Analysis of Indian Software Saumilexport Industry

A SUMMER INTERNSHIP REPORT ON
Software Project Management

Study of Marketing Potential Indian Software Export Industry
Submitted to L.J. Institute of Management Institute In requirement of artia! fu!fi!ment of Master"s of #usiness Administration$M#A% & 'ear fu!! time Program of (u)arat Te*+no!ogi*a! Uni,ersit'
Submitted on./t+ Ju!' &0..
Submitted b'Pate! Saumi! Pra1as+*+andra Enro!ment No- .0234053&062 #at*+ No- &0.0 7 .&
S.I.P. for Software Project Management
Study Of Marketing Potential
TABLE OF CONTENTS
Part-A Company Profile Part-B
. ANAL8SIS O9 IN:IAN SO9T;ARE E<PORT IN:USTR8 .....................................................5 1.1 INTRODUCTION................................................................................................................................5 1.2 LOCATION OF 1.$ DO#" 1.' 1.5
OFT!AR" CO#PANI"
............................................................................................5
TIC OFT!AR" INDU TR%....................................................................................................&
OFT!AR"
"(PORT INDU
TR%........................................................................................................)
TRUCTUR" OF
OFT!AR"
"(PORT .............................................................................................* "(PORT .............................................................................1+ "(PORT"R ................................................................11 ............................................................12
1.& D"
TINATION OF INDIAN
OFT!AR"
1.) D","LOP#"NT FOCU 1./ #AR0"TIN1 C-ANN"L 1.*

"1#"NT OF
OF T-"
OFT!AR"
U "D B% OFT!AR" CO#PANI" OFT!AR"
APPLICATION
D","LOP#"NT..............................................................12
1.1+ D","LOP#"NT PLATFOR#...........................................................................................................1$ 1.11 TOP T!"NT%

OFT!AR" "(PORT"R
..........................................................................................1'
& =HARA=TERISTI=S O9 IN:IAN SO9T;ARE E<PORTS.......................................................5 2.1 UN","N OUTPUT. 2.$ UN","N DI,I
"R,IC" NOT TINATION.
PAC0A1" ...............................................................................15 PRI

ON3.......................................................1/
2.2 UN","N "(PORT D"
U DO#INATION.......................................................................1)
-OPPIN1
ION OF
LABOUR. 2BOD%
2.3.1 Uneven Locational ivi!ion!" On!ite and Off!#ore $ork....................................................1% 2.3.2 Uneven Skill ivi!ion!" ominance of Programming..........................................................1% 2.3.3 Per!i!tence of On!ite Programming Service!.......................................................................1& 2.' UN","N #AR0"T 2.5 UN","N
ITTIN1. -AR".
"CONO#IC CONC"NTRATION OF PRODUCTION..................................2+
LOCATION CONC"NTRATION OF PRODUCTION................................................21
> ANAL8SIS O9 OTHER SO9T;ARE E<PORTIN( =OUNTRIES-.........................................&> $.1 AU

TRALIA....................................................................................................................................2$
3.1.1 'ffect of 'a!t (!ian )ri!i! in Software e*+ort! of (u!tralia...............................................23 3.1.2 Im+lication! for India ...........................................................................................................2, $.2 IR"LAND.........................................................................................................................................2' 3.2.1 -ocu! on '*+ort!..................................................................................................................2. 3.2.2 Peo+le wit# !kill!..................................................................................................................2/ 3.2.3 -ocu! for Inve!tment.............................................................................................................20 3.2., 1ec#nology in +lace..............................................................................................................20 $.$ FINLAND........................................................................................................................................2/ 6 IN:IAN SO9T;ARE E<PORTS 7 E?OLUTION @ STATE POLI=IES .................................&3
L. 2. In!titute Of Management Studie!
Page 2 of .3

OFT!AR"
'.1 INTRODUCTION..............................................................................................................................2* '.2 A BRI"F -I '.' INDU

TOR% IN TI#"
POLIC% PRIOR TO 1*/' .................................................$+

ATION
'.$ 1*/'-1**+. 1UID"D AND 1UARD"D LIB"RALI

TR%
.................................................................$1
",ALUATION OF
OFT!AR"
POLIC% IN 1**+ .............................................................$$
,.,.1 (++ro+riatene!! of +olicy4! o5jective!.................................................................................33 ,.,.2 (ltering t#e com+o!ition of Software '*+ort!......................................................................3, ,.,.3 6ature of li5erali!ation7 government !u++ort or ot#er +olicy c#ange! re8uired ................3. '.5 "CONO#IC LIB"RALI '.& P#3 IT TA
0 FORC" ATION
- 1**1 - 1**/ ..................................................................................$5
- T-" N"! IT POLIC% OF T-" 1O,"RN#"NT...........................................$)
,./.1 Info Infra!tructure drive........................................................................................................3& ,./.2 1arget I1'9:.3.....................................................................................................................,3 ,./.3 I1 for all 5y 233%..................................................................................................................,. ,./., ata Security Sy!tem! and )y5er Law!................................................................................,0 '.) CONCLU
ION
................................................................................................................................'/
5 =ON=LUSIONS.................................................................................................................................63 4 RE9EREN=ES....................................................................................................................................50
Page 3 of .3
TABLE OF TABLES AND FIGURES

TA#LE ...- (EO(RAPHI= LO=ATION O9 IN:IAN SO9T;ARE =OMPANIES....................4 9I(URE ...- (RO;TH O9 THE :OMESTI= SO9T;ARE IN:USTR8....................................2 9I(URE ..&- (RO;TH O9 SO9T;ARE E<PORTS 9ROM IN:IA............................................./ 9I(URE ..>- PER=ENTA(E (RO;TH O9 SO9T;ARE E<PORTS 9ROM IN:IA................3 TA#LE ..&- STRU=TURE O9 SO9T;ARE E<PORTS..................................................................0 TA#LE ..>- #REAA UP O9 THE SO9T;ARE A=TI?IT8...........................................................0 9I(URE ..6- :E?ELOPMENT 9O=US O9 IN:IAN SO9T;ARE E<PORTS............................ 9I(URE ..5- A #REAA7UP O9 THE MARAETIN( =HANNELS USE: #8 IN:IAN SO9T;ARE =OMPANIES..................................................................................................................& 9I(URE ..4- A #REAA7UP O9 THE RE?ENUES #8 SE=TOR...................................................> 9I(URE ..2- A #REAA7UP O9 THE :E?ELOPMENT PLAT9ORMS USE:...........................> TA#LE ..6- TOP &0 IN:IAN SO9T;ARE E<PORTERS...............................................................6 9I(URE &..- :ESTINATION O9 IN:IAN SO9T;ARE E<PORTS.............................................2 TA#LE &..- LO=ATION O9 IN:IAN SO9T;ARE =OMPAN8 HEA:BUARTERS...............&& TA#LE >..- THE OTHER TOP E<PORTIN( OR(ANISATIONS IN AUSTRALIA................&> 9I(URE >..- A PRO9ILE O9 SO9T;ARE E<PORTS O9 IRELAN:........................................&6 9I(URE >.6- :ESTINATION O9 IRISH SO9T;ARE E<PORTS...............................................&4 TA#LE >.&- RE?ENUES O9 IRISH SO9T;ARE IN:USTR8.....................................................&4 TA#LE >.>- E<PORTS $AS A C O9 TOTAL RE?ENUE%.............................................................&4 9I(URE >.5- =OMPOSITION O9 IN:IAN IN:USTR8-...............................................................&4
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ANALYSIS OF INDIAN SOFTWARE EXPORT INDUSTRY
1.1 Introduction
C5rrently6 t7e 8oft9are in:58try in In:ia i8 9ort7 1&$.1 ;illion. If 9e a:: in-7o58e :e<elopment of t7e lar=e >ommer>ial?>orporate en:-58er86 t7en t7e total 8oft9are in:58try i8 >lo8e to 5++ ;illion6 97erea8 ten year8 ;a>@ t7e 8oft9are in:58try in In:ia 9a8 not more t7an /++ million. T7e In:ian 8oft9are in:58try 7a8 a 5niA5e :i8tin>tion in t7at mo8t of it8 o5tp5t i8 eBporte:. Of t7e t5rno<er 9ort7 o<er 5+ per >ent i8 a>>o5nte: ;y eBport8. T7e CA1R CCompo5n:e: Ann5al 1ro9t7 RateD for t7e In:ian 8oft9are in:58try in t7e la8t fi<e year8 7a8 ;een 52.&E. CA1R for t7e 8oft9are eBport in:58try 7a8 ;een 55.+'E 97ile t7at for t7e :ome8ti> in:58try 7a8 ;een '/.*E. De8pite t7e8e 7i=7 =ro9t7 rate86 In:ia38 87are in t7e 9orl: 8oft9are mar@et i8 <ery lo96 ;5t In:ia 8till enFoy8 an a:<anta=e o<er 8ome of t7e ot7er nation86 97i>7 are tryin= to promote 8oft9are eBport8. T7i8 i8 :5e to t7e fa>t t7at In:ia po88e88e8 t7e 9orl:38 8e>on: lar=e8t pool of 8>ientifi> manpo9er 97i>7 i8 al8o "n=li87 8pea@in=. Co5ple: 9it7 t7e fa>t t7at t7e A5ality of In:ian 8oft9are i8 =oo: an: manpo9er >o8t i8 relati<ely lo96 it pro<i:e8 In:ia a <ery =oo: opport5nity in t7e 9orl: mar@et.
1.2
Location of software companies
T7e in:58try i8 mainly >on>entrate: aro5n: #etro8. Lately6 -y:era;a:6 C7ennai6 P5ne an: 15r=aon 7a<e emer=e: a8 fa8t =ro9in= oft9are >itie8. At t7e 8ame time Ban=alore an: #5m;ai >ontin5e to attra>t in<e8tment in 8oft9are 8e>tor. An analy8i8 of t7e 7ea:A5arter8 of t7e top '$+ 8oft9are >ompanie8 :emon8trate: t7e follo9in= 8tati8ti>8.
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=it' No. of =om anies #5m;ai */5 Ban=alore 1+5& Del7i6 15r=aon G Noi:a '5) -y:era;a: &)' C7ennai )'5 Cal>5tta $&) P5ne 2'/ Ot7er8 '+/* 1a5le 1.1" ;eogra+#ic location of Indian Software )om+anie!
1.
!omestic Software Industry
For years6 no relia;le :ate 7a8 ;een a<aila;le on t7e In:ian :ome8ti> 8oft9are in:58try. T7i8 i8 more 8o ;e>a58e t7e per>enta=e of in-7o58e :e<elopment of 8oft9are i8 <ery 7i=7 an: it i8 :iffi>5lt to a>>5rately e8timate it8 <al5e6 in 2++'-1+. T7e :ome8ti> 8oft9are in:58try 7a8 ;een e8timate: at 2'.1 ;illion an: t7i8 :oe8 not in>l5:e t7e in-7o58e :e<elopment of 8oft9are in:58try 7a8 87o9n a CA1R of '/.*E 97i>7 7a8 ;een 8tea:ily impro<in= in t7e la8t fe9 year8. T7e =ro9t7 rate 9a8 ''.1$E in t7e year 2++'-1+. T7e :ome8ti> 8oft9are in:58try i8 eBpe>te: to =ro88 $& ;illion in 2++*-1+. !it7 t7e amen:ment8 to t7e >opyri=7t A>t an: it8 ri=oro58 enfor>ement6 it i8 eBpe>te: t7at in t7e >omin= year86 pira>y 9o5l: ;e ;ro5=7t 5n:er f5rt7er >ontrol. Al8o6 t7e =o<ernment 7a8 anno5n>e: Hero import :5ty on 8oft9are. !it7 t7e >opyri=7t amen:ment8 an: Hero import :5ty6 t7e :ome8ti> mar@et i8 eBpe>te: to 87o9 7i=7 =ro9t7 rate8 in t7e ran=e of '+-5+ per>ent in t7e >omin= year8.
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-igure 1.1" ;rowt# of t#e ome!tic Software Indu!try
1." Software Export Industry

T7e In:ian 8oft9are eBport in:58try >ontin5e8 to 87o9 impre88i<e =ro9t7 rate8. In term8 of In:ian r5pee86 t7e CA1R 7a8 ;een a8 7i=7 a8 55.+'E. T7e in:58try eBporte: 8oft9are 9ort7 $+ ;illion in 1*/5 an: 9it7in a fe9 year86 t7e t5rno<er 7a8 =ro9n m5ltifol:. In 2++'-1+6 a total eBport of C $* ;illionD 9a8 a>7ie<e: an: it i8 eBpe>te: to ;e 9ort7 U I 1./ ;illion in t7e >5rrent year C2++*-1+D. Intere8tin=ly6 mo8t of t7e eBport i8 in t7e form of pro<i:in= 8oft9are 8ere8 t7at i8 :e<elopin= or 7elpin= :e<elop 8oft9are for or=ani8ation8 o<er8ea8. #o8t of :ome8ti> t5rno<er >ome8 t7ro5=7 8ellin= of 8oft9are pro:5>t8 :e<elope: primarily in ot7er >o5ntrie8. T7at i86 t7e o<er8ea8 re<en5e i8 earne: ;y pro<i:in= 8ere8 97ile t7e :ome8ti> re<en5e >ome8 mo8tly t7ro5=7 tra:in=.
Page 0 of .3
-igure 1.2" ;rowt# of Software '*+ort! from India T7e In:ian 8oft9are in:58try 7a8 =enerate: an e8timate: 8oft9are eBport re<en5e of $6+)' >rore CU I/5$./* millionD in t7e fir8t 7alf of fi8>al 2++*-1+. T7e in:58try 7a8 mar@e: a re>or: =ro9t7 of &'.' per>ent o<er t7e pre<io58 yearGJ1'&K8 CU I51*.'' millionD :5rin= t7e 8ame perio:. T7e 8oft9are in:58try in In:ian eBpe>t8 to rea>7 an eBport le<el of U I '.+ ;illion ;y 2+++ AD For a>7ie<in= t7i8 <elo>ity of ;58ine886 t7e in:58try nee:8 f5rt7er li;erali8ation of t7e In:ian e>onomy6 8implifi>ation of pro>e:5re86 :eployment of a::itional re8o5r>e8 for te>7ni>al manpo9er :e<elopment6 ne9 mar@etin= >7annel8 an: pro<i:in= 8tate-of-t7e-art infra8tr5>t5re for 8oft9are :e<elopment. 16/)+ >rore
Page % of .3
-igure 1.3" Percentage ;rowt# of Software '*+ort! from India
1.#
Structure of Software Exports
T7ere 7a8 ;een a 87ift to9ar:8 off87ore 8ere8 in t7e 8oft9are eBport >ar=o of In:ia. T7e ;5l@ of In:ian 8oft9are eBport8 7a<e ;een in t7e form of profe88ional 8ere8. A :etaile: analy8i8 in:i>ate8 t7at maFority of 8oft9are eBport8 are in t7e area8 >la88ifie: a8 "customized" or "professional consultancy". -o9e<er6 8in>e la8t t9o year86 t7ere 7a8 ;een a <i8i;le 87ift to9ar:8 off 87ore proFe>t :e<elopment6 97i>7 al8o in>l5:e8 off87ore pa>@a=e :e<elopment 7a8 in>rea8e: to o<er '1E :5rin= t7e year. Rea8on8 attri;5te: for t7i8 =ro9t7 are in>rea8in= n5m;er of "5ropean >o5ntrie8 T7e :e=ree of on-8ite :e<elopment i8 8till <ery 7i=76 9it7 a8 m5>7 a8 5*E of t7e 9or@ ;ein= :one at t7e >lient38 8ite6 ;5t it i8 eBpe>te: to :e>rea8e f5rt7er in t7e >omin= year8 9it7 impro<e: :ata >omm5ni>ation lin@8. In 1*//6 t7e per>enta=e of on-8ite :e<elopment 9a8 almo8t a8 7i=7 a8 *+E. oft9are Te>7nolo=y Par@86 li;erali8e: e>onomi> poli>y an: 5nnat5ral <i8a re8tri>tion8 ;y U. . an: 8ome !e8tern
Page & of .3
T' e of Ser,i*es Mi!!ion On- ite ere8 22/*+.++ Off87ore ere8 11)/+.++ Off87ore Pa>@a=e8 '$$+.++ Total $*+++.++ 1a5le 1.2" Structure of Software '*+ort! A ;rea@-5p of t7e 8oft9are a>ti<ity i8 87o9n in t7e ta;le ;elo9.
Per*entage 5/.)E $+.2E 11.1E 1++ E
:omesti* SoftDare SoftDare EE ort #illion E of Total #illion E of Total T5rn@ey */55 '+.*E Profe88ional ere8 1/21$ '&.)E Pro:5>t8 G Pa>@a=e8 112)+ '&./E '$$+ 11.1E Con85ltan>y G Trainin= 1&)5 &.*E 1+&/5 2).'E Data Pro>e88in= 125+ 5.2E '2*+ 11 E Ot7er8 5+ +.2E 1'/2 $./E Total 2'61++ 1++ E $*+++ 1++ E 1a5le 1.3" <reak u+ of t#e Software (ctivity An analy8i8 of ;rea@-5p of 8oft9are a>ti<ity of ;ot7 :ome8ti> a8 9ell a8 eBport in:58try :emon8trate8 t7at Pro:5>t8 G Pa>@a=e8 top8 t7e li8t 9it7 a 87are of '&./E in :ome8ti> mar@et6 97erea8 profe88ional 8ere8 >omman: a 87are of almo8t '&.)E in t7e eBport mar@et.
SoftDare A*ti,it'
1.$ !estination of Indian Software Exports

In 2++'-1+6 In:ia eBporte: almo8t 5/E of it8 total 8oft9are eBport8 of U A an: 21E to "5rope. T7e 8iB O"CD >o5ntrie8 CU A6 Lapan6 U06 1ermany6 Fran>e an: ItalyD to=et7er 7a<e )$E of t7e mar@et 87are of t7e 9orl:-9i:e 8oft9are mar@et. Intere8tin=ly6 In:ia38 eBport8 to t7e8e >o5ntrie8 are al8o almo8t /$E of it8 total 8oft9are eBport8. In t7e >omin= year86 In:ia i8 eBpe>te: to 8tri@e many Foint <ent5re8 an: 8trate=i> allian>e8 in "5rope. T7e tra:e 9it7 "5ropean nation8 i8 =ro9in= rapi:ly. T7ere 7a<e ;een allian>e8 to >reate more >o-operation ;et9een In:ian an: "5ropean 8oft9are >ompanie8.
Page 13 of .3
NA
CO# 5n:er t7e ae=i8 of #ini8try of Commer>e6 1o<ernment of In:ia 7a: CO#38 In:ia-"5rope oft9are Allian>e CNI" AD. T7e >7eme of t7e
initiate: a ProFe>t >alle: NA
NI" A P7a8e-I 9a8 partly f5n:e: 5n:er t7e "CIP Fa>ility 1
Commi88ion of t7e "5ropean Comm5nitie8. After 85>>e88f5l >ompletion of p7a8e I of t7e ProFe>t6 Na88>om 7a8 no9 la5n>7e: p7a8e II. T7i8 i8 eBpe>te: to f5rt7er 7elp in in>rea8in= 8oft9are eBport8 to "5rope. O<er t7e neBt t9o year86 8oft9are eBport8 to many A8ian >o5ntrie8 an: A58tralia are al8o eBpe>te: to in>rea8e. T7e ne9 mar@et8 in>l5:e 0orea6 o5t7 Afri>a6 Latin Ameri>a an: 8ome >o5ntrie8 in A8ia-Pa>ifi>. U A >ontin5e8 to ;e In:ia38 lar=e8t eBport mar@et. -o9e<er6 if t7e <i8a 8it5ation for t7e U mar@et :oe8 not impro<e6 t7e eBport =ro9t7 for t7e U mar@et >an ;e a:<er8ely affe>te:.
1.% !e&elopment focus of t'e Software Exporters(

Nearly t9o t7ir:8 of t7e >ompanie8 are en=a=e: in :e<elopin= en:-58er appli>ation pro:5>t8 an: 8ere8 ran=in= from 8trai=7tfor9ar: a>>o5ntin= 8y8tem8 to 8pe>iali8e: ni>7e mar@et pro:5>t8 or >58tomi8e: 8ere8. T7e re8t o;tain t7eir re<en5e8 from >on85ltan>y6 8y8tem8 inte=ration6 an: 85pply of 8pe>iali8e: 8oft9are 8y8tem86 85>7 a8 8oft9are tool86 >omm5ni>ation8 8oft9are an: 8oft9are for :e:i>ate: 7ar:9are :ee8.
-igure 1.," evelo+ment -ocu! of Indian Software '*+ort!
Page 11 of .3
1.) Marketing c'annels used *y software companies

#ar@etin= i8 t7e mo8t >riti>al i885e for t7e :e<elopment of t7e In:ian 8oft9are In:58try. T7e 8iHe of t7e In:ian 8oft9are eBport in:58try i8 <ery 8mall >ompare: to t7e 9orl: mar@et. To emer=e a8 a maFor player in t7e 9orl: 8oft9are mar@et6 t7ere 7a8 to ;e a 8i=nifi>ant eBpen:it5re on mar@etin=. In In:ia6 t7e 8oft9are <en:or8 operatin= in t7e eBport mar@et 7a<e tra:itionally :epen:e: 5pon :ire>t mar@etin= to en:-58er8. -o9e<er lately6 many 8oft9are >ompanie8 7a<e 8et 5p t7eir o9n offi>e8 in <ario58 >o5ntrie8.
-igure 1.." ( 5reak:u+ of t#e Marketing )#annel! u!ed 5y Indian Software )om+anie!
1.+ Segments of ,pplication Software !e&elopment

In:ian 8oft9are >ompanie8 mainly >on>entrate on :e<elopin= appli>ation 8oft9are for t7ree main 8e>tor8. T7ey in>l5:e Ban@in= #an5fa>t5rin= In85ran>e an: Ot7er Finan>ial ere8
Page 12 of .3
A 8e=ment 9i8e ;rea@ 5p of t7e 8oft9are in:58try38 re<en5e :emon8trate: t7e follo9in= 8tati8ti>8.
-igure 1./" ( 5reak:u+ of t#e =evenue! 5y Sector
1.1- !e&elopment platform

#aFority of >ompanie8 >on>entrate on fo5r maFor :e<elopment platform8 - PC CDO 6 !in:o986 AppleD6 #ainframe6 UNI( an: #i:ran=e. Al8o6 a8 mo8t >ompanie8 :e<elop on more t7an one platform6 t7erefore t7e <al5e8 87o9n total more t7an 1++E. T7e mo8t >ommon >om;ination8 are UniB 9it7 PC6 an: UniB 9it7 #i:ran=e.
-igure 1.0" ( 5reak:u+ of t#e develo+ment Platform! u!ed
Page 13 of .3
1.11 .op twenty Software exporters

T7ere are >5rrently more t7an 55+ >ompanie8 in In:ia 97i>7 are en=a=e: in t7e ;58ine88 of 8oft9are eBport8. In 2++'-1+6 more t7an 52 >ompanie8 7a<e eBporte: more t7an more t7an 1++ million 9ort7 of 8oft9are. In 1**1-*26 only fi<e >ompanie8 an: 5++ million 9ort7 of 8oft9are. T7i8 in:i>ate8 t7e 7i=7 proliferation an: eBporte: 8oft9are more t7an 1++ million. Al8o in 2++'-1+6 1) >ompanie8 eBporte: all-aro5n: =ro9t7 of 8oft9are eBport8. T7e top t9enty 8oft9are eBporter8 Cin or:er of re<en5eD a>>o5nte: for almo8t &+E of t7e total 8oft9are eBport8. T7e follo9in= ta;le li8t8 t7e Top 2+ 8oft9are eBporter8 ;y re<en5e. Ran@ +1 +2 +$ +' +5 +& +) +/ +* 1+ 11 12 1$ 1' 15 1& 1) 1/ 1* 2+ Company "Bport8 2++'-1+ in #illion Tata Con85ltan>y ere8 &+&/./+ !ipro Lt:. 25//.'+ NIIT Limite: 1&12.5+ Pentafo5r oft9are G "Bport8 Lt:. 15*'.2& Info8y8 Te>7nolo=ie8 Lt: 12&).1+ Tata Infote>7 Limite: 1+&+.++ atyam Comp5ter ere8 Limite: /*1./+ International Comp5ter8 CIn:iaD Limite: /5+.2+ Patni Comp5ter y8tem8 P<t. Lt:. /'/.*+ D M oft9are Limite: /+$.** #a7in:ra Briti87 Tele>om Limite: )**.&2 il<erline In:58trie8 Limite: )2+.22 Tata IB# Limite: &'/./+ C#C Limite: &2+.*' #a8te@ Limite: 5)/./+ iemen8 Information y8tem8 Limite: 55'.1+ LGT Information Te>7nolo=y Limite: '**.$+ Information #ana=ement Re8o5r>e8CID Lt:. '*).)' -eBa9are Info y8tem8 Limite: '/$.5+ Citi>orp Information Te>7nolo=y In:58trie8 ')+.++ 1a5le 1.," 1o+ 23 Indian Software '*+orter!
Page 1, of .3
2 CHARACTERISTICS OF INDIAN SOFTWARE EXPORTS

2.1 /ne&en 0utput( Ser&ices not Packages
In:ian 8oft9are eBport8 7a<e ;een :ominate: ;y eBport of 8oft9are 8ere86 in t7e form of >58tom 8oft9are 9or@6 rat7er t7an eBport of 8oft9are pro:5>t86 in t7e form of pa>@a=e8. T7i8 7elp8 eBplain t7e re>ent ri8e in =ro9t7 rate8. T7i8 ri8e 7a8 partly ta@en pla>e ;e>a58e of t7e eBplo8ion of 8ere8 9or@ on t7e 2%ear 2+++ pro;lem3K no9 e8timate: to ma@e 5p nearly '+E of >5rrent 8oft9are eBport 9or@ from In:ia. By >ontra8t6 at t7e <ery mo8t6 F58t 5n:er 5E of eBport8 >ame from pa>@a=e8 in 1**)?*/. One rea8on 97y pa>@a=e8 not ta@en off :e8pite In:ia38 lo9 la;o5r >o8t a:<anta=e8 i8 ;e>a58e of 7i=7 entry ;arrier8 :e8pite t7e lo9 >o8t at 97i>7 In:ian >ompanie8 >an :e<elop 85>7 pa>@a=e8. T7e8e entry ;arrier8 are la>@ of familiarity 9it7 t7e forei=n pa>@a=e mar@et8 t7ey 8ee@ to penetrate6 an: t7eir :i8tan>e from t7o8e mar@et8 ma@e8 it 7ar: to @eep 5p 9it7 >7an=in= nee:8 an: 8tan:ar:8. #oreo<er6 t7e In:ian :ome8ti> mar@et i8 a poor =5i:e for 8oft9are :e<eloper8 ;e>a58e of :ifferen>e8 in 58er nee:86 in 9or@6 in 7ar:9are en<ironment86 an: a =enerally lo9 le<el of inno<ation. Ot7er entry ;arrier8 in t7e 8oft9are pa>@a=e mar@et8 i8 7i=7 >o8t8 in a:<erti8in= an: mar@etin= effort nee:e: to >at>7 t7e attention of potential >58tomer8. oft9are m5ltinational8 >an 8pen: '+-5+E of ann5al re<en5e on pa>@a=e 8ale8 an: mar@etin=6 an: 1+-15E on re8ear>7 an: :e<elopment for pa>@a=e8 C">onomi8t 1**'D. For a 8in=le lar=e firm6 t7i8 >an repre8ent ;illion8 of U :ollar8-9ort7 of in<e8tment. more t7an t7e entire o5tp5t of all In:ian 8oft9are pro:5>er8. D5e to In:iaN8 la>@ of rep5tation a8 a 8oft9are pa>@a=e 8o5r>e an: it8 la>@ of any 8oft9are ;ran: name8 in a relati<ely ;ran:-loyal mar@et6 7i=7 8ale8 9o5l: not ;e eBpe>te:6 ma@in= t7e 5nit >o8t of mar@etin= an: :i8tri;5tion e<en 7i=7er. Pro<i:in= 85pport6 maintenan>e an: 5p=ra:e8 for a pro:5>t in a forei=n mar@et i8 al8o eit7er :iffi>5lt or <ery >o8tly.
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La8tly6 all t7i8 a885me8 85>>e88 9it7 t7e pro:5>t6 yet eBperien>e 85==e8t8 t7at only a;o5t 1-5E of 8oft9are pa>@a=e8 85>>ee:6 in 97i>7 >a8e 75=e in<e8tment8 are reA5ire:6 97i>7 are not rea:ily a<aila;le 9it7in In:ia. "<en if a<aila;le6 neit7er =o<ernment poli>y nor mana=erial attit5:e8 7a<e =enerally en>o5ra=e: t7e 7i=7-ri8@6 lon=-term in<e8tment8 ne>e88ary. Be>a58e of t7e8e >on8traint86 8ome In:ian >ompanie8 7a<e a=ree: to 5n:erta@e >58tom 8oft9are 9or@ at >5t pri>e for a forei=n >lient on t7e 5n:er8tan:in= t7at t7ey 9ill 85;8eA5ently try to mar@et t7e :e<elope: 8y8tem a8 a pa>@a=e for a ni>7e mar@et. Firm8 an: offi>ial 85r<ey8 freA5ently >la88ify t7i8 a8 2pa>@a=e eBport83 ;5t 85>7 2pa>@a=e83 4 8ometime8 more a>>5rately i:entifie: a8 28emi-pa>@a=e: 8oft9are3 4 often en: 5p ;ein= 58e: merely a8 mar@etin= or :e<elopment platform8 for f5rt7er >58tomi8ation. T7e alternati<e option for In:ian eBporter8 8ee@in= to 9or@ on pa>@a=e8 i8 to >olla;orate 9it7 a forei=n firm 97i>7 9ill 85pply t7e pa>@a=e 8pe>ifi>ation86 mar@etin=6 85pport an: finan>e. T7e :ra9;a>@ i8 t7at t7e In:ian >ompany en:8 5p F58t 85pplyin= pro=rammin= 8ere8 in ret5rn for a <ery 8mall 87are of any re<en5e. Nor 9ill it8 rep5tation ;e m5>7-en7an>e: for6 a8 9it7 ori=inal eA5ipment man5fa>t5rin= in ot7er fiel:86 t7e pro:5>t 9ill emer=e 5n:er t7e forei=n firmN8 ;ran: name.
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2.2 /ne&en Export !estination( /S !omination

In:ian >ompanie8 7a<e eBporte: 8oft9are to more t7an forty >o5ntrie8 ;5t t7ere i8 a 7ea<y relian>e on t7e U mar@et a8 t7e fi=5re ;elo9 in:i>ate8.
!estination of Indian Software Exports
Japan 5% Europe 10% UK 10%
Other 10%
USA 65%
-igure 2.1" e!tination of Indian Software '*+ort! T7e U mar@et :ominate8 In:ian 8oft9are eBport8 partly ;e>a58e it i8 ;y far t7e
9orl:N8 lar=e8t 8oft9are mar@et6 >on8tit5tin= aro5n: 7alf of all 8oft9are 8ale8 in t7e 1**+8. T7e U 7a8 al8o 7a: more li;eral immi=ration r5le8 for 9or@ or re8i:en>e t7an mo8t ot7er :e<elope: >o5ntrie8 97i>7 en>o5ra=e8 eBport of on8ite proFe>t8. T7e U -orientation of eBport8 mi=7t pre8ent a limitation to f5t5re =ro9t7 ;e>a58e U 87are of t7e 9orl: mar@et i8 8lo9ly :e>linin=. -o9e<er6 t7e Ameri>an mar@et i8 8till eBpan:in= 85;8tantially in a;8ol5te term8 pl586 8in>e t7e early 1**+86 In:ian 8oft9are eBport8 7a<e 87o9n t7eir a;ility to =ro9 in ot7er mar@et86 85>7 a8 t7o8e of A8ia an: "5rope.
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2.
/ne&en !i&isions of La*our( 12ody S'opping Prison3
2. .1 /ne&en Locational !i&isions( 0nsite and 0ffs'ore 4ork #5>7 of In:iaN8 eBport 9or@ :e<elopin= >58tom 8oft9are i8 a>t5ally >arrie: o5t at t7e >lientN8 8ite o<er8ea8 C2on8ite3D rat7er t7an off87ore in In:ia. Ba>@ in 1*//6 an a<era=e of &5E of eBport >ontra>t8 9ere >arrie: o5t 97olly at t7e >lient 8ite6 97ile $5E >ontaine: 8ome off87ore element8 C-ee@8 1**1D. T7i8 tran8late: into F58t 5n:er )5E of In:ian 8oft9are eBport :e<elopment ta@in= pla>e o<er8ea8 an: only 25E in In:ia. T7i8 9a8 e<en tr5e of 9or@ in In:ia38 eBport pro>e88in= Hone8697i>7 9ere inten:e: to ;e ;a8e8 for off87ore 9or@. 5;8eA5ent 85r<ey8 7a<e 87o9n t7at t7e amo5nt of 9or@ >arrie: o5t off87ore 7a8 in>rea8e: 9it7in in:i<i:5al firm8.
2. .2 /ne&en Skill !i&isions( !ominance of Programming D5rin= t7e perio: 1*//-1**/6 at lea8t &5E of eBport >ontra>t8 9ere 8olely for pro=rammin= 9or@ ;ille: on a 2time an: material83 ;a8i86 9it7 pro=rammin= fi=5rin= 8tron=ly in t7e remainin= one-t7ir: of >ontra>t8. o6 in =eneral term86 In:iaN8 8oft9are eBport tra:e 7a8 ;een >7ara>teri8e: ;y an international 8@ill :i<i8ion of la;o5r 85>7 t7at t7e maFority of 8oft9are >ontra>t8 allo>ate only t7e le88-8@ille: >o:in= an: te8tin= 8ta=e8 to In:ian 9or@er8. T7at i8 to 8ay6 In:ian 9or@er8 7a<e far more often ;een 58e: a8 pro=rammer86 9or@in= to reA5irement8 an: :e8i=n 8pe>ifi>ation8 8et ;y forei=n 8oft9are :e<eloper86 rat7er t7an a8 8y8tem8 analy8t8 or :e8i=ner8.In t7e In:ian >onteBt6 t7e >om;ination of on8ite an: pro=rammin= 9or@ 7a8 >ome to ;e @no9n a8 2;o:y 87oppin=3. Amon=8t ot7er t7in=86 t7i8 7a8 7elpe: to reinfor>e a f5rt7er =en:er :i<i8ion of la;o5r.
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2. .
Persistence of 0nsite Programming Ser&ices
Rea8on8 for on8ite pro=rammin= 8ere8 are a8 follo98. .. Trust and Ris1. A>>or:in= to inter<ie9ee86 t7ere i8 a la>@ of tr58t an: a per>eption of ri8@ amon= >lient86 97o are 5n>ertain of t7e 8@ill86 >apa;ilitie8 an: >re:i;ility of potential In:ian 85;->ontra>tor8. In or:er to re:5>e t7e ri8@6 many >lient8 >7oo8e to retain a8 m5>7 >ontrol a8 t7ey >an o<er pro:5>tion6 only >ontra>tin= o5t t7e relati<ely 5npro;lemati> ta8@8 of >o:in= an: te8tin=6 an: 7a<in= t7e 9or@ >arrie: o5t on8ite. !or@ 9ill only ;e allo9e: off87ore if t7ere are fairly ti=7t6 formali8e: 8pe>ifi>ation86 ;5t eBporter8 are >a5=7t in t7e ;in: t7at 85>7 proFe>t8 are t7en more amena;le to a5tomate: 8oft9are tool8. &. Ot+er =!ient Attitudes. Client attit5:e8 perpet5ate on8ite 9or@ in ot7er 9ay8. A>>or:in= to InfoTe>7N8 C1**2D 85r<ey t7e important fa>tor8 =5i:in= forei=n firm8 o<er on8ite 9or@ are >o8t6 >re:ential86 pro:5>ti<ity an: A5ality. In:ian firm8 9or@in= on8ite ten: to 8>ore A5ite 9ell on t7e8e. -o9e<er6 t7ere i8 a :ifferent pi>t5re for off87ore or t5rn@ey a88i=nment8. In t7e8e >a8e86 >o8t i8 le88 important 97ile mana=ement 8@ill86 A5ality6 pro<en eBperti8e an: a>>e88 to te>7nolo=y all ;e>ome m5>7 more important. In:ian firm8 9or@in= off87ore ten: to 8>ore m5>7 le88 9ell on t7e8e6 ma@in= a tran8ition t7at m5>7 le88 li@ely to o>>5r from on8ite pro=rammin= to off87ore t5rn@ey a88i=nment8. >. Pro)e*t SiFe. ProFe>t 8iHe affe>t8 t7e :i<i8ion of la;o5r 8in>e 8mall >ontra>t8 are not 9ort7 8en:in= o<er8ea8. Ni>7ola8 C1**'D6 for eBample6 re>ommen:8 a minim5m proFe>t 8iHe of U I1++6+++ ;efore it ;e>ome8 9ort7 t7e time6 effort an: ri8@ to >on8i:er 8en:in= 9or@ off87ore. 6. Need for Intera*tion. Contin5o58 >lient-:e<eloper intera>tion i8 an e88ential part of 8oft9are :e<elopment. De8pite =oo: >omm5ni>ation8 lin@86 intera>tion 8ometime8 nee:8 to ;e fa>e-to-fa>e6 97i>7 mean8 t7e :e<eloper8 =oin= to t7e >lient rat7er t7an e <er8a. T7586 e<en 9it7 off87ore t5rn@ey >ontra>t86 t7e reA5irement8 analy8i86 preliminary :e8i=n6 in8tallation an: implementation =enerally nee: to ;e :one on8ite.
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5. Une,en S1i!!s Profi!e. T7e a<era=e 8oft9are :e<elopment proFe>t reA5ire8 le88 t7an 7alf t7e la;o5r inp5t to >ome from pro=rammer8. %et /5E of 9or@er8 in In:ian 8oft9are eBport8 are pro=rammer8. T7i8 2pro=rammer 7ea<y3 8@ill8 profile6 reinfor>e: ;y lo88e8 of eBperien>e: 8taff to t7e o<er8ea8 2;rain :rain36 en>o5ra=e8 pro=rammin=-only >ontra>t8. T7i8 an: >on8traint8 on t7e a<aila;ility of IT an: proFe>t mana=ement re8o5r>e8 9it7in In:ia al8o re:5>e off87ore pro:5>ti<ity an: A5ality in 8ome >ompanie86 ma@in= on8ite 9or@ more attra>ti<e. 4. Indian Manageria! Per*e tions . Apart from t7e eBternal 2p5873 fa>tor8 note: a;o<e6 t7ere i8 an internal 2p5ll3 in fa<o5r of on8ite pro=rammin= ;e>a58e mana=er8 per>ei<e it to ;rin= ;enefit8. It pro:5>e8 A5i>@ re<en5e for lo9 in<e8tment6 97i>7 85it8 t7e la>@ of ri8@-ta@in= fa<o5re: ;y many In:ian ;58ine88 mana=er86 parti>5larly =i<en 5n>ertaintie8 t7at eBi8t a;o5t poli>y an: a;o5t t7e =lo;al an: In:ian e>onomie8. It 7elp8 ;y eBpo8in= 8taff to forei=n mar@et tren:86 8@ill8 an: 8tan:ar:8. #any In:ian 8taff al8o 9ant8 to 9or@ o<er8ea8 an:6 if :enie: t7e opport5nity ;y one >ompany6 9ill 8imply Foin anot7er 97i>7 9ill 8en: t7em a;roa:. T7i8 moti<ate8 mo8t >ompanie8 to retain a mea85re of on8ite 9or@.
2." /ne&en Market S'are( Economic 5oncentration of Production

Pro:5>tion of In:ian 8oft9are eBport8 i8 a 7ea<ily >on>entrate:. By 1**/6 t7ere 9ere a;o5t '++-5++ 8oft9are eBport firm8. #o8t6 7o9e<er6 are 8in=le->ontra>t firm8 employin= F58t a 7an:f5l of 8taff. By >ontra8t6 t7e top fi<e firm8 9ere re8pon8i;le for more t7an '+E of all eBport86 an: t7e top t9enty for )+E CDataA5e8t 1**/D. Lar=e firm8 7a<e :ominate: 8oft9are eBport8 t7an@8 to t7e e>onomie8 of 8>ale an: entry ;arrier8 t7at eBi8t in 8oft9are pro:5>tion. ">onomie8 of 8>ale an: ;arrier8 in>l5:e t7o8e of 7ar:9are6 of 8taff trainin=6 of mar@etin= an:6 le88 tan=i;ly6 of >re:i;ility an: rep5tation.
Page 23 of .3
in>e In:ian 8oft9are eBport8 are 8ere8 rat7er t7an =oo:86 eBample8 >annot ea8ily ;e :i8playe: to potential ;5yer8 to e8ta;li87 >re:i;ility. T7ere i8 t7erefore a 7ea<y relian>e on rep5tation6 tra>@ re>or:6 referen>e8 an: t7e 8@ill8 an: appearan>e of t7e mar@etin= team6 97i>7 all =o to=et7er to :etermine t7e In:ian firmN8 >re:i;ility. All t7e8e >re:i;ility-relate: fa>tor86 97i>7 prin>ipally 7in=e on tra>@ re>or: an: 8pen:in= on mar@etin=6 o;<io58ly 9or@ to t7e a:<anta=e of lar=er6 lon=er-e8ta;li87e: firm8. T7e only 87ort >5t o>>5r8 if a ne9 firm i8 8et 5p ;y an eB-mem;er of one of t7e lar=e IT >ompanie8. In t7i8 >a8e t7e in:i<i:5al >an ma@e 58e of 7i8 or 7er per8onal >onta>t8 an: >re:i;ility. -o9e<er6 t7i8 :oe8 not ena;le t7e firm8 to o<er>ome te>7nolo=y6 8@ill8 an: finan>e ;arrier8. T7i8 eBplain8 t7eir initial relian>e on on8ite pro=rammin= 8ere86 for 97i>7 t7ere are fe9 8>ale e>onomie86 an: t7e fa>t t7at fe9 of t7em 7a<e ma:e 8i=nifi>ant lon=-term 7ea:9ay in 8oft9are eBport8. T7ere are al8o ;ia8e8 a=ain8t 8mall an: 8tart-5p >ompanie8 in term8 of o;tainin= forei=n >olla;oration8 an: te>7nolo=y6 an: in :ealin= 9it7 t7e ;5rea5>ra>y. For eBample6 :e8pite t7e fallin= real pri>e8 of po9erf5l >omp5ter8 an: tele>omm5ni>ation86 t7e8e te>7nolo=ie8 remain ;eyon: t7e rea>7 of many 8mall In:ian firm8. imilarly6 a>>e88 to =o<ernment 85pport ten:8 to ;e t7e pre8er<e of t7e lar=er firm8.
2.# /ne&en Sitting( Location 5oncentration of Production

oft9are >ompanie8 are not :i8tri;5te: e<enly t7ro5=7o5t In:ia6 ;5t are mainly lo>ate: aro5n: a fe9 maFor In:ian >itie86 e8pe>ially aro5n: Ban=alore. Ta;le $ in:i>ate8 t7e lo>ation of >ompany 7ea:A5arter8 for o<er 55+ 8oft9are >ompanie8 CIn>l5:in= a n5m;er fo>58e: on t7e :ome8ti> mar@etD.
Page 21 of .3
=it' #5m;ai Ban=alore Del7i6 15r=aon G Noi:a -y:era;a: C7ennai Cal>5tta P5ne Ot7er8
No. of =om anies */5 1+5& '5) &)' )'5 $&) 2'/ '+/*
1a5le 2.1" Location of Indian Software )om+any >ead8uarter!1 -a5=N8 C1**1D 9or@ 7a8 87o9n t7at fi<e main fa>tor8 play a part in t7e lo>ational :e>i8ion8 of ne9 8oft9are >ompanie8. One of t7e8e 4 proBimity to >58tomer8 4 i8 of limite: rele<an>e in t7e >onteBt of 8oft9are eBport8. T7ree ot7er fa>tor86 7o9e<er6 are fo5n: to 7a<e =5i:e: lo>ational :e>i8ion8 in In:ia. .. Labour A,ai!abi!it'. Ban=alore 9a8 8een to 7a<e a;5n:ant la;o5r t7at >o5l: ;e :ra9n from it8 lon=-8tan:in= re8ear>7 la;oratorie86 e:5>ational in8tit5te8 an: p5;li> 8e>tor ele>troni>8 firm8. 0ey in8tit5tion8 in>l5:e: B7arat "le>tri>al8 Lt:6 t7e In:ian In8tit5te of #ana=ement an: t7e In:ian In8tit5te of >ien>e. T7e8e 7a<e ;een a @ey 8o5r>e of ;ot7 8oft9are employee8 an: 4 in later year8 4 entreprene5r8. &. Bua!it' of Life. Ban=alore ;enefite: from it8 rep5tation for a =oo: >limate an: 8o>ial life. IT 9or@er8 9ere rapi:ly inte=rate: into t7e >ity38 8o>ial fa;ri> By >ontra8t #5m;ai
o5r>e. DataA5e8tC1**/D
Page 22 of .3
3 ANALYSIS OF OTHER SOFTWARE EXPORTING COUNTRIES:

.1 ,ustralia
A58tralian eBport8 of pro:5>t8 an: 8ere8 are 9ort7 o<er I2.1 ;illion 97i>7 87o98 an in>rea8e of more t7an 1+E o<er la8t year. Profe88ional ere8 9a8 t7e area t7at =enerate: t7e =reate8t re<en5e C$'ED. T7e area8 of =reate8t =ro9t7 in t7e la8t 12 mont786 9ere Tele>omm5ni>ation8 Pro:5>t8 Can in>rea8e of /$ED an: oft9are Can in>rea8e of )*ED. IB# A58tralia 9a8 t7e 7i=7e8t ran@e: ITGT eBporter C2*E of t7e total eBport8D 9it7 eBport re<en5e of I&+1m in t7e finan>ial year 2++'-1+. Organisations Turno,er N"C A58tralia I&&.&m C C A58tralia I5/.$m #in>om I5)m F5Fit85 A58tralia I5'.'m Uni8y8 A58tralia I'*./m Canon A58tralia I'1.15m 1a5le 3.1" 1#e ot#er to+ e*+orting organi!ation! in (u!tralia .1.1 Effect of East ,sian 5risis in Software exports of ,ustralia
/'E of >ompanie8 a>ti<e in t7e re=ion reporte: 85fferin= a:<er8e affe>t8 from t7e >5rrent >ri8i8. -o9e<er6 :e<al5ation of t7e A58tralian :ollar 7a8 re85lte: in in>rea8e: pri>e >ompetiti<ene88 for 8ome A58tralian pro:5>t8 t7at >ompete 9it7 pro:5>t8 from ot7er mar@et86 moreo<er t7e >ri8i8 7a8 a88i8te: a8 >58tomer8 are no9 loo@in= for a::e: effi>ien>ie8 to 8a<e >o8t8 ;y importin= 8oft9are 8ol5tion8. #alay8ia 9a8 t7e mo8t important mar@et for A58tralia. T7e neBt mo8t important mar@et8 are In:one8ia6 in=apore an: 0orea6 -on= 0on= an: T7ailan:. #any or=ani8ation8 7a<e >7an=e: t7eir 8trate=ie8 a8 a re85lt of t7e e>onomi> 8it5ation in A8ia. T7e main >7an=e8 >an ;e 85mmari8e: a8 follo98. Do9n8iHe: operation8 or re:5>e: 8taff n5m;er8 in A8ian operation8 C5t in mar@etin= a>ti<itie8?eBpen:it5re or 8toppe: a>ti<itie8 in A8ia >ompletely C7an=e: mar@etin= approa>7 li@e le88 58e of :ire>t mar@etin= an: more 58e of partner87ip8
Page 23 of .3
Re:5>e mar=in8 to retain >58tomer8?:i8tri;5tor8 C7an=e of pro:5>t miB Clo9er pri>e: pro:5>t8D or mar@etin= me88a=e Cemp7a8i8 on >o8t ;enefit8D Can>elle: eBpan8ion plan8 in A8ia6 >on>entratin= on maintainin= eBi8tin= ;58ine88 Or=ani8ation are >7an=in= t7eir emp7a8i8 ;a>@ on t7e A58tralian :ome8ti> mar@et6 or fo>588in= on ot7er mar@et86 primarily Nort7 Ameri>a an: "5rope. .1.2 Implications for India
T7e a;o<e analy8i8 87o98 t7at A58tralian eBport8 9ill ;e tar=ete: more to9ar:8 t7e Nort7 Ameri>an an: "5ropean nation8 an: In:ia >an fa>e 8tiff >ompetition e8pe>ially after t7e o5t7 "a8t A8ian >ri8i8.
.2 Ireland
T7e 8oft9are in:58try i8 firmly e8ta;li87e: in Irelan:. T7e :ome8ti> 8e>tor 7a8 inno<ate: a ;roa: ran= of pro:5>t8 ;58ine88 appli>ation86 8oft9are tool86 a:<an>e: tele>omm5ni>ation8 m5ltime:ia 8y8tem8. In tan:em 9it7 t7e :e<elopment of t7e in:i=eno58 8e>tor6 an eA5ally 8tron= o<er8ea8 8e>tor 7a8 >7o8en Irelan: a8 an off87ore 8oft9are lo>ation. Internationally6 Irelan: i8 no9 re>o=ni8e: a8 a prime 8o5r>e of 7i=7 A5ality 8oft9are :e<elopment 8ere8 an: a8 t7e i:eal =ate9ay to "5ropean mar@et8. -igure 3.1" ( Profile of Software '*+ort! of Ireland
T7e rea8on8 ;e7in: t7i8 ;oomin= :e<elopment in>l5:e. t7e a<aila;ility of a 9or@for>e6 97i>7 i8 pre:ominantly yo5n=6 8@ille: an: 9ell e:5>ate:6 9it7 8tron=
L. 2. In!titute Of Management Studie! Page 2, of .3
te>7nolo=i>al an: ;58ine88 8@ill8K a 7i=7ly effi>ient an: >o8t-effe>ti<e6 9orl:-9i:e >omm5ni>ation8 infra8tr5>t5re 58in= 8tate-of -t7e-art te>7nolo=y. T7e 8oft9are 8e>tor >5rrently >ompri8e8 more t7an 55+ >ompanie86 /+E of 97i>7 are Iri87 o9ne:. ome are 8mall6 8pe>iali8e: firm8 operatin= at t7e forefront of 8oft9are :e<elopment te>7nolo=ie8K ot7er8 are lar=er or=ani8ation8 t7at 7a<e 85>>e88f5lly tar=ete: ni>7e mar@et8 on a 9orl:9i:e ;a8i8 an: 7a<e e8ta;li87e: offi>e8 o<er8ea8. .2.1 6ocus on Exports Irelan:38 8mall :ome8ti> mar@et mean8 t7at 85;8tantial =ro9t7 i8 often only attaina;le ;y 8erin= t7e nee:8 of international mar@et8. From t7e o5t8et6 Iri87 8oft9are >ompanie86 anBio58 to eBploit o<er8ea8 mar@et86 :e<elop a 5niA5e international orientation t7at i8 refle>te: in t7e A5ality an: f5n>tionality of t7eir pro:5>t8. A8 a >on8eA5en>e6 more t7an /+E of all in:i=eno58 :e<eloper8 are a>ti<e in o<er8ea8 mar@et8. Ann5al o5tp5t from t7e 8e>tor in 1**5 9a8 e8timate: to ;e 9ort7 F58t 5n:er I5 Billion6 almo8t all of 97i>7 9a8 eBporte:. In:ee:6 to:ay o<er '+E of all PC pa>@a=e: 8oft9are Cin>l5:in= &+E of ;58ine88 appli>ation 8oft9areD 8ol: in "5rope i8 pro:5>e: in Irelan:. Irelan:38 in:i=eno58 8oft9are :e<eloper8 7a<e a 5niA5ely international fo>58 an: a 8tron= pro:5>t ;ia86 8ettin= it apart from many ot7er "5ropean >o5ntrie86 97ere 8ere8 a>>o5nt for a lar=e proportion of 8oft9are a>ti<ity. #ore t7an t9o t7ir:8 of Iri87 >ompanie8 are in<ol<e: in :e<elopin= an:?or mar@etin= 8oft9are pro:5>t8. After t7e U. .6 Irelan: eBport8 more 8oft9are t7an any ot7er >o5ntry in t7e 9orl:6 not on a per >apita ;a8i86 ;5t in a;8ol5te term8O T7e maFor :e8tination8 for Iri87 8oft9are eBport8 are =i<en ;elo9.
Page 2. of .3
-igure 3.," e!tination of Iri!# Software '*+ort! Re<en5e PIR Q millionR 1**1 1**$ 1**5 In:i=eno58 Companie8 2*1 $$& $*+ O<er8ea8 Companie8 )' /1 *$ Total $&5 '1) '/$ 1a5le 3.2" =evenue! of Iri!# Software Indu!try 1**1 1**$ 1**5 In:i=eno58 Companie8 '1E '*E 5/E O<er8ea8 Companie8 */E */E **E 1a5le 3.3" '*+ort! ?(! a @ of total revenueA
-igure 3.." )om+o!ition of Indian Indu!try"
.2.2 People wit' skills T7e @ey to Irelan:38 85>>e88 in t7e 8oft9are ;58ine88 7a8 ;een t7e >ontin5e: a<aila;ility of yo5n=6 9ell-e:5>ate: people. Irelan: 7a8 a 5niA5e :emo=rap7i> profile - 5+E 5n:er 2/ year8 of a=e. A Unite: Nation8 8t5:y 87o98 t7at ;y t7e year 2+++6 '+E of Irelan:38 pop5lation 9ill ;e 5n:er 25 year8 of a=e6 8i=nifi>antly a7ea: of all ot7er >o5ntrie8 in "5rope. Unli@e many >o5ntrie8 t7erefore6 Irelan: i8 in a 8tron= po8ition to re8pon: to t7e =ro9in= 87orta=e of IT 8@ill8 aro5n: t7e 9orl:6 an: i8 :oin= 8o a==re88i<ely.
Page 2/ of .3
A8 ent758ia8ti> "5ropean86 t7e Iri87 7a<e a 8tron= 9or@ et7i>. T7i8 i8 refle>te: in t7e rate of employee t5rno<er6 97i>7 i8 9ell ;elo9 t7e "5ropean a<era=e. It mean8 t7at >ompanie8 enFoy =reater >ommitment from t7eir 8taff6 an: ;enefit from a 7i=7er proportion of eBperien>e: per8onnel an: lo9er ann5al trainin= >o8t8. 5r<ey8 from or=ani8ation8 85>7 a8 t7e Lon:on >on85ltan>y !illiam #. #er>er 87o9 t7at forei=n in<e8tor8 in Irelan: >on8i:er t7e A5ality an: t7e 2>an :o3 fleBi;le attit5:e of Iri87 people to ;e t9o of t7e >o5ntry38 =reate8t a:<anta=e8. Irelan: i8 >ommitte: to f5rt7er :e<elopin= t7e 8oft9are in:58try an: >ontin5e8 to ta@e 8tep8 to en85re t7at t7e a<aila;ility of =ra:5ate8 >omin= t7ro5=7 t7e >o5ntry38 2+S 5ni<er8itie8 an: t7ir: le<el >olle=e8 i8 85ffi>ient to meet t7e :eman:8 of t7e 8e>tor. Clo8e >o-operation ;et9een in:58try an: a>a:emia 7a8 re85lte: in t7e pro<i8ion of a::itional re8o5r>e8 an: pla>e8 for >omp5tin= >o5r8e8 an: al8o in t7e e8ta;li87ment a n5m;er of ne9 8oft9are-relate: >o5r8e8 - 9it7 a =reater emp7a8i8 on t7e lin=5i8ti> 8@ill8 of =ra:5ate8 an: t7e ne9er 8oft9are an: tele>omm5ni>ation8 te>7nolo=ie8. T7e e:5>ation 8y8tem i8 7i=7ly-rate: - a re>ent report ;y t7e International In8tit5te for #ana=ement De<elopment ran@e: it t7e ;e8t in "5rope - an: i8 i:eally =eare: to pro:5>in= 8@ille: employee8 for t7e 8oft9are 8e>tor.
.2.
6ocus for In&estment
P5;li> in<e8tment in 8oft9are :e<elopment >ompanie8 o<er an eBten:e: perio: of time 7a8 ;een lar=ely in:ire>t6 ;5t 7i=7ly 8i=nifi>ant in ma@in= t7i8 one of t7e fa8te8t =ro9in= 8e>tor8 of t7e e>onomy. TaB in>enti<e86 an: =rant8 for employment6 >apital in<e8tment6 trainin= an: re8ear>7 an: :e<elopment 7a<e >ontri;5te: to attra>tin= o<er 1++ forei=n >ompanie8 to 8et 5p operation8 in t7i8 8e>tor 97i>7 a>7ie<e ann5al re<en5e =ro9t7 in of o<er 25E. .2." .ec'nology in place T7e 8ere8 pro<i:e: ;y ;ot7 Iri87 an: international >ompanie8 operatin= in t7i8 area in>l5:e tran8lation an: lo>ali8ation6 :i8@ an: CD RO# man5fa>t5rin=6 ma8terin= an: :5pli>ation6 58er man5al printin=6 pa>@a=in=6 t5rn@ey an: f5lfilment 8ere8 an: te>7ni>al 85pport.
L. 2. In!titute Of Management Studie! Page 20 of .3
Irelan:38 :i=ital tele>omm5ni>ation8 8y8tem i8 one of t7e mo8t a:<an>e: in t7e 9orl: an: ena;le8 8oft9are :e<eloper8 to lin@ a>ro88 t7e 9orl: for real-time :e<elopment a>ti<itie86 an: pro<i:e8 for pan-"5ropean an: 9orl:-9i:e >58tomer 85pport. T7e tran8formation of t7e tele>omm5ni>ation8 infra8tr5>t5re 7a8 >ome a;o5t a8 a re85lt of t7e in<e8tment of I5 Billion ;y Tele>om Irelan: in t7e :e<elopment of f5lly inte=rate: :i=ital net9or@. O<er )5E of all >58tomer8 are no9 >onne>te: to :i=ital eB>7an=e86 97i>7 in t5rn are inter>onne>te: ;y :i=ital tran8mi88ion 8y8tem8.
6inland
T7e =ro9t7 rate of t7e finni87 8oft9are in:58try 7a8 ;een &+E in 1**) T7e le<el of 8oft9are eBport i8 8till lo96 only FI# 5++ million in 1**). It i8 a;o5t fo5r per >ent of t7e total IT re<en5e in Finlan:. T7ere are a;o5t '2+ 8oft9are >ompanie8 in Finlan: o5t of 97i>7 mo8t of t7em are lo>al 8ere >ompanie8 an: :o not 7a<e 8oft9are pro:5>t8 for international mar@et8. T7e re<en5e of 8oft9are pro:5>t ;58ine88 9a8 FI# $.5 ;illion in 1**).
Page 2% of .3
4 INDIAN SOFTWARE EXPORTS - EVOLUTION & STATE POLICIES

In t7i8 8e>tion6 9e 87all try to pro<i:e eBplanation8 for t7e 8pe>ta>5lar =ro9t7 in In:iaN8 8oft9are eBport8 an: rapi: >7an=e8 in t7e 58e of IT ;y fo>58in= on t7e role of >7an=e8 in =o<ernmental poli>ie8. !e 87all al8o try to eBamine t7e pro;lem8 an: opport5nitie8 t7at 8oft9are po8e: for t7e poli>y ma@er8 in t7e In:ian 8tate an: 97at are t7e impli>ation8 of t7e emp7a8i8 on 8oft9are eBport8 to9ar:8 t7e inte=ration of In:iaN8 e>onomy 9it7 9orl: tra:e an: in<e8tment pattern8. Al8o t7e re>o=nition of 8oft9are a8 t7e maFor =ro9t7 8e>tor for earnin= forei=n eB>7an=e in t7e IT Ta8@for>e re>ommen:ation8 a885me 8i=nifi>ant importan>e o<er 7ere an: 9e 87all eBamine t7em in =reat :etail.
".1 Introduction
T7e term li;erali8ation i8 58e: to en>ap85late t7e 8i=nifi>ant 87ift8 in In:iaN8 e>onomi> poli>ie86 87ift8 t7at 7a<e o>>5rre: on a n5m;er of front8. T7e =o<ernment 7a8 ;y alterin= it8 poli>ie8 re=ar:in= tra:e in >omp5ter eA5ipment6 8oft9are6 an: FDI in information an: >omm5ni>ation a>ti<itie86 remo<e: ;lo>@a=e8 to =ro9t7 in t7e 58e of information te>7nolo=y. Con8i8tent 9it7 t7e prote>tioni8t <ie98 to9ar:8 in:58try6 In:iaN8 8oft9are poli>ie8 ;efore 1*/' 9ere >on8i8tent 9it7 a mo:el of 8tate-le: planne: :e<elopment. In t7e mi: 1*/+86 a =5i:e: an: =5ar:e: e>onomi> li;erali8ation too@ pla>e t7at emp7a8i8e: ;ot7 =reater a>>e88 to import8 an: t7e promotion of 8oft9are eBport8 97ile 8till >lo8ely re=5latin= t7e :ome8ti> >omp5ter an: 8oft9are in:58trie8. -o9e<er6 it ;e>ame >learer in 1**1 9it7 t7e 8tate 8lo9ly =ettin= o5t of t7e 9ay. In fa>t in In:ia6 e>onomi> li;erali8ation 9a8 >om;ine: 9it7 poli>ie8 to en>o5ra=e an: :ire>t t7e intro:5>tion6 a:option6 an: 58e of information te>7nolo=ie8 an: to a:<an>e national >apa;ilitie8. Of parti>5lar importan>e in t7i8 re=ar: are t7e e<ol5tion8 of poli>ie8.
to promote t7e 8oft9are in:58try an: 8oft9are eBport8 t7ro5=7 :ep5tation >ontra>t86
Page 2& of .3
to en7an>e information re8o5r>e8 an: 75man 8@ill8 rele<ant to information te>7nolo=ie86 to 87ift t7e >ompo8ition of 8oft9are eBport86 an: to >apt5re a 7i=7er <al5e a::e: 8e=ment of t7e =lo;al 8oft9are in:58try.
T7e BLP 1o<ernment8 late8t initiati<e in 8ettin= 5p t7e IT Ta8@for>e an: for t7e fir8t time in In:ia38 7i8tory tryin= to =et 85==e8tion8 from t7e =eneral p5;li> C58in= t7e 9e;-8ite 7ttp.??999.it-ta8@for>e.>omD 87o98 =o<ernment8 lon=-term >ommitment to9ar:8 t7e =ro9t7 an: :e<elopment of t7i8 in:58try ;y follo9in= t7e poli>y of li;erali8ation.
".2 , *rief 'istory in time 7 Software Policy prior to 1+)"

O<er t7e pa8t '5 year86 In:ian politi>al an: te>7ni>al t7in@ tan@8 8o5=7t to a>7ie<e e>onomi> =ro9t76 mo:erni8ation6 an: in:58triali8ation t7ro5=7 8tate :ire>tion of in<e8tment an: t7e 85;8tit5tion of nationally pro:5>e: pro:5>t8 an: 8ere8 for a>t5al an: potential import8. T7e Plannin= Commi88ion i:entifie: priority area8 for p5;li> an: pri<ate in<e8tment in fi<e-year :e<elopment plan8. Alt7o5=7 t7e ele>troni>8 an: >omp5ter 8e>tor8 9ere not emp7a8i8e: a8 m5>7 a8 t7e role of man5fa>t5rin= in In:ian :e<elopment plan86 t7e8e area8 9ere in>rea8in=ly :i8>588e: ;e=innin= in t7e late 1*&+8 an: early 1*)+8. Follo9in= t7e re>ommen:ation8 of B7a;a Committee6 t7e "le>troni>8 Commi88ion an: t7e Department of "le>troni>8 CDo"D 9ere in8tit5te: in 1*)+. T7e8e ;e>ame t7e primary a=en>ie8 for t7e :e<elopment of In:iaN8 IT 8trate=y. T7e frame9or@ for 8oft9are eBport86 97i>7 7a8 ;een operational 8in>e t7e early 1*)+86 allo9e: t7e import of >omp5ter8 ;y t7o8e 9i87in= to eBport 8oft9are a;o<e 2++E of t7e <al5e of t7e importe: >omp5ter o<er a perio: of 5 year8. In 1*)&6 t7e =o<ernment allo9e: NRI8 to in<e8t in In:ian 8oft9are operation8. If t7ey 9ere 58in= forei=n >apital6 a 8oft9are eBport >ommitment of 1++E of t7e >omp5terN8 <al5e8 o<er a perio: of 5 year8 9a8 to ;e ma:e.
Page 33 of .3
In 1*/16 a re<i8ion of t7e 8oft9are eBport poli>y 9a8 anno5n>e: t7at f5rt7er a>>ent5ate: t7e emp7a8i8 on national 8elf-relian>e. Import8 of >omp5ter8 9ere allo9e: only 9it7 proof of =5arantee: eBport8 in pla>e. Performan>e an: pro=re88 report8 to t7e Do" 9ere reA5ire: e<ery & mont786 an: le=al ;on:8 9ere reA5ire: to >o<er t7e e<ent5ality t7at t7e 8>7e:5le of eBport o;li=ation8 9a8 not met o<er t7e fi<e-year perio:. In retro8pe>t6 one mi=7t >on8i:er t7at t7e 7i=7 eBport reA5irement8 for importe: >omp5ter8 mi=7t 7a<e >ontri;5te: to9ar:8 t7e TeBport of 75man re8o5r>e8T a8 a 8trate=y to eBpan: 8oft9are eBport8. T7i8 e88entially in<ol<e: lo9er reA5irement8 for import8 of eA5ipment to ;5il: in:58try >apital an: infra8tr5>t5re :ome8ti>ally in In:ia.
".
1+)"81++-( 9uided and 9uarded Li*eralisation
T7e term 8ea >7an=e i8 9i:ely 58e: to :e8>ri;e t7e 8i=nifi>ant poli>y 87ift t7at ;e=an to o>>5r in :i8>588ion8 lea:in= 5p to t7e >omp5ter poli>y of No<em;er 1*/'. Only one mont7 after #r. RaFi< 1an:7i ;e>ame t7e Prime #ini8ter6 t7e >omp5ter poli>y re8ol<e: a n5m;er of on=oin= :e;ate8. T7e ne9 poli>y 9a8 prompte: ;y a n5m;er of emer=in= >on:ition8 in =lo;al >omp5ter 8ere8 mar@et8. T7e =ro9in= 9orl: :eman: for :ata pro>e88in= an: 8oft9are 8ere8 9a8 8een to pre8ent t7e opport5nity for In:ian >ompanie8 to 8ell >omp5ter 8oft9are an: 8ere8 a;roa:. A>>or:in= to 8ome6 In:ia >o5l: leapfro= t7e in:58trial a=e6 =oin= from ;ein= an 5n:er:e<elope: a=rarian e>onomy :ire>tly to ;e>omin= an information e>onomy in an information re<ol5tion. T7e 1*/& 8oft9are poli>y 7a: t7e o;Fe>ti<e8 of ra:i>ally eBpan:in= In:ian 8oft9are eBport8 an: of >7an=in= t7e >ompo8ition of 8oft9are eBport8. It 7a: t7e follo9in= o;Fe>ti<e8.
to promote 8oft9are eBport8 to ta@e a A5ant5m F5mp an: to >apt5re a 8iHea;le 87are in t7e international 8oft9are mar@et6 to promote t7e inte=rate: :e<elopment of 8oft9are in t7e >o5ntry for :ome8ti> an: eBport mar@et86 to 8implify t7e eBi8tin= pro>e:5re8 to ena;le t7e 8oft9are in:58try to =ro9 at a fa8ter pa>e6 to e8ta;li87 a 8tron= ;a8e for t7e 8oft9are in:58try in t7e >o5ntry6
Page 31 of .3
to promote t7e 58e of >omp5ter8 for :e>i8ion ma@in=6 an: to in>rea8e 9or@ effi>ien>y.
T7e mea85re8 :e8i=ne: to fa>ilitate t7e a>7ie<ement of t7e8e o;Fe>ti<e8 in>l5:e:.

Li;erali8ation of a>>e88 to importe: inp5t8 reA5ire: ;y 8oft9are firm8 De-li>en8in= of pro:5>tion >apa>ity for >omp5ter8 an: ele>troni>8 eA5ipment. A 87ift from t7e 8tate-le: :e<elopment of t7e national 8oft9are an: >omp5ter in:58try to9ar:8 a =reater role for t7e In:ian pri<ate 8e>tor Allo9in= 8olely o9ne: forei=n firm8 to operate 1++E eBport-oriente: 5nit8 9it7in In:ia Better a>>e88 to tele>omm5ni>ation8 8ere8 Re:5>tion of import tariff8 an: in>ome taBe8 A88i8tan>e in t7e trainin= an: e:5>ation of >omp5ter 8oft9are per8onnel. A 87ift to9ar:8 a national fo>58 for ti=7ter inte=ration 9it7 international >omp5ter 8ere >orporation8 an: =lo;al 8ere8 mar@et8.
A n5m;er of national a=en>ie86 pro=ram86 an: poli>ie8 operatin= in a mar@et >onteBt 9ere initiate: to fa>ilitate t7e a>7ie<ement of 8oft9are eBport o;Fe>ti<e8. T7e8e in>l5:e:. oft9are De<elopment A=en>y in t7e Do"6
A 8erie8 of 8oft9are te>7nolo=y par@8 t7at pro<i:e: t7e tele>omm5ni>ation infra8tr5>t5re nee:e: ;y t7e 8oft9are >ompanie86 Or=ani8ation of 8oft9are eBport 8eminar8 ;y t7e tra:e De<elopment A5t7ority an: T7e >reation of t7e ele>troni>8 an: Comp5ter oft9are "Bport Promotion Co5n>il6 t7e latter t9o ;ein= 8pon8ore: ;y t7e #ini8try of Commer>e. By 1**+6 t7ere 9ere 8e<eral maFor form8 of 8oft9are eBport8 from In:ia. T7e o<erall <ol5me of eBport8 of 8oft9are an: 8ere8 :5rin= 1*/*-1**+ 9a8 e8timate: to ;e aro5n: I11+ million6 5p from I2& million in 1*/5 ;efore t7e 8oft9are poli>y 9a8 intro:5>e:. T7e maFority of eBport8 - aro5n: /+E - 9ere in t7e form of :ep5tation86 on-8ite >on85ltan>y6 profe88ional 8ere86 or ;o:y 87oppin=. oft9are an: 8ere eBport8 al8o in>l5:e: proFe>t8 >on85ltan>y or t5r@ey proFe>t8 - 97erein t7e o<erall
Page 32 of .3
mana=ement of t7e 9or@ 9a8 in t7e 7an:8 of t7e In:ian >on85ltin= firm rat7er t7an of t7e >lient - t7at >ompri8e: aro5n: 15E of eBport8. Analy8t8 ar=5e: t7at f5rt7er eBport =ro9t7 9ere to ;e 8o5=7t in t7e area8 of 8oft9are :e<elopment ;a8e: on >lient8N 8pe>ifi>ation86 In:ian ;a8e: 8oft9are eBport operation86 8y8tem8 maintenan>e an: 8ere Co5t8i:e In:iaD6 an: trainin= 8t5:ent8 an: retrainin= profe88ional8.
"." Industry E&aluation of Software Policy in 1++Amon= t7e poli>y A5e8tion8 fa>in= t7e In:ian =o<ernment 9ere. 1. T7e appropriatene88 of t7e poli>yN8 o;Fe>ti<e8. 2. T7e importan>e of alterin= t7e >ompo8ition of 8oft9are eBport8. $. T7e nat5re of li;erali8ation6 =o<ernment 85pport or ot7er poli>y >7an=e8 reA5ire: in or:er to a>7ie<e t7o8e o;Fe>ti<e8.
".".1 ,ppropriateness of policy3s o*jecti&es A A5e8tion t7at 9a8 rarely >on8i:ere: at t7i8 point 9a8 t7e appropriatene88 of t7e 8oft9are poli>yN8 eBport o;Fe>ti<e8 in term8 of national information te>7nolo=y =oal8. T7e =oal of rapi:ly eBpan:in= eBport8 of 8oft9are an: >omp5ter 8ere8 <ia :ep5tation 9a8 pro;lemati> in t7at t7e a>7ie<ement of t7i8 =oal ran t7e ri8@ of ero:in= In:iaN8 8tren=t78 an: of eBpropriatin= re8o5r>e8 a9ay from meetin= national nee:8 an: :eman:8. "Bportin= 8oft9are an: >omp5ter 8ere8 <ia :ep5tation aro8e a8 a re8pon8e to t7e :eman:8 a;roa:6 t7e >apa;ilitie8 t7at In:ian8 po88e88e:6 t7e la>@ of effe>ti<e a>>e88 to forei=n mar@et86 an: t7e lo9er a<aila;ility of information te>7nolo=ie8 in In:ia. T7i8 7elpe: :imini87 97at 9a8 8een to ;e t7e In:ian >omparati<e a:<anta=e. traine: an: >apa;le people. T7e NA CO# 8et t7e =oal of re:5>in= t7e per>enta=e of eBport8 in :ep5tation >ontra>t8 from t7e /+- /5E in 1**+ to aro5n: 5+E ;y 1**5. !it7 a 8i=nifi>ant =ro9t7 in eBport86 7o9e<er6 e<en t7e re:5>e: proportion 9o5l: 8till repre8ent a tremen:o58 a;8ol5te eBpan8ion in t7e n5m;er of people 5n:erta@in= on-8ite 9or@ o5t8i:e In:ia. T7e former 7ea: of C#C6 P.D. Lain note: t7at to 8i=nifi>antly eBpan: t7e 8oft9are eBport86 8ome of t7e ;e8t people 9o5l: ;e ta@en a9ay from t7e 8@ille: 9or@ for>e
Page 33 of .3
a<aila;le to t7e In:ian >omp5ter 8ere8 in:58try. Ro;ert >79are of t7e !orl: Ban@ in an O>to;er 1*/* >on85ltation on t7e 9orl: 8oft9are in:58try in Ne9 Del7i6 propo8e: t7at =o<ernmental poli>y 87o5l: en>o5ra=e t7e :e<elopment of a p5;li> an: pri<ate national in:58try a8 9ell a8 t7e :e<elopment of a pri<ate 8e>tor eBportoriente: in:58try.
".".2 ,ltering t'e composition of Software Exports A 8e>on: poli>y A5e8tion relate: to t7e ne>e88ity of effort8 to alter t7e >ompo8ition of 8oft9are eBport8. Un:er eBi8tin= >on:ition86 a lo9 portion of t7e <al5e-a::e: in t7e 9orl: 8oft9are in:58try 9a8 >apt5re: ;y In:ian firm86 97o8e 9or@er8 mi=7t ;e in<ol<e: in ta8@8 85>7 a8 >o:in= or te8tin= 8oft9are rat7er t7an in mana=in= proFe>t86 t7e :e8i=n of 8oft9are6 or t7e inte=ration of :ifferent >omp5ter an: 8oft9are 8y8tem8. O<er t7e lon= term6 In:ian >ompanie8 ran t7e ri8@ of ;e>omin= 8t5>@ in t7e lo9 te>7nolo=y an: lo9 <al5e a::e: a>ti<itie8 of 9orl: 8oft9are pro:5>tion6 85>7 a8 9ritin= >o:e or >on<er8ion8 of eBi8tin= 8oft9are pro=ram8 to 9or@ 9it7 ne9 >omp5ter8 or operatin= 8y8tem8. In 1**+6 a n5m;er of 8tep8 9ere i:entifie: ;y in:58try repre8entati<e86 97ere;y In:ian firm8 >o5l: 87ift t7e >ompo8ition of 8oft9are eBport8. T7e8e in>l5:e:. :e<elopin= lon= term relation87ip8 9it7 >lient86 ;5il:in= >onne>tion8 9it7 forei=n affiliate86 :e<elopin= 8oft9are for 7ar:9are man5fa>t5rer8 prior to t7e relea8e of ne9 eA5ipment6 8ettin= 5p >orporate 8ere >entre8 in In:ia6 an: >on8tr5>tin= allian>e8 amon= In:ian 8oft9are 8ere8 an: ot7er a>ti<itie8 85>7 a8 en=ineerin= or a>>o5ntin= in or:er to :e<elop ni>7e 8pe>iali8ation38. At t7at time6 many :iffi>5ltie8 9ere re>o=ni8e: in effort8 to alter t7e >ompo8ition of eBport8. A8 a na8>ent in:58try6 many In:ian 8oft9are firm8 la>@e: t7e ne>e88ary eBperien>e in mana=ement 8@ill8. In:ia 9a8 al8o =eo=rap7i>ally remote from important 9orl: mar@et86 ma@in= it :iffi>5lt to ;5il: relation8 9it7 pro8pe>ti<e >lient8. -o9e<er6 alon=8i:e t7e8e :iffi>5ltie86 t7ere 9ere 8i=nifi>ant a:<anta=e8 in
L. 2. In!titute Of Management Studie! Page 3, of .3
;rin=in= 9or@ ;a>@ to In:ia for In:ian ;a8e: 8oft9are eBport operation8. T7e8e a:<anta=e8 in>l5:e: t7e lo9er >o8t8 of li<in= an: t7e opport5nity to remain 9it7in t7eir o9n >5lt5re an: lo9er a:mini8trati<e >o8t8 for >ontra>t8. Lar=e =eo=rap7i> :i8tan>e8 al8o allo9e: for t7e remote 58e of >lient83 >omp5tin= fa>ilitie8 <ia tele>omm5ni>ation8 97ile it 9a8 ni=7t time in t7e !e8t6 re:5>in= >o8t8 an: eBpan:in= t7e 58e of >lient83 >omp5ter re8o5r>e8.
".".
:ature of li*eralisation; go&ernment support or ot'er policy c'anges re<uired
e<eral poli>y >7an=e8 on t7e part of t7e In:ian =o<ernment to allo9 =reater a>>e88 to forei=n inp5t8 85>7 a8 >omp5ter86 8oft9are6 an: trainin= 9ere t7erefore ne>e88ary to fa>ilitate t7e a>7ie<ement of t7e8e =oal8. T7e area8 in 97i>7 t7e nee: for poli>y >7an=e8 9a8 e8pe>ially emp7a8i8e: 9ere.

ne>e88ity of o;tainin= import li>en8e8 for eA5ipment6 >ontin5in= tariff8 on importe: 8oft9are 5n:er t7e open =eneral li>en8e 8>7eme6 7i=7 eBport performan>e >ommitment8 to off8et t7e forei=n eB>7an=e >o8t of forei=n eA5ipment6 an: impro<e: a<aila;ility6 A5ality6 an: pri>e of inp5t8 o;taine: 9it7in In:ia.
T7e :e<elopment of 8tron=er national an: international prote>tion for intelli=en>e for intelle>t5al property ri=7t8 9a8 al8o 8een a8 e88ential to t7e :e<elopment of t7e 8oft9are in:58try. Forei=n 8oft9are firm8 t7at mi=7t 8en: 9or@ to In:ia 9ere 7e8itant to :o 8o if t7ey >o5l: not ;e 85re of t7e prote>tion of t7eir proprietary ri=7t8.
".# Economic Li*eralisation 8 1++1 8 1++)

Poli>ie8 allo9e: 51E eA5ity 7ol:in=8 for 8oft9are >ompanie8 in<e8tin= in In:ia. T7at i8 to 8ay6 >7an=e8 in t7e r5le8 for forei=n :ire>t in<e8tment :re9 >apital to In:ia an: a>>elerate: t7e =ro9t7 of In:ian-;a8e: 8oft9are a>ti<itie8. C7an=e8 in in<e8tment r5le8 allo9e: more in<e8tment ;y forei=n 8oft9are >ompanie8 in pro:5>tion fa>ilitie8 in In:ia. T7i8 >reate: an e<en =reater :eman: for traine: 9or@er8 an: allo9e:
Page 3. of .3
eBpan8ion into ne9 area8 of 8oft9are an: >omp5ter 8ere86 85>7 a8 pro<i:in= In:ian 8oft9are :e8i=n or :ata 8ere >entre8 for t7e =lo;al operation8 of tran8national >orporation8. Amon= t7e U >ompanie8 9it7 8oft9are operation8 in In:ia ;y t7e fir8t 7alf of t7e :e>a:e 9ere TeBa8 In8tr5ment86 #otorola6 -5=7e86 -e9lett-Pa>@ar:6 IB#6 Ora>le6 On9ar: No<ell an: Citi>orp. T7e o<erall role of t7e 8tate6 t7586 87ifte: in 1**1. T7e ne9 mea85re8 intro:5>e: 9ere.

t7e <irt5al a;olition of in:58trial li>en8in=6 t7e :il5tion of #onopolie8 A>t reA5irement8 t7at eBpan8ion8 or mer=er8 ;e appro<e:6 t7e relaBation of F"RA pro7i;ition8 on forei=n >ompanie8 7ol:in= a maFority 8ta@e in >ertain In:ian operation86 t7e a;olition of import li>en8e86 mo<e8 to9ar:8 >on<erti;ility of t7e r5pee6 an: t7e lo9erin= of >58tom8 :5tie8. oft9are eBport8 9ere al8o ai:e: ;y a :e>line in :i8p5te8 o<er intelle>t5al property
ri=7t8 an: a le88enin= of >omplaint8 from t7e international 8oft9are in:58try. Cr5>ial to t7e :ep5tation 8trate=y 9a8 t7e re>epti<ity of t7e 7o8t >o5ntry to temporary 9or@er8 an: potentially permanent mi=rant8. Dep5tation 9a8 al8o >ontin=ent on t7e a;ility to o;tain a <i8a A5i>@ly in or:er to allo9 a:mittan>e for a 8pe>ifi> 9or@er 97en t7at 9or@erN8 8@ill8 9ere reA5ire:. In 1**2-*$6 for in8tan>e $&E of In:iaN8 8oft9are eBport8 9ere in t7e form of on-8ite >on85ltan>y in t7e Unite: tate86 an: t7e U a>>o5nte: for 5/E of In:iaN8 o<erall 8oft9are eBport8. In 1**$6 ele>tri>al en=ineer8 an: 8oft9are 9or@er8 in t7e U ;e=an to >laim t7at t7eir Fo; openin=8 an: 9a=e le<el8 9ere ;ein= 5n:er>5t ;y t7e eBten8i<e 58e of temporary 9or@er8 ;y lar=e 8oft9are >ompanie8. T7e U Department of la;o5r re8pon:e: to t7e8e >on>ern8 in De>em;er 1**'6 ;y i885in= a ne9 8et of re=5lation8 for =rantin= <i8a8 to =5e8t 9or@er8. Finally t7e In:ian 8oft9are in:58try al8o ;enefite: from t7e en: of t7e Col: 9ar. Certain re8tri>tion8 on t7e eBport of information te>7nolo=ie86 97i>7 7a: o;8tr5>te:
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In:iaN8 a>>e88 to 8ome >omp5ter8 an: operatin= 8y8tem86 9ere remo<e: ;y t7e U in >onF5n>tion 9it7 :i88ol<in= t7e Coor:inatin= Committee on #5ltilateral "Bport8 Control CCOCO#D.
".$ PM3s I. .ask force 8 .'e :ew I. Policy of t'e 9o&ernment

T7e ne9 BLP 1o<ernment 7a8 re>o=ni8e: t7e importan>e of IT in In:ia38 eBport8. T7ey 7a<e form5late: t7e ne9 IT poli>y <ia t7e P#38 IT Ta8@ for>e. T7e IT Ta8@ For>e 7a8 prepare: t7ree :o>5ment8 t7at eBten8i<ely :etail t7e e<ol5tion an: t7e f5t5re of t7e In:ian IT in:58try an: al8o t7e re>o=nition of t7e fa>t t7at >omm5ni>ation8 infra8tr5>t5re 7a8 to play an important part in t7e :e<elopment of t7i8 in:58try. -ere 9e :i8>588 eB>erpt8 from t7e main poli>y :o>5ment UInformation te>7nolo=y A>tion PlanV. T7e pream;le of t7e poli>y eBemplifie8 t7e 1o<ernment38 >ommitment.
PREAM#LE TO IT A=TION PLAN
For In:ia6 t7e ri8e of Information Te>7nolo=y i8 an opport5nity to o<er>ome 7i8tori>al :i8a;ilitie8 an: on>e a=ain ;e>ome t7e ma8ter of oneN8 o9n national :e8tiny. IT i8 a tool t7at 9ill ena;le In:ia to a>7ie<e t7e =oal of ;e>omin= a 8tron=6 pro8pero58 an: 8elf->onfi:ent nation. In :oin= 8o6 IT promi8e8 to >ompre88 t7e time it 9o5l: ot7er9i8e ta@e for In:ia to a:<an>e rapi:ly in t7e mar>7 of :e<elopment an: o>>5py a po8ition of 7ono5r an: pri:e in t7e >omity of nation8. T7e 1o<ernment of In:ia 7a8 re>o=ni8e: t7e potential of Information Te>7nolo=y for rapi: an: all-ro5n: national :e<elopment. T7e National A=en:a for 1o<ernan>e6 97i>7 i8 t7e 1o<ernmentN8 poli>y ;l5eprint6 7a8 ta@en :5e note of t7e Information an: Comm5ni>ation Re<ol5tion t7at i8 89eepin= t7e =lo;e. A>>or:in=ly6 it 7a8 man:ate: t7e 1o<ernment to ta@e ne>e88ary poli>y an: pro=rammati> initiati<e8 t7at 9o5l: fa>ilitate In:iaN8 emer=en>e a8 an Information Te>7nolo=y 5perpo9er in t7e 87orte8t po88i;le time.
T7i8 >ommitment to Information an: Comm5ni>ation Te>7nolo=y in t7e National A=en:a for 1o<ernan>e 7a8 ;een for>ef5lly arti>5late: ;y Prime #ini8ter 7ri Atal Bi7ari ,aFpayee on a n5m;er of o>>a8ion8. In 7i8 fir8t tele<i8e: a::re88 to t7e Nation
Page 30 of .3
on #ar>7 256 1**/6 t7e Prime #ini8ter :e>lare: t7at promotion of Information Te>7nolo=y 9o5l: ;e one of 7i8 1o<ernmentN8 fi<e top prioritie8.
T7e main :o>5ment of t7e poli>y 7i=7li=7t8 t7e important t7r58t area8. It =oe8 on to 8ay t7e follo9in=. B1#e ;overnment of India7 recogni!ing t#at t#e im+re!!ive growt# t#e country #a! ac#ieved !ince t#e mid:'ig#tie! in Information 1ec#nology i! !till a !mall +ro+ortion of t#e +otential to ac#ieve7 has resolved to make India a Global IT Superpower and a front-runner in the age of Information Revolution . 1#e ;overnment of India con!ider! I1 a! an agent of tran!formation of every facet of #uman life w#ic# will 5ring a5out a knowledge based society in the twenty-first century. (! a fir!t !te+ in t#at direction7 t#e following revi!ion! and addition! are made to t#e e*i!ting Policy and Procedure! for removing 5ottleneck! and ac#ieving !uc# a +re:eminent !tatu! for India.C A8 >an ;e 8een t7e t7r58t of t7e =o<ernment poli>ie8 C>5rrent an: t7e f5t5reD are aime: at a>7ie<in= t7ree ;a8i> o;Fe>ti<e8.

to ma@e In:ia a 1lo;al IT 5perpo9er ;y ;ein= a front-r5nner in t7e a=e of Information Re<ol5tion an: tran8form e<ery fa>et of 75man life to ;rin= a;o5t a @no9le:=e ;a8e: 8o>iety in t7e t9enty-fir8t >ent5ry
To a>>ompli87in= t7e8e ;a8i> o;Fe>ti<e8 t7e IT poli>y 7a8 ma:e re>ommen:ation8 in t7e follo9in= area8. 1. Info-Infrastructure rive" (ccelerate t#e drive for !etting u+ a $orld cla!! Info Infra!tructure wit# an e*ten!ive !+read of -i5re O+tic 6etwork!7 Satcom 6etwork! and $irele!! 6etwork! for !eamle!!ly interconnecting t#e Local Informatic! Infra!tructure ?LIIA7 6ational Informatic! Infra!tructure ?6IIA and t#e ;lo5al Informatic! Infra!tructure ?;IIA to en!ure a fa!t nation:wide on!et of t#e I61'=6'17 '91=(6'1! and I61=(6'1!. 2. Target IT!" - #$" $it# a +otential 2 trillion dollar ;lo5al I1 indu!try 5y t#e year 233%7 +olicy am5iance will 5e created for t#e Indian I1 indu!try to target for
Page 3% of .3
a D .3 5illion annual e*+ort of I1 Software and I1 Service! ?including I1:ena5led !ervice!A 5y t#i! year7 over a commen!urately large dome!tic I1 market !+read all over t#e country. 3. IT for all by %$$&" (ccelerate t#e rate of P) E !et:to+:5o* +enetration in t#e country from t#e 1&&% level of one +er .33 to one +er .3 +eo+le along wit# a univer!al acce!! to Internet E '*tranet!E Intranet! 5y t#e year 233%7 wit# a flood of I1 a++lication! encom+a!!ing every walk of economic and !ocial life of t#e country. 1#e e*i!ting over /337333 Pu5lic 1ele+#one! E Pu5lic )all Office! ?P)O!A will 5e tran!formed into +u5lic tele:info: centre! offering a variety of multimedia Information !ervice!. 1oward! t#e goal of I1 for all 5y 233%7 +olicie! are +rovided for !etting t#e 5a!e for a ra+id !+read of I1 awarene!! among t#e citiFen!7 +ro+agation of I1 literacy7 networked ;overnment7 I1:led economic develo+ment7 rural +enetration of I1 a++lication!7 training citiFen! in t#e u!e of day:to:day I1 !ervice! like tele:5anking7 tele:medicine7 tele:education7 tele: document! tran!fer7 tele:li5rary7 tele:info:centre!7 electronic commerce7 Pu5lic )all )entre!7 among ot#er!G and training7 8ualitatively and 8uantitatively7 world cla!! I1 +rofe!!ional!. No9 9e 87all :i8>588 t7e main pro<i8ion8 t7at 7a<e ;een en>ap85late: 5n:er t7e a;o<e ;roa: area8 to a>7ie<e t7e o;Fe>ti<e8. ".$.1 Info Infrastructure dri&e T7e main poli>y >on8i:eration8 rele<ant for 8oft9are eBport8 5n:er t7i8 are. ?0A -or !etting u+ ISP O+eration! 5y com+anie!7 there shall be no license fee for first five years and after five years a nominal license fee of one rupee will 5e c#arged. '*i!ting Software )entre! 5y t#em!elve! may not 5e a5le to fulfil t#e #ig# target! now !et for t#e I1 indu!try 5y t#e year 233%. International e*+erience #a! !#own t#at #i:tec# indu!trie! flouri!# e!!entially in t#e rural #interland adjacent to citie! wit# modern telecom and communication infra!tructure and to+ cla!! #i:tec# educationalEre!earc# in!titution!. India will promote such '(i-tech (abitats' in the rural hinterland ad)acent to suitable cities . -or t#i! +ur+o!e !uita5le autonomou! !tructure! will 5e de!igned and +rogre!!ive regulation! will 5e framed to facilitate infra!tructural !elf:contained !elf:
?1%A
Page 3& of .3
financed >i:1ec# >a5itat! of #ig# 8uality. Initially7 five such (i-Tech (abitats shall be planned and implemented in the rural hinterland of the cities* +angalore, (yderabad, -une, elhi and +hubaneswar . It i! e!timated t#at +rogre!!ively .3 !uc# >i:1ec# >a5itat! can 5e via5ly !et u+ 5y em+owering t#e State ;overnment! to autonomou!ly nucleate t#em wit#in a tec#nologically +rogre!!ive and admini!tratively li5eral !et of guideline! to 5e +re+ared 5y a !+ecial $orking ;rou+ on >i:1ec# I1 >a5itat! to 5e !et u+ 5y t#e 1a!k -orce. T7e pro<i8ion8 no ) an: 1/ e88entially relate to t7e 8ettin= 5p of infra8tr5>t5re for t7e 8oft9are in:58try. T7e pro<i8ion8 are important in t7e li=7t of t7e fa>t t7at it i8 for t7e fir8t time t7at t7e 1o<ernment 7a8 <ery >learly arti>5late: t7e importan>e of -i-Te>7 >entre8 for t7e :e<elopment of 8oft9are in:58try. T7e8e 7i-te>7 >entre8 t7at 9o5l: pro<i:e 7i=7 A5ality >omm5ni>ation lin@8 are eBtremely e88ential for t7e off87ore :e<elopment >entre8 t7at >ontri;5te a ;5l@ of 8oft9are eBport8 from In:ia. Be8i:e8 it al8o important to pri<ati8e t7e Internet ere8 in:58try C97i>7 8in>e ;een 8tarte: ;y =rantin= li>en>e8 for t7e pri<ate 8ere pro<i:er8 to operateD to pro<i:e 7i=7 ;an:9i:t7 lin@8 to t7e 9orl: 8oft9are mar@et8 an: at a >ompetiti<e pri>e8. !7at i8 no9 nee:e: i8 to remo<e t7e monopoly of , NL to pro<i:e international =ate9ay 8ere8 an: allo9 t7e pri<ate operator8 to operate t7eir o9n international =ate9ay8 for :ata-tran8mi88ion.
".$.2 .arget I.E=8#For >reatin= a >on=enial am;ien>e for eBporter8 of IT oft9are an: IT ere8
Cin>l5:in= IT ena;le: 8ere8D to rea>7 t7e eBport tar=et of U I 5+ ;illion ;y t7e year 2++/6 t7e follo9in= in>enti<e8 87all ;e pro<i:e: Ct7e8e are :i8>588e: alon= 9it7 t7e impli>ation of ea>7 in>enti<e in t7e follo9in= pa=e8D. ?1&A?cA I1 Software !#all 5e entitled for zero customs duty and zero e.cise duty. ?23A I1 Software and I1 Service! com+anie!7 5eing con!tituent! of t#e knowledge indu!try7 shall be e.empted from inspection by Inspectors like those for /actory, +oiler, !.cise, 0abour, -ollution1!nvironment etc.7
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T7e8e 8e>tion8 e88entially refer to t7e eBemption8 ;ein= =i<en to t7e 8oft9are eBporter8 from t7e <ario58 >ontrol8 an: :5tie8 of t7e 1o<ernment of In:ia6 97i>7 9o5l: re85lt in t7eir fa8ter :e<elopment. oft9are import :5tie8 9ill =o t7at 9o5l: =o a lon= 9ay to pro<i:e t7e m5>7 nee:e: ;oo8t to t7e in:58try. Be8i:e8 eBemptin= t7e in:58try from t7e >ontrol of <ario58 mini8trie8 9ill re:5>e t7e =e8tation perio: of 8oft9are proFe>t8 ;y a lot of time t7ere;y re:5>in= t7e >o8t of 8ettin= 5p 85>7 a 5nit. ?2/A 1#e Mini!try of )ivil (viation !#all i!!ue t#e following notification!E amendment! in t#e regulation!" H H H !.port shipment time for air cargo will be reduced to less than %2 hours. IJnown S#i++erI will 5e introduced to avoid delay! on account of cooling off +eriod. )argo com+anie! and ot#er a!!ociated agencie! to allow con!olidation of e*+ort air cargo. T7i8 9o5l: re:5>e t7e time la= an: 7elp in meetin= t7e e88ential :eli<ery :ea:line86 97i>7 i8 a=ain eBtremely important. C5rrently eBport >an ta@e a8 lon= a8 15 :ay86 97i>7 re:5>e8 t7e in:58try38 >ompetiti<ene88 in :eli<ery of 8oft9are <i8-W-<i8 ot7er >ompetitor8. ?20A Section %3 >>' of t#e Income 1a* (ct +rovide! for income ta* e*em+tion to +rofit! derived from !oftware and !ervice! e*+ort!. 1#i! !ection !#all 5e amended a! follow!" H H H 1#e e*i!ting formula will 5e !o c#anged t#at ta* on +rofit! !#all not #ave any relation to dome!tic turnover. The definition of software and e.port turnover will be changed so as to include IT services e.ports. The benefits of this Section for income ta. e.emption to profits from e.ports will be e.tended to supporting IT Software 3 IT Services developers4
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T7i8 9o5l: 7elp a lot of >ompanie8 Ca lar=e part of In:ian 8oft9are eBport8 are in IT 8ere8D to plo5=7 ;a>@ t7eir earnin=8 to t7eir ;58ine88 an: =ain 8i=nifi>ant a:<anta=e8 ;y re:5>in= t7e >o8t of >apital. ?33A (! t#e traditional met#od of a!!et:5a!ed funding of working ca+ital would not meet t#e ade8uate and timely re8uirement! of fund of t#e !oftware !ector7 a differential and fle*i5le a++roac# !#all 5e ado+ted 5y giving !+ecial di!+en!ation toward! working ca+ital re8uirement! of t#i! !ector in view of t#e uni8ue nature of t#e indu!try. (ccordingly7 =<I !#all i!!ue7 5y 1.t# (ugu!t 1&&%7 new guideline! wit# regard to working ca+ital re8uirement! for t#e I1 !oftware and !ervice! !ector w#ic# would 5e 5a!ed on !im+le criteria !uc# a! turnover. +anks shall be advised to give %# percent of the contract value for 5& months, with the first si. months as term loan 6without collaterals7 and from the 8th month onwards annualized 9ash /low Statements shall be accepted instead of collaterals4 ?3,A IT software and services industry shall be treated as a -riority Sector by banks for the ne.t five years. 1#i! would #el+ to meet t#e re8uirement! of I1 !oftware and !ervice! e*+ort!7 and al!o t#e I1 indu!try and a++lication! wit#in t#e country. :a)or banks will be advised to create specialised IT financing cells in important branches7 w#ere I1 Software and Service! unit! are !ufficiently large in num5er. ?3.A Performance in t#i! dimen!ion will 5e monitored 5y t#e Mini!try of -inance. (gain!t t#e +re!ent e!timate of =!. ,33 corer! of working ca+ital for t#e indu!try7 the amount shall be increased to around 5%$$ corers 5y t#e year 2333 !u5ject to t#e 5road criteria of +ro:rata increa!e for t#e +ro!+ective re8uirement! 2, mont#! a#ead a! com+ared to t#e actual of t#e current re8uirement! at any given time. (! 8uantitative targeting i! not a++ro+riate7 a !y!tem will 5e +ut in +lace7 w#ic# would ena5le !u5!tantial increa!e in working ca+ital +rovided 5y t#e 5ank!. e>tion8 $$6$' G $5 relate to t7e =o<ernment effort8 to pro<i:e 9or@in= >apital f5n:8 to t7e in:58try6 97i>7 i8 an important pro<i8ion ;e>a58e t7e in:58try 7a8 ;een pla=5e:
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;y 9or@in= >apital >ri8i8 for lon= 97i>7 7a8 7in:ere: it8 =ro9t7. T7e =o<ernment38 effort8 are fo>588e: in t7e follo9in= :ire>tion8.

Pro<i:e a:<an>e loan8 for t7e eBport >ontra>t8 t7at 7a<e ;een alrea:y =at7ere:. P5t IT eBport8 in priority 8e>tor len:in= 8>7eme6 97i>7 9o5l: for>e ;an@8 an: FI8 to pro<i:e a >ertain per>enta=e of t7eir ann5al len:in=38 to t7i8 8e>tor an: at a m5>7 lo9er >o8t an: al8o 9it7o5t =ettin= >re:it ratin=86 97i>7 i8 a time >on85min= pro>e88.
In>rea8e t7e e8timate of t7e !or@in= Capital reA5irement8 of t7e in:58try from t7e >5rrent '++ Corer8 to 12++ Corer8 Ctre;lin= of t7e ori=inal amo5ntD.
?30A
The banks shall be allowed to invest in the form of e;uity in dedicated venture capital funds meant for I1 indu!try a! +art of t#e . +ercent of increment in de+o!it! currently allowed for !#are!.
C$/D
+anks1/Is like I9I9I, I +I, <TI and S+I shall set up )oint ventures with Indian or foreign companies for setting up of at least four different venture capital dedicated funds of a corpus of not less than #$ corers each to cater to t#e credit need of t#e indu!try. Suc# venture ca+itali!t! may 5e allowed to !et off lo!!e! in one inve!ted com+any and +rofit in anot#er inve!ted com+any during t#e 5lock of year! for t#e +ur+o!e of income ta*
In t7e a;o<e pro<i8ion8 t7e =o<ernment 7a8 finally reali8e: t7at t7e 85>>e88 of IT in:58try i8 :epen:ent on ,ent5re Capital finan>in=6 97i>7 7a8 ;een t7e :ri<in= for>e for t7e 85>>e88 of IT >ompanie8 in U . T7i8 mo<e 9o5l: =i<e a fillip to t7e =ro9t7 of t7e in:58try an: al8o t7ro5=7 t7e ret5rn of many In:ian r5n Californian 8oft9are >ompanie8 97o 7a<e 7i=7li=7te: t7e a;8en>e of <ent5re >apital to ;e t7e main rea8on for t7eir rel5>tan>e to in<e8t in In:ia. ?,1A ollar 0inked Stock =ptions to employees of Indian Software companies were announced in the 5>>& +udget and detailed guideline! on t#i! #ave 5een i!!ued 5y '(7 Mini!try of -inance. 1#i! !#all 5e modified in accordance wit# t#e definition of I1 Software and I1 Service! given under ?1&A?aA and ?5A a5ove.
Page ,3 of .3
!mployee Stock option schemes for stock listed in India would also be encouraged. (l!o7 clarification !#all 5e i!!ued t#at income ta* i! a++lica5le only at t#e time of !ale and not at t#e time of e*ci!e of o+tion. For a 8oft9are in:58try t7e only tan=i;le a88et8 are it8 people an: a8 85>7 t7ey m58t ;e 7i=7ly re9ar:e: to pro:5>e t7e le<el8 of moti<ation8 t7at are nee:e: to en7an>e pro:5>ti<ity. T7i8 mo<e re>o=ni8e8 t7e importan>e of ne9er mean8 to re9ar: t7e employee8 in t7e or=ani8ation38 performan>e ;y ma@in= t7em an o9ner in t7e firm. Al8o 8in>e t7e 8oft9are in:58try i8 a =lo;al in:58try o9ner87ip of 8to>@8 li8te: in eB>7an=e8 o5t8i:e In:ia i8 eA5ally important. ?,2A =ecogni!ing t#e #ig# velocity of 5u!ine!!7 #ig# degree of com+etition and fa!t tec#nological o5!ole!cence faced 5y t#e I1 !oftware and I1 !ervice e*+orter!7 =<I !#all 5e ma*imally accommodate t#e following" ?aA ? blanket approval for overseas investment for ac;uisition of software1IT companies across the board for software e.porters wit# +reviou! t#ree year! cumulative actual e*+ort reali!ation in e*ce!! of US D 2. million to 5e given u+ to .3 @ or US D 2. million7 w#ic#ever i! lower7 out of t#e cumulative actual e*+ort earning of t#e +reviou! t#ree year!. 1#i! i! !u5ject to !u5mi!!ion of a certificate of !oftware indu!try 5y a++ro+riate aut#oritie!. ?,0A =n-site IT Services should be made easier by combating @isa regulations of the recipient countries through a planned diplomatic strategy 5y t#e Mini!try of '*ternal (ffair! and t#e Indian Mi!!ion! a5road for w#ic# M'( will create a !uita5le dedicated !tructure. 1#i! will al!o include !igning of tantali!ation agreement!7 w#erever nece!!ary !o a! to maintain t#e com+etitive advantage of Indian com+anie!. ?,%A Returns from package software development shall be increased by enabling Indian :arketing companies to set up wholesale companies abroad. 1#ey !#all al!o 5e given ma*imum fle*i5ility in organi!ing t#e marketing of +ackage !oftware from India t#roug# I61'=6'1.
Page ,, of .3
T7e a;o<e pro<i8ion8 are a remo<al of t7e mo8t important ;ottlene>@ in t7e =ro9t7 of t7e 8oft9are eBport in:58try. T7e =o<ernment 7a8 for t7e fir8t time re>o=ni8e: t7at t7e 8oft9are eBport in:58try i8 e88entially a =lo;al in:58try an: 8o 58ele88 re8tri>tion8 on a>A5i8ition of :e<elopment an: mar@etin= 85;8i:iarie8 a;roa: 87o5l: not ;e pre<ente:. Be8i:e8 ,i8a pro;lem8 are t7e >ore i885e8 for on-8ite >on85ltan>y ;y In:ian >ompanie8 an: t7e =o<ernment 7a8 for t7e fir8t time anno5n>e: tan=i;le 8tep8 to ta>@le 9it7 t7i8 pro;lem. ?.3A ?.1A Restrictions on the location of IT software and IT Services ?including I1 trainingA com+anie! in re!idential area! !#all 5e removed. 1o ena5le organi!ation! and com+anie! to identify7 e*+lore and +lan !trategie! for Large 6ic#e Market! like K2J and 'uro7 nationally and cor+orate wi!e7 all a++lica5le +rovi!ion! !#all 5e made a++lica5le on #ig#er +riority 5a!i!. 1#roug# MO) and O' fund! 'India -avilions' shall be set up in several ma)or IT e.hibitions around t#e world t#roug# t#e initiative and co:ordination of 'S) and 6(SS)OM. ?.3A ':ega Aeb sites' shall be created on IBT!RB!T for promoting marketing and encouraging Indian Software +roduct! and +ackage! under multi+le initiative!. T7e8e pro<i8ion8 relate to =o<ernment38 effort8 to promote t7e In:ian 8oft9are in:58try a;roa: t7ro5=7 eB7i;ition8 an: t7e 58e of t7e internet.
".$.
I. for all *y 2--)
T7i8 initiati<e of t7e =o<ernment i8 aime: at penetration of IT in term8 of e:5>ation an: a9arene88. T7i8 i8 rele<ant for t7e oft9are "Bport in:58try ;e>a58e 9e nee: to ;ri:=e t7e =ap in t7e 85pply an: :eman: of 9ell traine: IT profe88ional8 in o5r >o5ntry. Be8i:e8 a8 i8 >lear from t7e ;elo9 mentione: =5i:eline86 t7e =o<ernment 9ill al8o fo>58 on tyin= 5p 9it7 t7e In:ian In8tit5te8 of #ana=ement to :e<elop mana=erial talent in t7e fiel: of IT. T7i8 i8 e88entially relate: to :e<elopment of ProFe>t #ana=ement an: oft9are #ar@etin= 8@ill8. T7i8 i8 eBtremely important
Page ,. of .3
>on8i:erin= t7e fa>t t7at In:ian 8oft9are eBporter8 7a<e ;een a>>58e: of la>@in= proper mana=erial talent a8 >ompare: to ot7er >ompetin= >o5ntrie8. ?/3A (ll univer!itie!7 engineering college!7 medical college! and ot#er in!titution! of #ig#er learning in t#e country a! well a! =e!earc# and evelo+ment Organi!ation! !#all 5e networked for a !u++lementary +rogramme of di!tance education for improving the ;uality of education before year %$$$. ?/1A ?/2A The seven national level institutions 6IITs, IISc47 shall be encouraged to triple their output of students in IT 5y !uita5ly re!tructuring t#e +rogramme. ( 6ational )ouncil of I1 'ducation com+ri!ing e*+ert! from 5ot# t#e indu!try and t#e academician !#all 5e !et u+ for defining cour!e! and t#eir content in t#e lig#t of ra+id develo+ment! taking +lace in Information 1ec#nology. 1#e )ouncil will al!o initiate a 'Teach the Teachers' 6CT7 programme for u+grading on a regular 5a!i! t#e I1 knowledge and !kill! of teac#er!. ?/3A ?/,A ?n IT 9ourse :odule shall be made a compulsory component of all 9ourses wit#in a !#ort +eriod. The setting up of Indian Institutes of Information Technology 6IIIT7 shall be implemented with urgency to make u+ for t#e lo!t time. >i:tec# in!titution! like t#e Indian In!titute of Information 1ec#nology ?III1A will 5e given t#e eemed Univer!ity !tatu! wit#out in!i!ting u+on t#e mandatory t#ree:year !ti+ulation. ?/.A ?//A 1#e ;overnment !#all promote the pairing of our <niversities with centres of e.cellence in IT in developed countries. Specific courses shall be launched in association with the Software Industry and II:s to provide -ro)ect :anagement skills and develop specialised courses on Software :arketing. ?0,A ( +ilot +roject under t#e aegi! of t#e 6ational 1a!k -orce on Information 1ec#nology !#all 5e launc#ed in !ome lead di!trict!7 w#ic# #ave already attained univer!al literacy7 wit# t#e aim of achieving universal computer literacy in all the secondary schools in these districts. (long!ide7 t#e network of educational institutions in these districts will be assisted to ma.imise the induction of IT in order to create world-class talent at the topend of the education pyramid. 1#e!e +ilot +roject! will 5e joint initiative! of egree
Page ,/ of .3
t#e local educational in!titution!7 re!+ective State ;overnment! and t#e )entre. In t#e fir!t in!tance7 !uc# a +ilot +roject will 5e launc#ed in Jannada and Udu+i ot#er State!. ".$." !ata Security Systems and 5y*er Laws T7e la8t 8et of re=5lation8 :eal8 9it7 t7e 8e>5rity a8pe>t8 of t7e 8oft9are an: t7e 58e of t7e Internet. T7e8e la98 are >5rrently non-eBi8tent in t7e >o5ntry ;5t are eBtremely important for t7e :e<elopment of t7e 8oft9are in:58try a8 al8o t7e 8oft9are eBport in:58try. 5>7 la98 are re>o=nition of t7e lon=-8tan:in= nee: of t7e in:58try to pro<i:e a 8afe an: 8e>5re mean8 of :ata tran8fer8 o<er t7e net9or@ an: al8o t7e pre<ention of 5na5t7ori8e: an: pirate: 8oft9are. ?133A ( 6ational )om+uteri!ed =ecord! Security document! +re+ared 5y S(;7 2)<7 $'S''7 etc. ?131A (n Information Security (gency !#all 5e !et u+ at t#e 6ational level to +lay t#e role of )y5er )o+. ?132A ( 6ational Policy on Information Security7 Privacy and !i* mont#!. ?13,A 1#e cry+tology and )y5er Security knowledge and e*+erience develo+ed 5y t#e efence e!ta5li!#ment! !#all 5e !uita5ly tran!ferred to t#e civilian information !ecurity agencie! for wider di!!emination in t#e country to increa!e information !ecurity7 network !ecurity and 5ring a5out a greater degree of !ecure u!e of '-17 igital Signature7 etc. ?13/A The Indian Telegraph ?ct of 5&&#, the Indian -ost =ffice ?ct of 5&&& and the Indian Aireless Telegraphy ?ct of 5>>C shall be suitably modified in t#e lig#t of t#e growing +redominance of I1 in day:to:day life. Suita5le c#ange! will al!o 5e made in ot#er Law!E(ct!7 w#erever nece!!ary. ata Protection (ct for #andling of com+uteri!ed data !#all 5e framed 5y t#e ;overnment wit#in ocument !#all 5e +re+ared ak!#in i!trict! in Jarnataka on a !u5!tantive !elf:financing
5a!i!. $it#in a !#ort time7 t#e !ame will 5e e*tended to !uita5le di!trict! in
wit#in t#ree mont#! for enforcing !ecurity re8uirement! 5y con!ulting !imilar
Page ,0 of .3
".% 5onclusions
T7e 87iftin= role of t7e In:ian 8tate in promotin= t7e =ro9t7 an: :e<elopment of t7e >omp5ter 8oft9are an: 8ere8 in:58try i8 ill58trati<e of t7e limitation8 of a li;eral e>onomi> interpretation of t7e8e poli>ie8 an: of t7e potential 8tren=t78 of a5=mentin= t7i8 9it7 t7e 8tate per8pe>ti<e6 97i>7 fo>58e8 on t7e 58e of information an: >omm5ni>ation re8o5r>e8. Rat7er t7an a 9it7:ra9al of t7e =o<ernment6 8i=nifi>ant 8tate 85pport for t7e 8oft9are in:58try an: for 8oft9are eBport8 9a8 maintaine: t7ro5=7 85pporti<e =o<ernment a=en>ie86 t7ro5=7 trainin= pro=ram86 an: t7ro5=7 t7e >on8tr5>tion of tele>omm5ni>ation infra8tr5>t5re to fa>ilitate eBport8. T7e ne9 IT poli>y frame: ;y t7e IT Ta8@ For>e aim8 to a::re88 mo8t of t7e lon= 8tan:in= nee:8 of t7e 8oft9are in:58try. It i8 for t7e fir8t time t7at t7e 1o<ernment 7a8 >ome o5t 9it7 85>7 a >ompre7en8i<e :o>5ment t7at >o<er8 nearly all t7e a8pe>t8 of t7e in:58try. T7e8e ran=e from finan>in=6 infra8tr5>t5re an: 9or@in= >apital nee:8 to t7e penetration of IT a>ro88 t7e len=t7 an: ;rea:t7 of t7e >o5ntry an: mo8t importantly t7e :e<elopment of a 8tr5>t5re: approa>7 to 8ol<e t7e =ro9in= manpo9er 8>ar>ity in t7e in:58try. T7e aim of all t7e8e poli>ie8 i8 to promote 8oft9are eBport to ma@e In:ia a 87inin= 8tar in t7e =lo;al 8oft9are 8>enario.
Page ,% of .3
5 CONCLUSIONS
A >ompre7en8i<e analy8i8 of t7e In:ian oft9are in:58try 9it7 8pe>ial emp7a8i8 on t7e 8oft9are eBport8 >an ;e 85mmari8e: a8 follo98. T7e :ome8ti> a8 9ell a8 t7e 8oft9are in:58try 7a8 87o9n >on8i8tently 7i=7 =ro9t7 rate8 in t7e *+8 alt7o5=7 o5r 87are in t7e =lo;al eBport mar@et i8 mini8>5le A;o5t )$E of o5r eBport >ar=o >on8i8t8 of Profe88ional ere86 Con85ltan>y an: Trainin=. -o9e<er6 t7ere 7a8 ;een a <i8i;le 87ift of o5r 8oft9are eBport8 to9ar:8 off 87ore proFe>t :e<elopment6 97i>7 al8o in>l5:e8 off87ore pa>@a=e :e<elopment In:ian >ompanie8 7a<e eBporte: 8oft9are to more t7an forty >o5ntrie8 ;5t t7ere 7a8 ;een a 7ea<y relian>e on t7e U mar@et. In:iaN8 8oft9are eBport tra:e 7a8 ;een >7ara>teri8e: >ontra>t86 97i>7 allo>ate only t7e le88-8@ille: >o:in= an: te8tin= 8ta=e8 to In:ian profe88ional8. In:ian 8oft9are eBport in:58try i8 7ea<ily >on>entrate:. It >an ;e e<i:en>e: ;y t7e fa>t t7at only top 2+ of t7e '++ eBportin= firm8 =enerate )+E of t7e eBport8. Analy8i8 of t7e ot7er 8oft9are eBportin= nation8 re<eale: t7e fa>t t7at >o5ntrie8 li@e A58tralia 97i>7 7a: 8o far >on>entratin= on o5t7 "a8t A8ian >o5ntrie8 are no9 loo@in= for mar@et8 in "5rope an: Nort7 Ameri>a. 1o<ernment 85pport for :e<elopment of oft9are In:58try. In or:er to ea8e t7e 85pply 8i:e ;ottlene>@86 t7e role of t7e =o<ernment ;e>ome8 <ery important for >7anneli8in= in<e8tment8 in :e<elopin= ;ot7 p7y8i>al infra8tr5>t5re in term8 of tele>omm5ni>ation8 a8 9ell a8 75man infra8tr5>t5re in term8 of :e<elopment of profe88ional8 97o 7a<e =oo: proFe>t mana=ement 8@ill8. In li=7t of t7i86 t7e ne9 IT poli>y of t7e =o<ernment i8 >ommen:a;le pro<i:e: it i8 implemente: in a planne: an: 8y8temati> manner. t5:y of Irelan: emp7a8i8e8 t7e importan>e of 8@ille: manpo9er6 infra8tr5>t5ral fa>ilitie8 an:
Page ,& of .3
6 REFERENCES
1. -ee@86 Ri>7ar: C1**&D In:ia38 oft9are In:58try 4 tate Poli>y6 li;erali8ation an: in:58trial :e<elopment 2. 7ttp.??999.man.a>.5@?i:pm?i8ieBpt.7tm $. 7ttp.??999.e>onomi>time8.>om?to:ay?+$feat$.7tm '. 7ttp.??999.ta=i87.>o.5@?et7o8?ne98?lit1?e/;a.7tm 5. 7ttp.??999.aiia.>om.a5 &. 7ttp.??999.na88>om.or= ). 7ttp.??999.it-ta8@for>e.>om
Page .3 of .3

Analysis of Indian Software Saumilexport Industry

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Analysis of Indian Software Saumilexport Industry

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A SUMMER INTERNSHIP REPORT ON

Software Project Management

Submitted on./t+ Ju!' &0..

S.I.P. for Software Project Management

Study Of Marketing Potential

TIC OFT!AR" INDU TR%....................................................................................................&

1.) D","LOP#"NT FOCU 1./ #AR0"TIN1 C-ANN"L 1.*

U "D B% OFT!AR" CO#PANI" OFT!AR"

1.1+ D","LOP#"NT PLATFOR#...........................................................................................................1$ 1.11 TOP T!"NT%

PAC0A1" ...............................................................................15 PRI

2.2 UN","N "(PORT D"

"CONO#IC CONC"NTRATION OF PRODUCTION..................................2+

LOCATION CONC"NTRATION OF PRODUCTION................................................21

> ANAL8SIS O9 OTHER SO9T;ARE E<PORTIN( =OUNTRIES-.........................................&> $.1 AU

L. 2. In!titute Of Management Studie!

S.I.P. for Software Project Management

Study Of Marketing Potential

'.1 INTRODUCTION..............................................................................................................................2* '.2 A BRI"F -I '.' INDU

POLIC% PRIOR TO 1*/' .................................................$+

'.$ 1*/'-1**+. 1UID"D AND 1UARD"D LIB"RALI

POLIC% IN 1**+ .............................................................$$

- 1**1 - 1**/ ..................................................................................$5

- T-" N"! IT POLIC% OF T-" 1O,"RN#"NT...........................................$)

L. 2. In!titute Of Management Studie!

S.I.P. for Software Project Management

Study Of Marketing Potential

TABLE OF TABLES AND FIGURES

L. 2. In!titute Of Management Studie!

S.I.P. for Software Project Management

Study Of Marketing Potential

ANALYSIS OF INDIAN SOFTWARE EXPORT INDUSTRY

Location of software companies

L. 2. In!titute Of Management Studie!

S.I.P. for Software Project Management

Study Of Marketing Potential

!omestic Software Industry

L. 2. In!titute Of Management Studie!

S.I.P. for Software Project Management

Study Of Marketing Potential

-igure 1.1" ;rowt# of t#e ome!tic Software Indu!try

1." Software Export Industry

L. 2. In!titute Of Management Studie!

S.I.P. for Software Project Management

Study Of Marketing Potential

L. 2. In!titute Of Management Studie!

S.I.P. for Software Project Management

Study Of Marketing Potential

-igure 1.3" Percentage ;rowt# of Software '*+ort! from India

Structure of Software Exports

L. 2. In!titute Of Management Studie!

S.I.P. for Software Project Management

Study Of Marketing Potential

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1.$ !estination of Indian Software Exports

L. 2. In!titute Of Management Studie!

S.I.P. for Software Project Management

Study Of Marketing Potential

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1.% !e&elopment focus of t'e Software Exporters(

-igure 1.," evelo+ment -ocu! of Indian Software '*+ort!

L. 2. In!titute Of Management Studie!

S.I.P. for Software Project Management

Study Of Marketing Potential

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