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Throughout the industry, it is profoundly transforming competitive strategies,
product development, manufacturing processes and procurement practices. Similar
transformations are occurring in finance, trade, distribution, marketing, education
and health services. These changes are inducing managerial and organizational
innovations and new business practices, such as outsourcing, time-based competition,
lean production, just-in-time procurement, and flexible manufacturing.
But if we compare the growth of the IT industry in India with the global scenario
and also understand the extent of IT diffusion in India, we find the situation
very different. Although the CAGR of the Indian IT industry is about 30 percent, the
rate of IT diffusion in the country is still far from satisfactory.
As far as growth is concerned, the year 1993-94 was a mixed year for the Indian
computer industry. The industry is estimated to have grossed about Rs.4,300 crore.
This represents close to 28 percent growth over last year’s revenue figures of Rs.
3,300
crore. No doubt, the growth rate is a lot more sedate than the furious pace
set by the industry in the past. This indicates that in the future too one can expect
more conservative growth rates, in the range of 25 to 30 percent! But then, this
slowdown was expected, since the industry revenue base has already expanded 30-
fold
—
from Rs. 100 crore (1983-84) within a span of 10 years.
No doubt however, that in 1993-94 the saving grace was software. The industry in
India grew by an impressive 47 percent. While software exports grew by 50 percent,
the domestic sector notched up figures of 42 percent. More efforts are clearly needed on
the domestic side.
Given its strategic assets, India is potentially well positioned for global competition
in software services, the core and most promising segment of the IT industry. But
efforts to formulate and launch a program by the leadership have so far been
fragmented. The activities of various ministries and industry associations need to
be coordinated and strengthened through a coherent national strategy
—
to broaden
the domestic market, facilitate the development of a competitive software industry
and build the necessary policy framework, infrastructure and institutions.
The cost of inaction could be very high. India has a window of opportunity that
may not stay open long. Given the fast pace of the IT industry, India could lose its
market share in a few years. Many low value added activities of the software
development process are being automated in OECD countries and software
productivity and quality enhancing tools may erode the competitive advantage of
India’s software industry. Sluggish domestic demand and an inadequate infrastructure
for information technology assimilation and diffusion is driving India’s talented
