ICT – The Making of Indian Engineers

Book: ICTs and Economic Development

Ashwani Saith and M. Vijayabaskar (eds), ICT and Indian Economic Development. Economy, Work, Regulation, New Delhi, Sage Publications, 2005

“This book evaluates the recent phenomenon of Information technology communication (ICT) development in India, and discusses such questions as: Can the growth be sustained? How far can an ICT revolution go towards modernising India’s economy? What could be the capacity of ICTs to induce rapid social transformation and change? Can India navigate all the pitfalls and hazards and retain its current comparative advantage in the field of ICT?

– Provide a systematic overview of the major developments and trends in the Indian ICT sector;

– Investigates the dynamism of the IT sector and whether it has contributed to wealth creation in any significant measure; and whether Bangalore, in its area of special strength-software-is a dynamic leader or merely a Silicon Valley follower;

– Assess the role of the State and of government policy, especially with regard to the opportunities for shaping the future of this sector;

– Explore the processes of the restructuring of work and employment in the wake of the IT revolution;

– Set the Indian experience in a wider context through a discussion of the Chinese experience, along with a comparative analysis of ICT clusters in the two countries.”

Roland Lardinois

Book: “Body Shopping” in ICT India

Xiang Biao, Global “Body Shopping”: An Indian Labor System in the Information Technology Industry, Princeton, Princeton University Press, 2006

“How can America’s information technology (IT) industry predict serious labor shortages while at the same time laying off tens of thousands of employees annually? The answer is the industry’s flexible labor management system–a flexibility widely regarded as the modus operandi of global capitalism today. Global “Body Shopping” explores how flexibility and uncertainty in the IT labor market are constructed and sustained through concrete human actions.

Drawing on in-depth field research in southern India and in Australia, and folding an ethnography into a political economy examination, Xiang Biao offers a richly detailed analysis of the India-based global labor management practice known as “body shopping.” In this practice, a group of consultants–body shops–in different countries works together to recruit IT workers. Body shops then farm out workers to clients as project-based labor; and upon a project’s completion they either place the workers with a different client or “bench” them to await the next placement. Thus, labor is managed globally to serve volatile capital movement.

Underpinning this practice are unequal socioeconomic relations on multiple levels. While wealth in the New Economy is created in an increasingly abstract manner, everyday realities–stock markets in New York, benched IT workers in Sydney, dowries in Hyderabad, and women and children in Indian villages–sustain this flexibility.”

Roland Lardinois

Report: R & D in ICT India

Payal Malik and P. Vigneswara Ilavarasan, Trends in Public and Private Investments in ICT R&D in India, European Commission, Joint Research Centre Institute for Prospective Technological Studies, Luxembourg: Publications Office of the European Union, 2011

Executive Summary

“The Indian Information Communication Technology (ICT) industry is contributing to the national economy in many ways and almost all states in India are targeting the sector as a vehicle for economic development. NASSCOM’s 2009 strategic report estimates that the Indian IT-BPO (Business Process Outsourcing) industry achieved revenues of USD 71.7 billion in FY2009, of which the IT software and services industry accounted for USD 60 billion. Direct employment at the end of March 2009 was expected to reach nearly 2.23 million, while indirect job creation was estimated to touch 8 million. The sector’s revenues grew from 1.2% of national GDP in FY1998 to an estimated 5.8% in FY2009. The net value added by this sector to the economy was estimated at 3.5-4.1% for FY2009.

The Indian ICT sector has evolved in three phases: up to 1984, 1984–1990 and post-1990. In the first phase, apart from trying to establish its own technological trajectories, the state attempted to run the industry which resulted in no commercial sector. In this phase, there was no great differentiation between software and hardware. In the second phase, the government realized that software was a viable option for income generation and technological capability enhancement. In the third phase, the software export industry blossomed, aggressively promoted by both national and sub-national governments. Consequently, the export-driven growth model ignored the hardware sector and domestic sector, despite their huge potential. Though the ICT sector is growing in all domains, it is predominantly driven by software services and telecom services.

Until the 1990s, the Indian economy was under state control and there was little incentive for private industry to invest in R&D. The Indian ICT sector is dominated by the larger players with the top 200 firms contributing about 86% of the total revenues in 2008. Multinational firms dominate in the innovation space through their Indian R&D centres. Although larger Indian firms perform R&D activities, they are sub-contractors and do not have ownership of their activities. An analysis of secondary data showed that most of the multinational firms follow the conventional outsourcing model: they enter India as a cost centre which then evolves into a technology centre.

At present, the ICT sector is clustered in six cities: Bangalore, Pune, Chennai, Hyderabad, the National Capital Region (Noida, Delhi and Gurgaon) and Mumbai. However, efforts are being made by the central and state governments to spread the sector to second-tier cities. A comparison of the major ICT clusters shows that the Bangalore cluster presents a more mature eco-system for the ICT industry compared to the other clusters. Due to its historical lead advantages, it has a deep labour market, proximity to well-known research institutes, government research labs, the presence of venture capital, and a healthy mix of large domestic firms, multinationals and other supplementary firms.

Hardware manufacturing is weak with some innovation happening in semiconductor design and manufacturing. Poor manufacturing capabilities and lack of adequate support infrastructure will continue to put the Indian ICT industry at a disadvantage to competitive producers like China, Taiwan and Korea.

University-industry alliances are much to be desired, but they are limited to campus placement and student internships. The labour pool with engineering or ICT-related education is impressive in terms of numbers, but a closer look reveals a poor research component.

Though Indian firms are expanding their global reach and technology domains in service through acquisitions, it is difficult to conclude that R&D capabilities have been acquired. Indian firms continue to cater to western clients through software product development or engineering services, and they innovate for in-house consumption rather than developing off the-shelf products for the open market.

Since the Indian ICT sector concentrates on services, innovation is predominantly on processes. This service innovation can be observed in other areas:

• Transition from on-site to off-shore, by sending people for project execution at the client’s site to executing and managing projects in India;

• Productised services, in which Indian firms standardise the services provided to clients and sell them as productised services, a level below off-the-shelf products;

• Virtual extension, in which Indian firms serve as sub-contractors but interact with primary clients directly;

• Human capital capacity building, because though human capital is available, skill gaps are met by the sector itself.

• Finally, service process innovation is crucial in explaining the success of the Indian telecom sector. Tailored tariff packages in line with the affordability profiles of Indians and also outsourced network expansion were the first of their kind and have yet to become a global trend.”