurial future of Indian software firms lies in setting a global objective through enhanced processes of organisation learning, capitalisation of externalities generated by other Indian and global industries, effective institutional policy development, all as part of the four processes of variation, selection, retention and struggle for resources. The extent to which firms and policy makers can enlarge the success story of India’s software sector is at least to some extent dependent on their ability to plan effectively under constraints of uncertainty which are as prevalent today as they have ever been in our country.