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The Indian software industry has surprised many observers based on its ability to catch up with the leading industry players across the world. It is remarkable that the software industry has learned and developed technological standards that match global norms. Current paper presents the main factors explaining the success and the history of three leading firms.
Economic liberalization is one of the factors that explain the success enjoyed by software industry players in India. In the recent times, the Indian economic policies have undergone substantial changes. With the opening up of the Indian markets, foreign exchange reserves improved leading to an overall improvement on the economys state. Although problems still persist, India began emerging as a robust economy driven by advancements in information technology. It should be noted that with the opening up of the Indian economy, Information Technology (IT) firms moved up the value chains. The firms moved from performing low cost to advanced programming in external markets. In addition, Indian firms had an opportunity to provide comprehensive services to oversea clients. It was supported by Government investments in information technology. Thus, the Indian country was able to develop a resilient manpower capable of taking the industry to the next level.
The support from successive Indian Government extends beyond investing in the industry. For instance, Indian Government oversaw the establishment of technical institutions charged with educating personnel in information technology. These institutes entered partnerships with the US firms, allowing Indian students to advance their expertise in information technology. From such associations, Indian professionals built their reputations in the sector. Consequently, US firms could now outsource services from India knowing that the country would offer quality services.
Examining the structure of the software industry highlights another success factor. The countrys software industry is pyramidal. There are few large local firms that dominate the sector. Many players are at the bottom. Small entities focus on serving the local market as they supply software services and products to medium size enterprises in the country. The firms also supply a few small entities and individuals from overseas markets. Small and large firms rarely enter horizontal partnerships. The nature of structure allows for some form of specialization since each industry player is able to focus on a given market segment.
Another critical success factor is that a sizable number of the Indian firms were started by individuals who had acquired wealth as well as experience while working in big organizations. In particular, many entrepreneurs in the sector graduated from the US universities where they also worked. Hence, they had a clear understanding of the gravity of running successful enterprises. In addition, the software industry is highly profitable and has relatively low risk of becoming unprofitable. As a result, it has attracted a big percentage of professionals into the industry.
Entry costs are another factor that explains the level of success achieved in the industry. Typically, the industry has low entry costs . Thus, starting software companies are relatively cheap. Moreover, the favorable conditions in the country imply that it is easy to start a software business since entrepreneurs can acquire assets on lease. In the long-term, leasing assets are cheaper than outright buying. Leasing only requires payment of a small upfront fee.
Another factor is about competitor arrival. Multinational firms in the software industry arrived in the country late. The late arrival gave Indian firms a head-start in the business. It explains why multinational firms operating in India are merely export platforms. However, the activities of multinationals are enriching the Indian software industry through training and learning.
Another important factor in the expansion of the software industry is the presence of diaspora-based Indians. It was highlighted earlier that Indian professionals have a close history with the United States. In particular, there was a group of IT professionals who worked at Silicon Valley. At the station, the Indian professionals gained managerial and entrepreneurial acumen. The Indian professionals contributed towards the enhancement of body-shopping through exhibiting Indian programs. The professionals were able to create links with their American counterparts leading to the formation of a significant web in the development of the industry in India.
Brief Histories of Leading Firms
Tata Communications limited is an international firm operating in the information technology sector. The company possesses many assets, such as a submarine cable network. More significantly, the company operates the countrys largest data center located in Pune. Founded in 1986, the company, formerly known as Videsh Sanchaar Nigam Limited became the first Indian organization to be listed in the New York Stock Exchange. It is deduced that the company has enjoyed a higher level of success since it started at a time when competition was minimal.
The Infosys Company was founded in 1981. The co-founders were employees who defected from the Patni Computer Systems. By 1992, the Infosys Company had transformed itself into a public company. The company made its first Initial Public Offer (IPO) in 1993. Having been undersubscribed, Infosys Company was bailed out by Morgan Stanley. Despite the initial problems encountered at the IPO, the companys shares had become the most coveted by 1999. At the same time, the company was among the top twenty companies at NASDAQ. Ranked by Forbes among the top twenty most innovative entities, Infosys has a favorable reputation compared to its Indian peers. The management of the company is also viewed as one of the best in the industry.
Formerly known as Western India Products Limited, Wipro Limited is a leading company in the information technology sector. By 2013, the company had a presence in more than fifty countries. By 1945, the company had been incorporated in Mumbai as a ghee, refined oil and vanaspati manufacturer. It is during the 1970s and 80s that the company shifted its focus to information technology. During the time, IT services and products were at a nascent stage.
Wipro diversified its product offerings to include heavy metals. It also partnered with General Electric in 1988 to manufacture medical products. In 1991, the company set up the Odyssey 21 centre to serve overseas clients. The company was the first one to get ISO certification in the country. It appears that the company is the oldest among the three captured in the paper. As mentioned early, entering an industry at the nascent stage is advantageous since it allows companies the convenience to operate without notable competition. Thus, the companies were able to take the lead which they have sustained to this time.
In conclusion, various factors account for the dominant position that the Indian software industry occupies. Based on the paper, shifts in Governmental policies which facilitated the opening up of the Indian economy and an increase in investments in the software industry through education proved instrumental. Through the formation of networks, the Indian Diaspora also played a significant role in the development of the software industry in the country. The paper also establishes that the three main players: Tata, Infosys and Wipro had a head-start since they entered the industry at its nascent stage. Given the success enjoyed, the Indian software industry is projected to remain strong in the years coming.