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May 14 2008, HINDUSTAN TIMES
 
A model for analysing IT industry success
 
Professor Jay Mitra, Head of the School of Entrepreneurship and Business at the University of Essex in UK has used an innovative model for analysing the evolution of the software industry and entrepreneurship in any country. Viewed through the lens of this model, the story so far for the fifty billion dollar plus software sector in India throws up some interesting analysis and conclusions.
Drawing on the pioneering work done by researchers like Prof H.A. Aldrich, the model argues that the nature and scope of software development allows for the evolution of entrepreneurship through the operation of four generic processes: ‘variation’, ‘selection’, ‘retention and ‘diffusion’ and 'the struggle over scarce resources'. In this context entrepreneurship is referred to as the process by which new venture creation, or innovation is generated and supported by a mix of talented and creative people, responsive and dynamic organisational values, and a conducive environment created by both external factors and effective policy formulation. .
Variation and selection have occurred in the creation and reorganisation of the IT sector through a partial abandonment of notions of self-sufficiency as espoused by various governments, based on the recognition of the global environment for software development, an acceptance of the value of interaction between different levels of country technological capabilities, the choice of and focus on software service provision such as coding and maintenance (as opposed to design, R&D and product development), and the entrepreneurial approaches taken by the private sector in opportunity identification in both the software business and education and training.

The analysis by the early entrepreneurs like FC Kohli and Narayana Murthy of the variations possible in the Indian economic model with support from visionary bureaucrats like N.Vittal led to the selection of a new approach in the eighties which was entirely export led. The subsequent retention of the abilities of this ‘virtual’ industry through the innovative STPI scheme and the simultaneous development of scarce resources in IT through private sector initiatives from NIIT and then APTECH followed by the IIITs and the BCA and MCA programs in the country have seen the industry rise to its present heights.

Enabling the ongoing retention of its capability and the diffusion of its expertise is now the imperative for the industry through value addition (from coding to maintenance to specialised services through now to a mix of offshore-onsite services centred round a Global Delivery Model) and the government policy role is essentially facilitation, through the co-existence of the STPI and IT SEZ schemes and the use of other instruments like IT Investment areas and private universities to enable strategic resources and competencies to be developed and sustained around the country. The particular struggle for resource has now begun to emerge in the Indian software industry as it competes with other low cost players, structural changes in the economy, and competitive positioning against the captive presence of global operators in India and political pressures centred round offshoring activities at key customer locations.

The recent NASSCOM-AT Kearney identification of fifty locations where the knowledge sector can proliferate and grow to reach a direct employment of eight million professionals in the next ten years shows that there is much to be achieved yet and we will look at specific focus areas in subsequent articles in this column.

 
   
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