Beyond offshoring, a new powerhouse is in the making

Led by a young work force, the country of 1 billion people is expanding into all things technology.

Part 1: Move over, China

India is striving to become a brand name in everything from tech consulting to consumer electronics.

Part 2: U.S.-style labor pains

The boom has created high turnover and other Western-like problems in India's labor market.

Part 3: The $100 computer

India may be the first country to reach the once-unthinkable goal of a $100 computer.
Plus: India's rise - An oral history

For the full report online, including photos and reader-contributed content and opinions, go to
http://news.com.

Editor: Mike Yamamoto Associate editor: Karen Said Copy editor: Leslie Katz
Design: Ellen Ng Production: Mike Markovich
By Michael Kanellos
Staff Writer, CNET News.com
June 28, 2005 4:00 AM PT

BANGALORE, India--The outsourcing boom that has transformed this country's economy can be traced in part to a
technology discovery made in 1995.
That year, engineers at Tata Consultancy Services found that a set of software tools called CasePac, developed to
convert code for IBM, could be used to change the date field in other programs.
"We realized this could be used for the Y2K problem," said Nagaraj Ijari, a senior executive at Tata's offices, located in
this city at the epicenter of India's thriving technology industry. Companies from around the world sought Tata's
outsourced services to fix the "millennium bug," and the company's annual revenue has climbed from less than $170
million to $2.24 billion in the years since.
The success story illustrates how quickly India's fortunes have changed in just a few short years, as the country's
burgeoning technology industry has provided such services at a fraction of the cost of Western counterparts. Building on
this foundation, India is now entering an important new phase in its economic evolution.
Once fairly anonymous organizations hired to run support desks and develop
server applications for large multinational corporations, Indian companies are
raising their profile as brand name suppliers in hardware design, software
development, consulting services and virtually anything else in technology.
Infused with new blood from a young tech-savvy work force, the new movement
is a major advance toward economic independence that carries broad
ramifications for a country whose past includes colonial rule, experiments in
socialism and devastating poverty.
"There is a huge Indian domestic opportunity and an export opportunity beyond
outsourcing," said Rishi Navani, managing director of WestBridge Capital
Partners, a venture capital firm specializing in Indo-American deals. "Over the
next 12 months, you will see three to four new Indian Nasdaq listings."
India's growing entrepreneurial spirit is reflected in its forays into consumer
electronics--a highly competitive market that has long been considered the
province of Japan, China, South Korea and other Asian nations, as well as the
United States.
Tata recently won a deal to create an environmentally friendly cell phone for a
U.S. carrier, for example, while rival Wipro Technologies is designing MP3
players for Europe and a flat-panel TV for an American company. Such
entrepreneurial ventures in the consumer market are not confined to the largest
players: Mumbai-based Celetronix produces set-top boxes for a U.S.-based
satellite TV carrier.
"Our evolution will be similar to the evolution of Taiwan," said Ramesh Emani, president of Embedded & Product
Engineering Solutions at Wipro, noting that in India, there would be greater emphasis on hardware design than on
manufacturing.
As was the case in China, domestic demand is a significant factor in India's technological expansion.
India has only 100 million phones for its population of 1 billion people--including both cellular and land lines--but that
number is expected to grow to 250 million in the next two years. Cellular service costs only about $4 to $7 a month,
and future phones will also sport cricket scores, lottery ticket purchases and other types of services seen in South
Korea and Japan.
"The volume is enormous," said Sanjay Nayak, CEO of network equipment specialist Tejas Networks, which has won
large contracts in India against multinational competitors.
High growth is also expected for the computer market in India, which counts only 14 PCs for every 1,000 people.
Several companies hope to court that market with computers priced at less than $250, many of them packaged with
residential broadband service that costs about $12 a month for a 128kbps connection.
"It is our fastest-growing emerging market," said Ketan Sampat, president of Intel India. "We've had a growing middle
class. PCs are part of that."
Beyond the home, some hardware companies are targeting the enterprise market
in and outside India. VXL Instruments, for example, delivers stripped-down
desktops to the likes of Air France and Goodyear Tire & Rubber.
New Delhi's FinalQuadrant Solutions sells a server appliance for the travel
industry. Travel agents pay only a modest amount for the server but hand
FinalQuadrant a small fee for each hotel room night or travel leg booked through
the system.
"We're making every single (travel) reseller as powerful as Expedia," CEO Anuj
Gupta said. The company, which made $1 million in net profit in 2004, has
mostly sold its products in Europe and is expanding to the United States.
For India's service companies, perhaps the most natural expansion is the consulting business. Outsourcing stalwarts
such as Tata, Wipro and Infosys Technologies have begun significant consulting operations as outgrowths of their
outsourcing work. Each of these "Big Three" companies has seen revenue grow in the 30 to 50 percent range every
year for the last five years--a period in which Western companies saw revenue flatten or decline.
Most of their consulting engagements largely address how best to implement services already provided by these
companies. But they are nevertheless long-term commitments that will pit them against the formidable white-collar
armies at large U.S. companies for years to come.
"We are not McKinsey. We do not want to hand over the report and run away," Tata's Ijari said. "Our competitors are
Accenture and IBM."
The new competition on many fronts from India has prompted U.S. companies to increase their presence in the country.
Western companies such as Sun Microsystems and Hewlett-Packard have set up shop in India as part of the
outsourcing trend, to keep engineering labor costs in line with those of their competitors. But U.S. companies face a
problem: Other types of employees, such as managers and sales executives, also have relatively low salaries--meaning
they cost India rivals less.
Such concerns explain why U.S. venture capitalists are increasingly insisting that any U.S. start-up seeking funds
maintain a presence in India. A company might cost $50 million to $70 million to build in the United States but, with
relatively inexpensive labor overseas, might cost $12 million to $20 million in India.
U.S.-Indian businesses can take all manner of hybrid forms. Some were conceived in the United States and have built
research and engineering departments in India. Others were born in India but have located high-level executives in
America. Still others, such as Tejas and Telsima, are founded and based in India.
Whatever the mix, functions often monopolized by Silicon Valley in the past are now spreading overseas. To lure new
investment, for instance, Silicon Valley Bank brought a number of American venture capitalists to India in September
2003 and subsequently opened offices that it lends to visiting VCs and their budding start-ups.
"Before, India was an afterthought," said Ash Lilani, head of global sales and marketing at Silicon Valley Bank. "Now it
is thought of at birth."
From blackouts to corruption
Still, challenges persist. With an estimated 600 additional cars on Bangalore's streets every day, traffic has ground to
gridlock. The five-mile drive to Electronics City, the main tech hub, can take an hour from the center of town. An
express road that was supposed to have been completed last year remains a tangle of rebar and cement pilings.
Electricity is another pressing concern. In nearly every Indian city and state, power outages occur fairly regularly. The
lack of an adequate power grid is one reason that no foreign company has built a semiconductor fabrication facility in
the country. A South Korean entrepreneur has signed a preliminary agreement to build a chip foundry near Hyderabad,
but many sources privately doubt that the project will get far, because of the water and power demands of a modern
fab plant.
"The government realizes that there needs to be foreign investment" in infrastructure, WestBridge Capital's Navani said,
adding that development funds are being negotiated with large banks.
Tech companies also routinely complain about India's tax system. On the plus side, the onerously large import duties of
the past are fading away, and the government has passed laws requiring the equivalent of benefits offered by places
like China and Taiwan, including one that gives companies exporting tech products a 10-year exemption from income
taxes.
Yet executives are well aware that the government has a history of adding taxes through its national budget, as
exemplified recently with a so-called fringe benefit tax. Under this provision, companies that throw parties for clients or
host them at conferences must pay a tax on the expenses, said Ravi Pradhan, India manager for Via Technologies.
Moreover, as in other parts of the world, corruption remains a problem when it
comes to influencing clients and government officials. "In America, you might
take them to the Super Bowl. Here, you give them money," one source said.
And even for Indian entrepreneurs who know how to navigate the unofficial
ways of doing business, help from multinational manufacturers is still
necessary to build their industry.
"We have engineers who are good technicians, but we need product
managers," said Vinod Dham, founder of NewPath Ventures, a venture capital
firm that specializes in Indian investments. The services business, he added,
has "made a culture of people who say, 'Tell me what to do.'"
Reverse outsourcing
This should lead, at least in the near term, to a form of reverse outsourcing, with U.S. experts heading overseas to
provide services for Indian businesses. Indian-based companies, for their part, will need to install an increasing number
of employees in Europe and North America to land contracts--which means paying higher Western salaries.
"You need guys who worked on Wall Street," said Jessie Paul, head of marketing for iGate, a Bangalore-based
company that provides consulting and other information technology services.
However, while these factors may temporarily slow progress, few expect it to stop the industry. Many Indian companies
are becoming more integrated into the business processes of its customers, making offshore outsourcing a permanent
arrangement.
"The level of people who are visiting us today is very, very high. They are actually the strategic decision makers. In the
dot-com days, it was more reactive," said Srinath Batni, a board member of Infosys. Outsourcing, he added, "has
become a long-term strategy."
That marathon approach is viewed as a key advantage for India. Many executives and entrepreneurs note that India's
tech boom is driven by a demographic bubble that will be difficult to match for other nations. India has a large
population of young people who are driven, well-educated and work for relatively low wages.
"The average age of the working population in India is 27 years," said Supratim Sarkar, manager of strategic marketing
at Wipro. "That is one of the biggest levers we have."
Not surprisingly, optimism is running high as younger generations come of age. The national exuberance has inspired
many entrepreneurs, including Rajesh Jain, who sold an Indian-based Web portal, IndiaWorld, for around $100 million
in 2000 and who is now incubating companies that he expects will bring computing to the masses in his country.
"For the first time," he said, "there is confidence that tomorrow will be better than today."
By Michael Kanellos
Staff Writer, CNET News.com
June 29, 2005 4:00 AM PT

BANGALORE, India--Vinod Dham was faced with a personnel issue he had never encountered before: the father-in-
law.
Nevis Networks, a company that Dham's NewPath Ventures had backed, reported one day that a top engineer had
gotten engaged and suddenly gave notice of his resignation. His fiancee's father, it seems, had never heard of the
young security company and wanted him to work instead for an established entity like Intel or IBM.
Thinking quickly, Dham had a press release drawn up, and a reporter was cajoled into writing a story about Nevis. The
father-in-law saw the article and heartily approved of the young man's career choice.
"All of the VC funds want to go to India," said Dham, whose venture capital firm
is based in Silicon Valley, "but most don't know how to do it."
Such cultural clashes reflect the rapidly changing nature of India's high-tech
world, where an industrial renaissance has created not only an unprecedented
economic boom, but also Western-style growing pains in employee recruitment
and retention. Turnover in the software services industry runs at about 15
percent a year on average, and can exceed 30 percent at some companies,
according to various sources.
Relative to their counterparts in the United States and other developed nations,
workers at Indian companies are both plentiful and inexpensive to employ. This
cheap labor, however, has led to explosive growth and, in turn, to unprecedented
competition for qualified employees. Double-digit raises are the norm.
"What if someone offered you double your salary?" said Rishi Navani, a
managing director at WestBridge Capital Partners. "There would be no debate."
Evidence of India's chaotic job market is everywhere. Upon learning of layoffs at
U.S. chipmaker PMC-Sierra's lab in this city, for example, Dham and his
NewPath partners caught a red-eye flight to India and took all 65 fired employees
to dinner; they hired 31 of them.
Large public companies such as Tata Consultancy Services each hire about
10,000 employees a year--the equivalent of a small town--in an effort to keep up
annual revenue growth that can reach 50 percent. Although the turnover rates
listed in the financial reports of these companies are substantially below the
national average, services giant Infosys Technologies alone is absorbing 1,000
employees every month, said Srinath Batni, a company board member.
A fresh engineering graduate at a leading Indian company might receive a starting salary of 15,000 to 28,000 rupees a
month, or $4,300 to $8,000 a year, according to various sources and figures from the New Delhi-based National
Association of Software and Service Companies (NASSCOM).
A director-level manager might make $30,000 to $51,000 a year, while a division head might make $76,000, depending
on experience. Those salaries are less than half that of equivalent positions in the United States.
But the gap is quickly narrowing, thanks to large multinationals that have descended upon the Indian labor market.
Companies such as Hewlett-Packard, Intel and Sun Microsystems can (and will) double or even triple the salary offered
by Indian counterparts, sources say.
The lure of lucrative salaries has extended beyond the private sector. The labs at the government-run Defence
Research and Development Organisation is losing about 60 scientists a year to various industries.
At the Indian Institute of Science, the country's premier research organization and graduate school, automotive and
electronics companies from the West have been hiring students on the verge of finishing their Ph.D.s for 30,000 rupees
a month. By law, assistant professors earn only 20,000 rupees a month, though recent changes allow them to keep 60
percent of all fees for consulting and patent licenses.
"We have a problem with internal brain drain," said Professor M.L. Munjal, chairman of the mechanical sciences division
at IIS. "This is the price we pay for globalization."
Problem or opportunity?
Over the past 20 years, India has transformed its school system to churn out graduates for the information technology
industry. In the mid-1980s, around 70 colleges nationwide admitted about 5,000 students into IT and computer science
programs, said Professor Deepak Phatak, who heads up the Kanwal Rekhi School of Information Technology at the
Indian Institute of Technology at Bombay (in the city now known as Mumbai).
Today, he said, 250,000 new students at 1,750 colleges enter
undergraduate and master's programs in computer science and electrical
engineering. Another 100,000 students enroll in mechanical, civil and
chemical engineering programs. (Different sources give varying totals for
the number of colleges in the system, but the number always exceeds
1,000.)
"The total number of engineering students in all four years of college is
over a million at any time," Phatak said. "So you see, this is our problem,
and this is our opportunity."
A prolific source of this educational bounty is Karnataka, the state where
Bangalore and a large percentage of the IT industry is located. There, 130
colleges produce 30,000 graduates in the field each year, said M.K.
Shankaralinge Gowda, the state's secretary of the department of
information technology.
That translates to jobs. Since 1997, the number of technology professionals employed in the state has risen more than
tenfold, from 25,000 to 285,000, Gowda said. In all of India, the number of software and service workers rose from
522,000 at the end of 2001 to 813,000 last year, according to NASSCOM.
While most students focus on software, chip design is growing. Five years ago, the Indian Institute of Technology set
up a chip design program and a semiconductor lab that graduates 20 students a year. The university is replicating it at
other institutions, according to Sunil Sherlekar, head of embedded systems at Tata Consultancy Services.
Large U.S. chipmakers have set up design centers in the country. Intel is designing a server chip at its Bangalore
facility, said Ketan Sampat, president of Intel India.
"Quality" not just a slogan
For India's services companies, fast hiring and high turnover are significant competitive concerns. To avoid wasting time
between projects, service companies must be able to move teams of employees from one project to another rapidly,
Batni and others say. "Quality" and "customer satisfaction" are viewed as more than empty slogans; they are measured
quantities that affect profitability and growth.
Achieving these goals requires rigorous employee training. At Tata, newly hired college graduates sit through 52 days
of training. Among other assignments, they have to read excerpts of novels such as "Gone with the Wind" and then
conduct a group discussion in front of a class.
"India is a very competitive world. It is heavy on the 'I,'" said Nagaraj Ijari, the delivery center head of Tata's offices
here. "We change it to a 'we.'"
Yet it is a habit that is difficult to shake, especially in a society that stresses individual achievement from an early age.
The competitive nature of the technology field is reflected in a contest sponsored by Tata for 13- and 14-year-olds in
Karnataka. More than 60,000 teenagers participated in the contest, which awards prizes to those most adept at
answering questions about the history or products of different technology companies.
After 10th grade, students must declare their collegiate paths and endure strenuous board examinations. Schools take
out full-page ads in newspapers to congratulate students who score in the 90-plus percentiles.
Not surprisingly, the college admissions process is rife with anxiety. The
seven campuses of the Indian Institute of Technology receive more than
150,000 applications a year and admit around 3,500 undergraduate and
graduate students.
During the five-year curriculum, "you're as good as in a prison," said M.T.
Karunakaran, president of Telsima Communications and an IIT alumnus.
One week, students might work on engineering theory, he said; the next,
they might be asked to learn how to weld.
The Indian Institute of Science is similarly stringent. The graduate school
receives more than 100,000 applications and accepts only a few hundred-
-an acceptance rate of 0.3 percent.
The long odds then continue when it comes time to get a job. Infosys
receives a million employment applications annually. The 10,000 hired represent only 1 percent of the applicant pool.
To stand out, job candidates will often fashion resumes five or six pages long. "It might include the elocution contest
that they won in grade school or what they did in the Boy Scouts," said Supratim Sarkar, manager of strategic
marketing at Wipro Technologies.
Jessie Paul, head of marketing at iGate, a services and consulting firm, said a bank teller once told her that his
granddaughter was looking for a job. Later that night, she got a call from him at home. "He got my phone number from
a loan application," she said.
But the hard work pays off for those employees who do get hired and eventually establish themselves. Then, they are
exposed to a very different kind of competition--one that casts them as the object of pursuit.
"The real issue here is the growth in the salary levels. The salaries in India are still growing at 18 to 20 percent
annum," said Sanjay Nayak, CEO of Tejas Networks. "The stickiness of people to companies is very low. A little bit
more stabilization is needed."
By Michael Kanellos
Staff Writer, CNET News.com
June 30, 2005 4:00 AM PT

MUMBAI, India--One of the critical ingredients for the $100 computer is probably in your garage.
In about three months, a little-known company called Novatium plans to offer a stripped-down home computer for
about $70 or $75. That is about half the price of the standard "thin clients" of this kind now sold in India, made possible
in part by some novel engineering choices. Adding a monitor doubles the price to $150, but the company will offer
used displays to keep the cost down.
"If you want to reach the $100 to $120 price point, you need to use old monitors," said Novatium founder and board
member Rajesh Jain, a local entrepreneur who sold the IndiaWorld portal for $115 million in cash in 2000 and has
started a host of companies since. "Monitors have a lifetime of seven to eight years."
It is this kind of entrepreneurial thinking that has made Jain the latest visionary
to seek out today's Holy Grail of home computing: a desktop that will start to
bring the Internet to the more than 5 billion people around the world who
aren't on it yet.
The first $100 computer is a fitting icon for a country undergoing major
changes in the development of its technology, economy and society. As Indian
companies increasingly break away from the limitations of handling outsourced
services for Western corporations, innovations are likely to multiply and inspire
the rising number of independently minded engineers and executives who are
leading the country's technology industry to new frontiers.
Because of thriving exports and low PC penetration, India has become the
epicenter for projects on the cutting edge of computing hardware. Advanced
Micro Devices has started to sell its Personal Internet Communicator for $235,
including monitor, through a broadband partner here. It says a fully equipped
$100 personal computer in three years isn't out of the question.
The innovative spirit that pervades the industry is producing a variety of new approaches toward affordable computing.
Tata Consultancy Services is tinkering with "domain computers" that reduce costs by just handling fixed functions such
as bill payment or word processing, said Nagaraj Ijari, a senior executive in the company's operations in Bangalore.
About 200 miles away in high-tech center Chennai, formerly known as Madras, Professor Ashok Jhunjhunwala of the
Indian Institute of Technology has developed a $1,000 automatic teller machine that can also serve as an Internet kiosk
for villages. He has also built a wireless data system that has been exported to Brazil, Iran, Fiji and Nigeria.
Creating a product that cuts costs without reducing functions isn't easy, as exemplified by the Simputer, a handheld
computer designed for the masses. And many products face formidable logistical and infrastructural obstacles.
Professor Jitendra Shah, from the Centre for the Development of Advanced Computing, is examining ways to reduce
electricity usage by setting up solar-powered computing terminals that tap into battery-powered PCs acting as servers.
"We are looking at ways to take advantage of unconventional sources of power. Practically in every village you will find
a truck or car battery that you can use when the regular power grid fails you," said Ketan Sampat, president of Intel
India. "You also want to design something that is more tolerant of dust."
Living in a material world
The key to success for the $100 computer lies in the sum of its parts. Even though the industry has seen continuous
price declines for components--including metal, plastic and other raw materials--many executives believe that
manufacturing a full-fledged PC for even less than $200 is probably still impractical.
"We are not able to fix the monitor and hard-drive problem," said P.R. Lakshamanan, senior vice president of Zenith
Computers, one of India's largest local PC makers.
With these realities in mind, some companies are adjusting their price goals. Xenitis, for example, has come out with
PCs that cost just under $250, equipped with an older 1GHz processor from Via Technologies, 128MB of memory, a
40GB hard drive, Linux software and a 15-inch screen.
Via will join in with its own Terra PC in the fall. The Terra comes with the same basic configuration as its Xenitis
competitor, but the operating system and the basic applications are loaded on a flash memory chip, not the drive--
making the computer less susceptible to viruses and other problems.
Via, however, admits that it will need to select battle-hardened software. "There is no way I am going to take care of all
of the problems," said Ravi Pradhan, country manager for Via. "The idea is to get as close to perfect as possible."
Others are taking a more socialistic approach to lowering costs. Intel, for instance, promotes communal arrangements
that spread the cost of a computer across an entire village.
In the southern state of Kerala, Intel has helped the government launch a program that assists local entrepreneurs in
lining up financing to set up an "Akshaya Center"--sort of an Internet cafe--and pays them to provide PC training to one
member of each family in a village. The Akshayas also provide videoconferencing for families with overseas relatives,
data entry for local cooperative banks, and links to commodity exchanges.
The system is modeled after a long-established practice in which India's
ubiquitous pay phones are owned by individuals, not the national
telecommunications companies. "Akshaya could become one of these
programs that scales out across the country," Sampat said.
Thin is finally in
The Indian market may also finally provide an outlet for the so-called thin
client, a type of basic computer tried repeatedly in North America and Europe
by Oracle and Sun Microsystems with little success. Thin clients, sometimes
known as network computers or "dumb terminals," effectively are used only to
communicate with a server; the server itself is the device that stores the data,
houses the applications, performs the calculations and connects to the
Internet.
Although a server can only handle a finite number of thin clients, advocates
say the systems reduce both hardware costs and support headaches.
Professor Deepak Phatak of the Indian Institute of Technology conducted a study of computer use in a bank and
determined that thin clients would cost about a third as much as multifunctional personal computers. A large insurer
installed 13,000 of the machines after the study, he said, and other companies are contemplating similar moves.
"Ninety-five percent of the employees only used a single application," Phatak said. "Fifteen thousand rupees ($357)
gets you a thin client with support for three years."
Moreover, proponents say, these systems are more than just typical thin clients with used monitors.
"Just because we are an emerging market doesn't mean we want an inferior product," said Jain of Novatium. The
engineering behind his company's base model illustrates his point.
Instead of a microprocessor, it will contain a digital signal processor that compresses and decompresses music and
video files. In addition to lowering costs, the technology is designed to provide access to the full range of the Internet
without bogging down the machine's operations. (Novatium would not disclose which chip brand it would use, but one
of its investors is also the chairman of digital signal processor designer Analog Devices.)
Using Linux applications and software from Jain's Netcore Solutions, these machines will be tweaked so that multiple
people can use them. This would reduce the cost of memory in the server that does the bulk of the computing work for
the Novatium thin clients on its network.
Jain will also try to establish "operator grids," local businesses that run the servers while acting as an Internet service
provider. Eventually, instead of buying their machines, he said customers could have the option of paying a grid
operator $15 to $20 a month for all hardware, software and storage needs.
While acknowledging the risks inherent in any start-up venture, Jain speaks eagerly of what he calls the phenomenon
of the black swan--a rare, but not impossible, event.
"Google was a black swan," he said. "No one expects the next Microsoft or Intel or Cisco to come out of India, but I
believe it is entirely possible."
By Michael Kanellos
Staff Writer, CNET News.com
June 28, 2005 4:00 AM PT
1946-1950: The Indian Institute of Technology founded. With seven campuses, which admit
3,500 out of 150,000 applicants each year, it has become the intellectual core of the country's
industry. Its professors sit on advisory boards, while alumni are behind successes such as
Infosys. The five-year program is "grueling," said Ravi Pradhan, Via Technologies' manager for
India.
1968: The Tata industrial conglomerate forms software services unit Tata Consultancy Services.
"We had six employees," said Nagaraj Ijari, the delivery center head at TCS' Bangalore offices.
"Now we have 40,000." Tata's headquarters in Mumbai
Credit: Tata Group
Mid-1970s: IBM exits India. Import duties of 150 percent or more mean that VCRs cost $3,000
and TVs cost $6,000. Wipro starts to create India's first homegrown PC.
1985: Prime Minister Rajiv Gandhi makes speech imploring the country to move into tech. A transcript
of the speech is passed out on paper to the audience, thanks to speech-to-text computing.
"It was 60 percent correct, but you could see the power of it," said A.K. Bhuwania, chairman of the
Priya Group, a distributor. That day, Bhuwania decides to expand from chemicals into tech
components.
1986: General Electric expands engineering presence and its Six Sigma methodologies here. Ex-GE
employees become key leaders in several companies. "They became like Fairchild" asserts Vinod
Dham, co-founder of NewPath Ventures.
1991: National financial crisis causes government to introduce major reforms. Finance Minister
Manmohan Singh (now prime minister) emerges as hero.
1993: A group of IT leaders determines plan for IT industry. Professor Deepak Phatak predicts India's
IT output will hit $100 billion by 2010. "Everyone thought that sounded crazy, so we changed it to $50
billion by 2008," he said. The latter figure is on track.
1994: Telecom liberalized. "That helped a lot. Before that, it was all FedEx," said Supratim Sakar, Rajiv Gandhi was the
manager of strategic marketing at Wipro. youngest Prime Minister of
India.
1995: TCS determines that its CasePack tool developed for IBM can be used to scan software for Y2K Credit: Prime Minister's office

problems. An industry is born.

1999: Y2K contracts pile into India. "The biggest boost of all was Y2K. In some ways, the
U.S. created this monster." Ash Lilani, head of sales and marketing at Silicon Valley Bank.
2002: Indian companies expand hiring to handle incoming work resulting from massive
layoffs after the dot-com bubble burst and the U.S. tech industry fell into a recession. "We
had a little bit of breathing space," said Sanjay Nayak, CEO of Tejas Networks.
2003: Led by service conglomerates such as Wipro and Infosys, India becomes a primary
destination for offshore outsourcing as foreign companies seek to lower labor costs. The
trend leads to political controversies around the world (link to last year's special report)."
2004: Singh becomes Prime Minister. High tech fairly ingrained in daily life for many in cities.
"Ten years ago, you had to stand in line for money at the bank," said Srinath Batni, a board Former U.S. President Bill Clinton with
member at Infosys. "It was what people did on the weekend." Prime Minister Dr. Manmohan Singh.
Credit: Prime Minister's Office
2005: Entrepreneur Rajesh Jain begins to promote thin clients costing $100 to $150 as
computers for the mass population. "It's not that we need just cheaper solutions. We need the newest technology, but at
fundamentally lower price points," Jain has said.