The decade spanning 2000-2010 marked the emergence of a parallel force in India termed the knowledge economy, bringing to light the smorgasbord of talent available in the country across sectors like information technology, biotechnology and nanotechnology; besides a wide smattering of venture funds ready to back any bright idea.
The army of Indian code-writers are all over the world today and most complex software projects have an Indian on board. From being known as tech coolies in the early 1990s, India has moved on to providing cutting edge solutions to some of the world?s biggest corporations. Software firms such as TCS, Infosys, Wipro and HCL have stepped on to the global stage and become multi-billion dollar companies, forcing giants like IBM and Accenture to look over their shoulders repeatedly. Today, the Indian software sector is worth nearly $60 billion. The Indian biotechnology industry, on the other hand, has grown three fold in just five years to report revenues of $3 billion in 2009-10, a growth of 17% over the previous year. People like Biocon?s Kiran Mazumdar Shaw and Avesthagen’s Villoo Moravala Patell emerged as influential business leaders in the field and made people sit up and take notice of the research at Indian labs. But the next decade will be the litmus test for the industry, analysts feel.
In IT, leaders like Infosys founder NR Narayana Murthy and Wipro chairman Azim Premji have gone on to become doyens of the industry and have inspired a generation. Corporate governance practices at Infosys, Wipro and TCS have become benchmarks, and though the Satyam imbroglio spoiled that party a bit, the Indian IT industry continues to remain a beacon of corporate excellence. Criticism about the industry has come largely in the form of perceived lack of success of Indian software product companies.
In 2000-01, the Indian software and services industry had registered annual revenues of $8.26 billion. Software exports grossed a total of $6.2 billion in this period. In a decade?s time, that figure has swelled 10 times over! In the mid ’90s, the software exports from the country stood at a mere $500 million. Not only has there been an exponential growth, but the industry has also moved up the value chain. However, events such as the dotcom crash, Satyam accounting fraud, anti-outsourcing wave etc threatened intermittently. But each time, the industry bounced back.
The dotcom boom that saw its advent in the late 1990s had started to crumble under the weight of huge expectations. The technology-heavy Nasdaq crashed, triggering off a domino effect in stock markets all over the world. For almost a year from mid-2001, IT firms were forced to freeze investments and hiring. The tough times got aggravated, further, with the 9/11 attacks. But these setbacks forced Indian software to think on more varied planes.
Thanks to its professionalism and inherent discipline, the Indian IT industry started showing better results and TCS, Infosys and Wipro took the lead in moving up the value chain. Soon Indian IT firms were treated as partners and not low cost gurus.
Quarter after quarter, these companies reeled off stunning numbers, energising the economy as a whole and giving a great boost to stock markets. Slowly, the industry started to regain its shape, and hiring came back with a bang. Today, all the three big IT firms have more than one lakh employees on their rolls.
But none could predict the big economic downturn, that was around the corner. Come 2008, the software dream started crashing again. IT budgets were cut enormously and outsourcing slowed. Order pipelines started drying up, and investors panicked. The downturn took a big toll on the US, sinking a few of their marquee companies, and Indian IT which depended heavily on Uncle Sam started to feel the heat. But people like Wipro chairman Azim Premji said the US economic downturn brought good tidings for Indian firms supplying information technology services. What followed was even more shocking and damning. Satyam Computer?s founder Ramalinga Raju admitted to cooking his company’s accounts in January, 2009. And all hell broke loose. The fraud ? estimated to be around Rs 7,800 crore ? came as a big blow to the industry. But the industry showed nerves of steel ? yet again ? and came out of choppy waters. Today, the revenues of India’s IT industry ? both domestic and exports put together ? are on track to exceed $70 billion during the current year, despite threats of protectionist measures introduced by various countries, including the US, and a looming European banking crisis.