December 7, 2000	atimes.com

Special Reports Software - the arrowhead of India's IT weaponry By Tony Allison 1. Introduction 2. Export growth and trends 3. International listings 4. Obstacles 5. Human capital 6. IT environment 7. New measures 8. Computer and Internet use 9. Key Agencies 10. India's IT cities 1. Introduction In May 1998, Indian Prime Minister Vajpayee Bharatiya formed a National Task Force on Information Technology and Software Development to formulate a long-term national Information Technology policy for the country and also to remove impediments for the growth of the IT industry. The objective was to help India emerge as an IT superpower, with a target of US$50 billion for software exports by 2008. Adding hardware exports and domestic sector requirements in hardware and software, the total size of the IT industry is projected to reach $100 billion by 2008. That will need a compounded annual growth rate of about 40 percent, a figure which has been regularly exceeded by the Indian IT industry for the several past years. The number of computer professionals in the country will also have to grow from the present 280,000 to more than 2.2 million. According to the National Association of Software and Service Companies (Nasscom), the apex private sector body of the software, dotcom and IT services industries in India, the IT software and services industry grossed $5.7 billion during 1999-2000. This represented an overall growth of 53 percent, up from $3.9 billion in 1998-99. Out of the total revenue, software exports - the arrowhead of the industry - grossed $4 billion (up 57 percent) and the domestic software market fetched $1.7 billion. Nearly half of the exports consisted of providing off-shore services, either in the form of solutions, or supplying on-site engineers in foreign countries. Forecasts for the full year 2000-2001 see growth of more than 50 percent with revenues of $8.75 billion. This will include software exports of $6.3 billion and a domestic market of $ 2.45 billion. As of 30 June 2000, the market cap of listed software companies in India was estimated at $55 billion. More than 185 of Fortune 500 companies - almost two out of every five global giants - outsource their software requirements to India. Vajpayee's technology-friendly government has firmly placed IT on the national agenda, and many states, encouraged by Bangalore - dubbed India's Silicon Valley - have formulated IT policies. This has further strengthened India's position in the software-driven IT sector in the world. The state policies focus on key issues of infrastructure, electronic governance, IT education, providing a facilitatory environment and increasing IT proliferation in the respective states. The software industry is not only growing exponentially, it is moving up the value chain. It is evolving, from the initial staffing to software development - where it is currently the world's major supplier of engineers - to integration and IT business consulting. For India to achieve its goals of superpower status, it recognizes that it needs to move faster on the value chain ladder and become more involved in strategic consulting, brand management for customers, research and development and in providing more Web-based and e-commerce interactive services. Packaging, too, is an area with potential that it needs to develop. Research and development spending in the software industry increased from 2.5 percent of total spending in 1997-98 to about 3.4 percent during 1999-2000. 2. Export growth and trends During the year 1999-2000, software exports earned foreign exchange worth $4 billion. This is a growth of over 57 percent in rupee terms and 51 percent in dollar terms over the previous year's exports of $2.65 billion. Exports were boosted by solutions for Y2K, with revenues for this sector accounted for about 12 percent of total software exports. The loss of Y2K problems is not expected to affect exports as the country's expertise in the area has helped win new accounts. Software exports accounted for 10.5 percent of India's total exports during 1999-2000. Five years previously, they accounted for only 2.5 percent. Thirty-seven software companies exported more than $25 million worth of software and services and 180 companies exported more than $2.5 million. In comparison, in 1992-93, only eight companies exported software worth more than $25 million, indicating an expanding industrial base. The top 20 software exporters include TCS, Wipro, Infosys, Satyam, HCL, NIIT, Silverline, Cognizant, Pentamedia Graphics, Pentasoft Technologies, Patni Computers, IBM, DSQ, Mastek, MBT, HCL Perot, I-Flex, Tata Infotech, Zensar Technologies and Birlasoft. Altogether, there are approximately 1,250 software exporting companies in the country. In 1999-2000, e-commerce software solutions worth $500 million were exported. This is expected to increase to $1.4 billion in 2000-01. IT Enabled Services are being referred to as the next major driver of the technology-led services industry. IT Enabled Services or "remote processing" covers a wide range of services, including call centers, medical transcription, data digitiztion, legal databases, revenue accounting, data processing, back office operations, Web content development and animation. The IT Enabled Services market is poised to grow from the present $10 billion worldwide to $200 billion. From its present low base, by 2008 these services could add an additional 1 million jobs in India, generating an annual revenue of $17 billion. Quality software: Of the leading 300 companies, more than 170 have ISO 900 certification. With regard to SEI CMM (Software Engineering Institute Capability Maturity Model) Level 5, Indian leads. Out of 23 worldwide companies with SEI CMM Level 5, 15 are located in India. Export destinations: India exported software and services to 95 countries, with the US and Canada dominating, at 62 percent, followed by 23.5 percent to Europe; 3.5 percent to Southeast Asia; 3.5 percent to Japan; 1.5 percent to West Asia; 1.5 percent to Australia and New Zealand; and 4.5 percent to the rest of the world. The US market dominates Indian software exports partly because it is by far the world's largest software market, constituting around half of all software sales in the 1990s, and partly because American information technology and financial services companies have moved much more quickly than their European counterparts to take advantage of offshore programming. However, India is also more locked into to the US market than others because many Indian businesses have links through family members or friends who are US residents; because many software developers are US-trained and so understand that market best; and because there is a vast predominance of US firms in the all-important collaborations which provide so much of India's software export market. Following an initiative by the Indian government and Nasscom, the Nasscom's India Europe Software Alliance program (Niesa), trade with Europe is growing rapidly, up to $920 million. The United Kingdom is the most favored destination. A shortage of skilled manpower in Germany, Austria, the UK, France and Italy has resulted in work permit requirements in those countries being eased, aimed particularly at allowing in Indian professionals. To target new and emerging markets, Nasscom has signed memorandums of understanding with Israel, Singapore, Ireland, Mexico and Morocco. Offshore software: Offshore services have increased to more than 42 percent of total exports - compared to 5 percent in 1991-92. The parastatal Internet provider Videsh Sanchar Nigam Limited (VSNL)) and Software Technology Parks of India (STPI) have improved their services to provide high speed (64 Kbps, 2 Mpbs) data communication links to the industry. As of 30 June, there were more than 1,200 leased lines from Indian software companies providing 64 Kbps and higher speed data communication links for offshore software development. In 1992, there were only 10 such links. Nasscom has announced a series of initiatives to help achieve its grand software revenue targets of $50 billion for exports and $35 billion in domestic sales by 2008. These include the completion of a study with McKinsey & Company to identify key growth opportunities in the sector. The association also plans to launch an aggressive campaign to increase the domestic use of computers. 3. International listings Satyam Infoway was the first listing of an Indian Internet/ ISP company on the tech-heavy US bourse Nasdaq. It was followed by Rediff.com and recently Silverline Technologies listing on the New York Stock Exchange. Earlier, the Bangalore-based Infosys Technologies became the first Indian software firm to list on the Nasdaq, in March 1999. It raised $70.38 million, securing a 22 percent premium on its offer price. Nasdaq is currently awaiting the Reserve Bank of India's approval to open its first office in India (in Bangalore) early next year as part of plans to assist more Indian companies to list on it. Nasdaq, which is carrying out its operations through a liaison office, plans to step up investor awareness and relationship programs in India. The move follows a long list of at least 55 Indian companies planning to list on the Nasdaq or the New York Stock Exchange once they adopt the Generally Accepted Accounting Principle (US GAAP). 4. Obstacles and strategy The government must continue with its present technological thrust. It must also assist the industry in leading brand equity promotions overseas. Inadequate telecom infrastructure. Lack of bandwidth. Inter-departmental fighting among concerned government ministries. Simplified call center policy needed. High-end tools in the form of Software Engineering Environment (SEE) for design of real time systems, Concurrent Engineering Environments (CEE), Computer Aided Design (CAD), Computer Aided Manufacturing(CAM) and Electronic Design Automation (EDA) have been available in the world market since the early '90s. However, due to their high cost, penetration in the Indian market has been negligible. In addition, the limited lifespan of the tools - one to three years before they are out of date - makes them expensive to keep replacing. It is necessary to find an affordable solution to overcome this problem and evolve a promotional framework at national level for meaningful penetration of these tools. Less than 100 Indian software companies were equipped to provide euro tools and services in 1999. This will grow to 500 by 2002 in an attempt to cash in on the $3 billion market. Provide computers and Internet in every school, polytechnic, college, university and public hospital in the country by 2003. 5. Human capital In the mid-1970s the government, then the purchaser of about half the computers sold in India, standardized on the Unix platform. Indian software companies subsequently built a solid reputation for Unix-based software development. Motorola, Texas Instruments, Hewlett-Packard and other multinationals established engineering centers in the country to take advantage of India's large pool of low-cost, capable engineers. Today, India's dominant business model has changed from one focused on Unix computer platform services to one focused on the growing number of Internet-related services. Indian software developers are finding that their engineering strengths are opening a wide array of opportunities in the development of Web and Internet-based activities, such as business-to-business e-commerce, data centers, application hosting and medical transcription. In the past India provided the grunt work - code-crunching - for software that was designed in the US. But now, increasingly more technology design work is being done in India and Indian entrepreneurs at home, who initially focused on starting consulting firms, are now seeing the rewards of taking greater risks and developing new technologies and products. In some ways, the software industry resembles the unique jewelry industry because India imports unfinished software, substantially modifies it by customizing it for use elsewhere in the world, then re-exports the finished product. Notwithstanding India's high illiteracy rate, a large pool of highly skilled, English-speaking technical workers live in the country, the biggest of its kind in the world. (The literacy rate, as defined as those aged 15 and over who can read and write out of the total population of just over a billion, is 52 percent.) The seeds of India's success lie in the post-independence (1947) creation of a network of high-quality technical colleges. The premier institutions of higher education are the Indian Institutes of technology (IITs), the Indian Institute of Science (IISc) and the Indian Institutes of Management (IIMs). They are comparable to the best institutions for technical and management education world over, and they are complemented by a large number of other national and regional engineering colleges produce highly trained and qualified manpower. Altogether, these approximately 1,832 facilities train about 70,000 computer software professionals every year. According to Nasscom, in 1998-1999 the number of software professionals working in India increased to 250,000 from 200,000 the preceding year. In 2000, the figure rose to 280,000. According to the Ministry of Information Technology (MIT), India is comfortably placed until 2008 to satisfy domestic demand for IT manpower, at present levels of demand. In a discussion paper presented at the first meeting of the "Task Force on Human Resource Development in Information Technology" in September 2000, concerns, however, were expressed over the unpredictable growth of the IT sector worldwide. This would influence the exodus of IT professionals. The MIT said that based on the current intake capacity in various institutions and projected additions till 2008, against an additional requirement of nearly 760,000 people for the hard-core IT sector, 1,060,000 graduates will be added to the system by 2008, providing an adequate cushion for international migration and attrition. This would bring the total number of IT professionals in India in 2008 to 2.2 million. But being unable to put a figure to global demand, the discussion paper proposed setting up a center to project supply and assess demand in the IT sector. It recommended an increase in the intake of quality institutions and improvement in others. Taking 1999-2000 as the base year, it suggested that intake could be doubled by the next academic year and made three-times bigger by 2003-04. To meet infrastructure and faculty requirements, the paper proposes a cluster approach comprising select institutions wherein they can share the strengths of each other's faculties, such as courses. At least 20 percent of the money needed to improve facilities will come from the World Bank. In addition to the emerging IT-related opportunities, Indian firms continue to provide low-cost, outsourced software development services. Firms such as Moon-Stone InfoTech of Hyderabad and Lama Information Technologies of Bangalore are examples. These and similar firms undertake labor-intensive programming for offshore customers over the Internet using high-speed datacom links. Programming costs can average as low as $35 an hour per programmer compared to up to $200 an hour in the US. Body shopping: In addition, Indian companies such as Wipro and Infosys Technologies grew wealthy by exporting software engineering talent (a practice called "body shopping") to provide on-site services to customers, primarily in the United States and Europe. The first generation of Indian/US entrepreneurs includes the following: Kanwal Rekhi, who sold the networking firm Excelan to Novell for $250 million in 1989. Sabeer Bhatia, co-founder of Hotmail, which was sold to Microsoft for $250 million. Vinod Khosla, founder of Sun Microsystems. Indian immigrants ran approximately 9 percent of Silicon Valley startups from 1995 to 1998. In recent months Britain, the United States and Germany have relaxed their immigration laws to encourage more Indians to move. In America the number of visas for foreign IT workers has been raised to 200,000 a year. In 1999, 165,000 of the H1B visas were issued to Indian IT workers. And Germany too is offering thousands of new visas. When it first opened up to Indian workers this year it received 30,000 applications for 2,000 positions. Japan this year announced more multi-entry visas valid for up to three years to Indian IT professionals working in Japan and the training of 1,000 technicians in the Japanese language and business practices. In general terms, India's software export trade has been characterized by an international skill division of labor in that the majority of software contracts allocate only the less-skilled coding and testing stages to Indian workers. Indian workers have generally been used as programmers, working to requirements and design specifications set by foreign software developers, rather than as systems analysts or designers. This has helped to reinforce a gender division of labor. Only about 10 percent of Indian software developers are female. Women face particular difficulties because software development often entails working unsocial hours and, more significantly, working overseas. 6. IT environment In India's most recent general election in August 1999, Prime Minister Vajpayee's Bharatiya Janata Party (BJP), a group strongly committed to economic and technological progress, won a solid victory. A number of Vajpayee's colleagues share his well-stated IT objectives, such as Chandrababu Naidu, the chief minister of the state of Andhra Pradesh, who carries a laptop with him wherever he goes. In October 1999 the central government, moving ahead with its plans for India to become a global IT superpower, announced the formation of a new ministry, the Ministry of Information Technology. While the move has been widely welcomed in the industry, other government ministries and departments, notably those relating to communications, information and broadcasting, and science and technology, are engaged in a bureaucratic turf battle that is impeding IT progress. This is hindering the government's goal of acting as a "facilitator and not a regulator". In the 2000-2001 budget, the government allocated funds for the Department of Scientific and Industrial Research to launch a New Millennium Indian Technology Leadership Initiative. It will focus on areas which fulfill national objectives and will be based on partnership between the government and private sector. New IT legislation: On October 17, the Information Technology Act came into force, making India one of the few countries in the world - and second in Asia after Singapore - to have an IT law. The greatest impact of the law will be on electronic commerce, and it appoints a Controller of Certifying Authority (CCA) for the authorization of digital signatures. Even if e-commerce is slow to pick up domestically, export-import companies are increasingly requiring this facility. In addition to authentication of digital signatures by the CCA, the act provides for the use of electronic documents for all kinds of e-commerce activities, including their acceptance by government offices. It also brings under the ambit of the law electronic crimes, such as hacking. A Center for Electronic Governance has been set up by the government to collate and disseminate the best practices of e-governance for use by the central and state governments. The new IT Act, however, might be short-lived as a larger "convergence" piece of legislation has been mooted by planners. It would overtake the IT Act and its institutions, all of which would come under a proposed Communication Commission of India that would regulate both the carriage and the content of the Internet. 7. New measures In the 2000-2001 budget customs duty on several items for the IT sector were cut. These included: Computers, from 20 percent to 15 percent; Mother boards, from 20 percent to 15 percent; Floppy diskettes, from 20 percent to 15 percent; Specified capital goods for manufacture of semi conductors and ICs, from 15 percent to 5 percent; Microprocessor for computers, from 5 percent to nil; Memory storage devices, from 5 percent to nil; CD ROMs, from 5 percent to nil; Integrated circuits and microassemblies from 5 percent to nil, and; Data graphic display tubes for colour monitors for computers from 5 percent to nil. For telecommunications, the basic customs duty on specified raw materials for the manufacture of optical fibers was reduced from from 15 percent to 5 percent and the duty on cellular phones from 25 percent to 5 percent to improve their availability through proper channels and to curb the menace of the grey market, and on their battery packs from 40 percent to 15 percent. The concessional rate of 5 percent basic duty applicable to specified telecom equipment to internet service providers also extended. Other government incentives to the software sector include: A five- to 10-year tax holiday for units in Software Technology Parks; 100 percent depreciation over two years on all IT products; Software and IT to be treated as a priority sector by banks for five years; Blanket approval for Indian IT companies for overseas acquisitions from export earnings; Issuance of sweat equity to employees; Zero custom duty on all IT products by the year 2002; Broadening of the definition for software to include the entire range of IT software as per World Trade Organization requirements; Exemption of software developers and exporters from physical and customs bonding at Software Technology Parks, 100 percent Export Oriented Units and Export Processing Zones, and; Opening of a radio band for public wireless access In addition, the government has amended the Copyright Act and established a rigid enforcement directorate, which is aimed at curtailing piracy. 8. Computer and Internet use Technological growth in India has long been hampered by a lack of telecommunications infrastructure. According to the International Telecommunications Union, India has a teledensity of only seven telephones for every 1,000 people compared to 490 per 1,000 in the US. Power shortages are another problem, forcing companies to utilize leased lines or satellite uplinks for their telecommunications needs. In addition, government restrictions and high costs have impeded Internet development. The government did not open the Internet to private subscribers until August 1995, and private companies could not offer Internet services until November 1998. Since then, more than 100 private Internet service providers have been licensed, and user subscription costs have dropped to about $0.35 per hour. Nasscom says its latest study showed the number of Internet subscribers had doubled to 1.8 million in the seven months from March to October in 2000. Projections are for 23 million users by 2003. Internet users are estimated to be more than three times the number of subscribers because shared connections and cyber cafes account for a significant amount of usage. Demand for access to the Internet is driving PC sales. The number of PCs in India stood at around 4.3 million at the end of 1999/2000 and the hardware industry expected an additional 1.9 million units to arrive in 2000/01. Cable television currently reaches some 40 million households. Spending by Indian households on information technology, particularly computer hardware, is set to surge 55 percent in the current fiscal year, A recent survey by International Data Corp (IDC) covering 25 Indian cities estimated IT spending by households would grow 55 percent in value to account for 14 percent of the total information technology market, up from 11 percent in 1999/2000. IDC said that including small- and medium-sized businesses, spending on information technology was expected to top ($4.2 billion) in 2000/01 (April-March). Internet access through cable will account for 24 percent of the overall volume by the end of March 2005, it is predicted, while access through dial-up subscribers is expected to decrease from the present level of 84.6 per cent in March 2000 to 70 percent by March 2005. 9. Key agencies The Ministry of Information Technology The ministry serves as a "facilitator, motivator and promoter" in the industry. Its functions include: * Policy matters relating to Information Technology; * Promotion of knowledge-based enterprises; * Development of electronics and coordination among its various users; * All matters relating to the personnel under the control of the Ministry; Coordination of requirements relating to electronics processing equipment (computers); All matters pertaining to silicon facilities; All matters concerning computer based information, technology and processing, including hardware and software, standardization of procedures and matters relevant to international bodies; Promotion of the Internet; Promotion of e-commerce; Promotion of IT education and information; Technology based education; National Informatics Center, and; Electronics and Computer Software Export Promotion Council. The National Association of Software and Service Companies (Nasscom) Founded in 1988, the New Delhi-based body represents India's software industry. It has close to 260 members which between them account for 95 percent of the total revenues in the Indian software industry. Its stated mission is to act as a catalyst for the growth of the software industry in the country. It aims to maintain close interaction with the government to formulate national IT policies with specific focus on computer software; to promote the profitable growth of the software industry; maintain a state-of-the-art information database of software-related activities for use by both software developers and interested companies overseas; to encourage members to provide world-class and quality products, services and solutions in India and overseas. It also takes effective steps to campaign against software piracy, to provide valued-added services to its members and to help in the development of human resources required for the software industry. On policy issues, Nasscom has taken up several important issues. These include income tax exemption on profits from software exports; zero import duty on computer software; legal reproduction of imported software in India to bring down the street price of software; availability of datacom links (both national and international); amendments to the Indian Copyright Act, which makes the law one of the toughest in the world; and the abolition of the sales tax on software. In October, Nasscom launched a new initiative, Entrepreneur Club, to promote entrepreneurship in the IT sector. The club will bring together angel investors, incubators, venture capitalists and mentors and provide a one-stop-shop for entrepreneurs to establish start-ups. As many as 150 CEOs and vice-presidents have already joined the club and volunteered to be mentors as well as angel investors. Software Technology Parks (STP) Recognizing the potential of the software industry, the Ministry of Information Technology (MIT) in 1986 introduced a policy document on "Computer Software Export, Software Development and Training". Subsequently, in 1990, the it formulated the Software Technology Park (STP) scheme to promote and facilitate software exports from India. Offering new fiscal incentives, state-of-the-art infrastructure and an investor friendly environment, the scheme has contributed to the steep growth in the software exports. Software Technology Parks of India (STPI), an autonomous organization, was subsequently set up by under the Ministry of Information Technology to promote continued exports. The STP scheme is a 100 percent export-oriented initiative for the development and export of computer software using data communication links or in the form of physical media, including the export of professional services. The major attraction of this scheme is single point contact service to the STP units. Objectives To act as the front-end to the software industry for government policies and approvals; To establish and provide data communication facilities, computer facilities and infrastructure facilities, such as office space and general amenities; To promote the development and export of software and services through technology assessments, market analysis, marketing segmentation, marketing support and related areas, and; To train professionals and to encourage design and development in the field of software technology and software engineering. Highlights of the STPs Approvals are given under single window clearance mechanism; An STP project may be set up anywhere in India; The STPI can clear projects with less than than $2.1 million in investment; 100 percent foreign equity is permitted and is approved automatically through delegated powers from the government to the Director of the STPI; All imports of hardware and software in the STP units are duty free, and imports of second hand capital goods are also permitted; Computer systems can be used for commercial training purposes provided no computer terminals are installed outside the STP premises; Sales in the Domestic Tariff Area (DTA) are allowed up to 50 percent of the export in value terms; STP units pay no corporate income tax until 2010; Capital goods purchased in the Domestic Tariff Area are subject to regular benefits, such as the reimbursement of Central Sales Tax (CST), and; The capital invested by foreign entrepreneurs - be it know-how, fees, royalties or dividends, can be freely repatriated once required income taxes are paid. 10. India's IT cities Software companies are not distributed evenly throughout India, but are mainly located around a few major Indian cities, especially Bangalore in Karnataka state, Hyderabad in neighboring Andhra Pradesh state, Madras in Tamil Nadu and a trio of cities, Bhopal, Indore and Gwalior, in the central state of Madhya Pradesh. Maharashtra has an ambitious IT infrastructure plan for setting up 15 information technology parks. The state's IT vision hinges on a five-pronged strategy of providing infrastructure, connectivity, fiscal and non-fiscal incentives, human resources; development and institutional framework, state industries and water. US President Bill Clinton's visit to Hyderabad in March and Microsoft's decision to set up its research and development center there has helped put Andhra Pradesh on the global IT map. Mumbai, original home of the software industry, is still used by some of the largest software companies, although almost all of these have offices in several other cities. Bangalore leads the pack with software exports of $1.2 billion in the fiscal year ending March 31. Tamil Nadu's software exports have almost trebled from $91 million in the past three years and Andhra Pradesh's exports have shot up from $3 million in fiscal year 1994-95 to $131 million in 1998-99. The software industry started in Mumbai, in the business district around Nariman Point, in the late 1970s. When prices and commute times began to rise there, part of the industry decamped up to the Santa Cruz Electronics Export Processing Zone (SEEPZ) in the north of the city, so Mumbai was still the center of the software industry until at least the mid-1980s. This began to change because Mumbai's problems still reached up to SEEPZ. Software firms were fast running out of labor, partly due to the overseas brain drain, plus high prices in the city and poor quality of life. These firms, and more importantly foreign investors and individual entrepreneurs considering the creation of new software companies, began comparing location in Mumbai with location elsewhere. Bangalore Several main factors play a part in the locational decisions of new software companies. One of these - proximity to customers - is of limited relevance in the context of software exports. Four other factors have guided locational decisions in India. Labor availability: Bangalore has abundant labor that could be drawn from its long-standing research laboratories, educational institutes and public sector electronics firms. Key institutions include Bharat Electricals Ltd, the Indian Institute of Management and the Indian Institute of Science. These have been a main source of both software employees and in recent years entrepreneurs. Quality of life: Bangalore has benefited from its reputation for a good climate and social life. IT workers have rapidly integrated into the city's social fabric. By contrast, Mumbai has had a long and troubled history of both communal and labor relations strife, both of which were comparatively unknown in Bangalore. Infrastructure: The infrastructure in Bangalore is better, with a plentiful supply of both power and water. In 1986, US company Texas Instruments set up its subsidiary in Bangalore, the first proper offshore software facility (using satellite-based telecommunication links) of its kind in the country. This further encouraged firms to go to Bangalore. From this point on, the Bangalore "snowball effect" began. Proximity: A large number of software firms in India have come into existence when employees leave their previous firm to set up on their own. It is this, together with labor and infrastructural factors, which has contributed especially to self-reinforcement of location and, hence, to the intense clustering of software firms that is observed in India. (Special to Asia Times Online)

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