This paper, based inter alia on over 60 interviews with Indian IT firms, reviews the growth of the industry and evaluates its prospects. Section II maps the software product space and the position of Indian firms in it. Section III traces the exodus of programmers from India in response to shortages in the USA beginning in the late 1980s. Section IV describes the resulting labour shortage faced by the Indian IT industry and the practices it developed to circumvent the shortage. Section V describes the emergence of an IT export industry from the early 1990s following the advent of VSAT radio links with the major markets. Section VI describes the impact on the industry of the end of the IT boom in the USA in 2000. Section VII shows the extreme profitability of the industry and its impact on its development. Section VIII covers the industry's infrastructural requirements. Section IX describes how the educational system responded to provide the rapidly rising manpower requirements of the industry. Section X discusses government policies impacting the industry. Section XI analyses the industry's share in global markets for various types of software, and from it draws some conclusions on what it needs to do to meet potential competition and secure its markets.
DRC Working Papers, Foreign Direct Investment in Emerging Markets, Centre for New and Emerging Markets, London Business School, No. 20, London, UK, 41 pp.