IT Services
exports
Domestic
4. 5; 150
2. 1; 160
7. 3; 220
2. 7; 190
13. 2; 345
3. 9; 250
23. 1; 510
7. 9; 400
36. 7; 720
14. 3; 615
54. 5; 975
24.0; 870
76. 9; 1,225 101. 7; 1,490
37. 5; 1,155 54.0; 1,485
Engineering Services,
R&D, Software Products
exports
Domestic
1. 6; 55
0.5; 40
2. 5; 75
0.8; 60
3. 9; 105
1. 3; 85
6.3: 145
2. 2; 115
10.0; 205
3. 2; 135
15. 1; 280
5. 1; 165
21.0; 365
6. 7; 200
27. 8; 430
9. 6; 240
Total IT Industry (excluding
hardware and BPO sectors)
8. 7; 405 13. 3; 545 22. 3; 785 39. 5; 1,170 64. 2; 1,675 98. 7; 2,290 142.1; 2,945 193.1; 3,645
USD (Billion); Number of IT Professionals (‘000) *Expected
˲ Realizing the Indian college system was unable to provide much IT
training, three Indian entrepreneurs
took it upon themselves in 1982 to provide IT tutorials and training classes.
Their early days were often marked
with one of them driving a motorcycle
and the other riding behind with a PC
in his lap so that they could impart this
training in some rented school space
(in evenings and on weekends). Today,
their institute (NIIT) is a multinational
company that has helped build a substantial base of IT skills in India.
˲ In 1985, Texas Instruments set up
an office in Bangalore with a direct
satellite link to the U.S. By 1989, the
government had also commissioned a
direct 64Kbps satellite link to the U.S.,
economic hardships
forced u.S. companies
to reduce costs.
as a result, they
transferred even
more it work to
india, thereby fueling
the growth of an
industry that was
already growing.
which offered software exporters a new
way to transfer data and services and
set the foundation for offshore business models that could compete with
the onsite “body shopping.”
In 1993, the U.S. Immigration and
Naturalization Service made changes
that made it difficult to get B- 1 visas.
Furthermore, the U. S. Department of
Labor required that companies applying for new H- 1 visas needed to certify
that prevailing market wages were being paid to immigrant workers. Also,
Indian software professionals who
were brought under the umbrella of
the Immigration Act, had to pay Social
Security and related taxes to the U.S.
government, creating an additional
burden on the employees as well as
their employers. These factors led a
few IT companies in India to adopt
a mixed model, which satellite links
had already enabled, and in which
some software programmers would
work at the client’s premises (in the
U.S.) whereas others would continue
to work in their offices in India. Nevertheless, the move to this new business model was gradual because cost
savings for the onsite model were still
quite large, and there were clearly advantages of being in close proximity to
the client. Even today, some IT companies continue to follow the old model
and send 15%–25% of their programmers to the U.S. and other developed
countries.
By 1998, the IT industry in the U.S.
and other developed countries was consumed by the Y2K problem, and two
industries—telecommunications and
the Internet (with its associated dot-com start-ups)—were booming. This
resulted in U.S. companies hiring increased numbers of computer programmers, and since the Y2K problem was
mainly related to legacy software written
in old languages like COBOL, India was
one of the few countries that could still
provide a sufficient number of such programmers. Consequently, the U.S. government was forced to increase its H- 1
quota from 65,000 in 1998 to 130,000 in
1999 and then to 195,000 soon thereafter, and many Indian IT professionals
moved temporarily or permanently to
the U.S. However, in spite of the large
influx of IT professionals, the U.S. industry still could not fulfill its programming
needs and started outsourcing large
amounts of programming and maintenance work to India.
By early 2000, the Y2K problem had
been solved, and both the telecommunications and dot-com booms had
suffered downturns. In 2001, the U.S.
went into a recession and the U.S. government reduced its H- 1 quota back
to 65,000. Far from harming India,
though, these events showed that offshore outsourcing grows in both good
times and bad times. Economic hardships forced U.S. companies to reduce
costs. As a result, they transferred even
more IT work to India, thereby fueling
the growth of an industry that was
already growing exponentially.
The table here lists the revenue
earned and the number of professionals employed by the Indian IT services
industry during alternate years spanning 2001–2002 and projects numbers