A Brief History of Indian IT

Every stand-up artist in India can’t resist but make a crack at how everyone in India becomes a software engineer. How is it that India became the land of IT?

It started in 1974, when the mainframe manufacturing company, Burroughs, asked its India sales agent, Tata Consultancy Services (TCS), to provide programmers for the installation of system software for an American client. Like any other industry, Indian IT too faced challenges, such as absence of a local market, and unfavourable government policy regarding private enterprises. In those days, the industry mostly comprised of Bombay-based conglomerates whose chief purpose was to supply programmers to internationals IT firms overseas.

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As Rafiq Dossani, Senior Research Scholar at the Asia-Pacific Research Center at Stanford University, says in his paper, ‘Origins and Growth of the Software Industry in India’, “Unlike the offshored software outsourcing industries of Ireland and Israel, in which multinationals started the industry, in India, local conglomerates began the industry by sending programmers to clients’ sites overseas.”

The 1970s Indian IT faced the most struggle. Remember, that back then, the economy hadn’t been opened up and was state-controlled. The state was hostile to the software industry, and showed it in the form of high import tariffs; 135% on hardware and 100% on software. Software was not recognised as an industry; that meant exporters were not eligible to seek finance from banks.

It would be 1984 when this industry finally saw some favourable changes, when Rajiv Gandhi became Prime Minister and brought about a change in the government’s attitude towards the IT sector. His New Computer Policy (NCP-1984) offered a package of reduced import tariffs on hardware and software. A reduction of up to 60% was seen.

Also, software exports finally got the recognition of as a “delicensed industry”. This meant that exporters had now become eligible for bank finance and the industry was unrestricted from license-permit raj. Foreign companies now had the permission to set up autonomous, export-dedicated units. A project was also set up to establish a chain of software parks to provide infrastructure at costs lower than the market price. These policies eventually made the Indian IT industry what it is today.

As Dossani says, “In the mid-1980s, work shifted to India and was done mainly by domestic firms. This was due to a new technology for software development and was despite new policies friendlier to foreign firms. The shift of work to India was responsible for Bangalore’s development and the relative decline of other centers, notably Mumbai. Since the 1990s, value-addition has increased and domestic firms have become less dominant. This was due to the evolution of multinational firms’ response to new policies.”

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Today, Indian IT companies include the likes of Tata Consultancy Services (TCS), Wipro, Infosys, HCL, and many more, which are recognised all over the world as providers of top class software services. Some of the major factors which played a key role in India’s emergence as key global IT player are:

The Indian education system, though stressful, also has become streamlined to create a world-class IT workforce. Indian engineers are in demand all over the world. The emphasis on English language also adds to the attraction. In addition, the prices offered by Indian IT firms for software development and services are also very competitive.

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