India’s Software Industry and Competitive Advantage
Introduction
The growth of the Indian software industry is attributed to the setup of Tata Consultancy Services (TCS) in Mumbai in 1967. During this period, the company began as a downstream computer service with its first manager from Tata Electric Companies (“Tata Consultancy Services”, 2021). In 1970, the company acquired ICL 1903, which was imported from Calcutta Electric Supply Company. In 1974, the company executed its first software project specifically for financial accounting for two United Kingdom (UK) organizations. In 1973, India came up with its first software export zone. In 1974, the company executed its first software project specifically for financial accounting for two United Kingdom (UK) organizations. In this period, the company’s team worked on the project. In the same period, the company got its first independent software assignment to develop a Detroit city police department system.
In 1977, Tata Consultancy Services began exporting IT services beyond India’s borders. In 1984, the company researched heterogeneous computer networks and came up with the Fast Access Local Computer Network (Falcon) (“Tata Consultancy Services”, 2021). This made it the first company to develop the first fault-tolerant multi-user, multitasking windows computer. In 1991, the Software Technology Parks of India (STPI) was set up by the department of electronic (Palit & Mukherjee, 2017). The purpose of this setup was to provide Very-Small Aperture Technology (VSAT) communications without tempering with its monopoly company. The STPI came up with software technology parks in several Indian cities whose role was to provide satellite links to firms through a wireless radio link. In 1993, the government of India allowed firms to have their links which enable direct transmission of work from India to abroad (Palit & Mukherjee, 2017). In 2001, an India-EU group of scholars was created to enable further research and development. In 2002, a bilateral cooperation was made between India and the European Union, enabling progress in science and technology.
Currently, there are more than 1250 software industries in India. Some are managed by the locals, while others are managed by foreign investors. The software industry is the largest in terms of forex earning as it accounts for more than 25% of the total exports in India(“IT industry in India”, 2021). The sector contributes approximately 7.9 % of the Indian GDP. In the first quarter of 2021, the software industry generated approximately $150 Billion. More than 3.9 million people are employed in the sector (“IT industry in India”, 2021). This makes it the leading industry in India in terms of revenue generation and employment.
The milestones of the Indian software industry are as follows; currently, the Indian software industry is among the top industries globally. The industry has employed approximately 4 million people, more than 13 million people indirectly (Jalote & Natarajan, 2019). The current value of the industry is approximately $180 Billion, and this is expected to increase with the advancement in the technology industry (Jalote & Natarajan, 2019). The industry has empowered women as more than 30% of the employees in the software industry are female (Jalote & Natarajan, 2019). The sector has provided women with career options that make them among the people driving change in society. The software industry has wiped the global perception of India being a poor country as it generates billions of revenue each year, which helps develop the nation’s economy. The industry has developed many software and provides solutions in many countries all over the world.
Demand Conditions
For the last two decades, there has been rapid growth through globalization. Many companies and firms have been looking for computer software to solve their business, management, financial, supply chain, and logistics problems. Many business organizations are competing to gain a competitive advantage in the market and one of the requirements to compete effectively is to have technology that will help compete effectively (Jalote & Natarajan, 2019). Business organizations like banks and other financial institutions have been on the upper hand to manage their day-to-day activities with computer systems that are very sophisticated in handling large volumes of data. This increased the demand for computer projects, and in the process, the Indian software industry grew because of the high demand for financial and banking systems (Jalote & Natarajan, 2019). The need for computer systems across India and outside India has increased significantly.
Many businesses that operate online have had a hard time managing their activities. Many are looking for solutions to their problem, making software industries expand their activities to reach many people, especially small and Medium Enterprises (SMEs). SMEs are the backbone of many countries’ economies as they hold the most jobs and revenue (Palit & Mukherjee, 2017). Medium enterprises having more than 65 employees have been looking for ways to manage their business activities. Many software companies have been making business software for small enterprises in India at a cheap price.
Apart from small-scale business organizations, there is a higher demand for programming and networking skills from large-scale industries in the Middle East and worldwide. The software industry in India is known for its technology capabilities, increasing the demand for its programs and software application (Jalote & Natarajan, 2019). Major organizations in the Middle East like the Open and Intelligent Radio Access Networks (ORAN) have been among the top in demanding services from major software companies like Tata Consultancy Service. ORAN is a world-class organization that specializes in testing and integration of ORAN. This company forms a basis of enormous demand as its projects are done worldwide (Jalote & Natarajan, 2019). Mobile service providers such as Telecomm are among the most prominent companies that fulfill their demand from Indian software companies.
Related and Supporting Industries
In Software industries, the related industries are the industries which are industries that manufacture telecommunication equipment and computers. In India, industries such as HP industries are important in gearing the performance of the software industry. Computers are a significant factor in the performance of the software industry. Without computers, it is impossible to have software industries, and thus this makes it the backbone of the software industry (“IT & BPM Industry in India”, 2021). The Hp industry equips the software industry with the necessary tools required for competing effectively in the technology industry. Many computer programs require stable computers with high-performance speed. Many programmers in the country have access to a good computer with high speed hence promoting their performance.
Other industry such as Samsung, plays a crucial role in enhancing the performance of India’s software industry. Samsung manufactures communication gadgets such as rooter and other IT components. Their products are basic requirements for the software industry (“IT & BPM Industry in India”, 2021). The software industry depends on the performance of the network to enhance its operation in many places. Online software, such as business software, requires network connectivity for it to be fully operational. Having this industry is significant as the software industry does not require to import of telecommunication products.
Supporting industries are the industries that hugely rely on the services of the software industry in India. These industries include the airline and the banking industry. In India, the Software industry has grown through the development of major banking software and airline software. For example, leading companies like Tata have grown their name by creating banking software for more than 13,000 branches (“IT & BPM Industry in India”, 2021). The supporting industry has a crucial role in enhancing the performance of the technology industry. Companies tend to grow because of the projects awarded by major supporting industries.
Factor Conditions
Factor conditions such as talent and capital have a significant impact on the performance of the company. Management of talent is very substantial for the organization as it helps the organization progress. When a talented individual is given the right job, the person becomes an asset to the company hence enhancing the company’s development (“India’s Tech Industry”, 2021). Many software industries in India have implemented various strategies such as training to improve competency in the organization. They have ventured into infrastructures that help in nurturing talents. The employees in the software industry are talent-oriented and are mentored hence increasing their productivity within the organization. The industry uses an employee-centric model when training the employees to keep them updated on the changes taking place in the digital world.
Talent diversity in the Indian software industry is perceived through employees who have different cultures, ethnicity, gender, and disability to enhance the performance of the company in different areas. Inclusivity and diversity in this industry are significant in creating a favorable environment that encourages a good work environment. The company has diversity policies, such as the employment of more than 30% women, which is an outstanding achievement (“India’s Tech Industry”, 2021). It gives the company a better chance in the market as diversity creates an environment fit for all types of clients. Through a diversity-focused talent acquisition strategy, the performance of the employee and that of the company are enhanced. Other initiatives like workplace groups in software organizations have helped employees attain their full potential through favorable interventions enabling the creation of a balance between life and work.
Capital determines the industry’s success as it is the source of hiring, paying of employees, expansion, innovation through funding of research and development networks. Many software companies in India use equity financing as it involves shareholders financing and long-term loans. The equity financing method has a lower risk than other forms of funding, enabling the company to enjoy the benefits of financial gearing (Lardinois, 2017). Long-term loans have been beneficial to the company because of the low interest rate and cost associated. Companies such as Tata and Infosys are conservative in using loans, enhancing their performance in the industry. Capital availability has made the company invest in many countries hence competing effectively in the market.
Strategy, Structure, and Rivalry in India Software Industry
Structure
The software industry in India has dramatically grown since 1991. The structure of the software industry in India is different from the structure of many industries. This is because after receiving major liberalization of the economy, the software industry began growing at a rate of 50% and above (“Structure of India’s IT Industry”, 2021). The software industry structure is largely dependent on a skilled workforce.
Strategy
The software industry in India has a partnership with many global organizations. The industry offers IT services such as cloud services, products and platforms, IT consulting services, cognitive business operations, and digital transformation services. The company provides solutions to SMEs and large-scale organizations worldwide (“IT & BPM Industry in India”, 2021). These services involve energy, media and technology, banking, healthcare, consumer business, resource and utility, insurance, and financial services.
The industry uses a value creation model to enhance its performance. In this model, companies such as TCS and Infosys enhance their human capital through talent acquisition in every business environment that the company operates. The company uses organic talent development by investing in its employees and increasing its digital economy performance. This equips their employees with skills that aid in handling customers’ needs and requirements. By implementing the customer-centric structure, the company can convert human capital to intellectual capital (“IT & BPM Industry in India”, 2021). Another strategy is customer engagement, where the companies identify holistic solutions to problems facing customers. The software industry helps customers solve business problems by creating efficient business models and meeting customers satisfaction.
Major Competitors
Tata consultancy service is an IT industry that specializes in software and services. The industry was founded in 1968 in India. Currently, the company has a market CAP of $158.9 B (“Tata Consultancy Services”, 2021). The company’s headquarters is in Mumbai, with a revenue generation of $22.1 and 469,261 employees and an asset amounting to $16 billion and a profit of $4.6 billion. The company has employed more than 488,000 people worldwide and has generated revenue totaling $22.2 billion as of March 2021 (“Tata Consultancy Services”, 2021). The company has encouraged gender diversity employing more than 100,000 women with a third gender rule. The strategy used by the company is identifying talented individuals, filling technological gaps, helping SMEs and large-scale companies through the provision of technological solutions.
The second top competitor is Infosys Company, this company was established in 1981. Infosys is an IT company that specializes in global consulting and technology services. The company has more than 279,000 employees and was labeled the first India Company on the NASDAQ list (“History”, 2021). Infosys provides IT solutions to businesses through technical development of maintenance systems, infrastructure management systems, and technical consulting design. The company operates in more than 46 countries with 220 locations globally (“History”, 2021). The company is known for its excellent skills in developing banking systems such as the Finacle banking solution for India and overseas countries. The company strategy is reskilling their employees, making them suitable for any market changes (“History”, 2021). Also, the company focuses on business transformations of small, medium, and large enterprises.
Government Policies
The growth of the Indian software industry is because of the favorable government policies that help the company thrive both locally and internationally. Various methods employed by the Government of India include eliminating import duties on technology products and reducing trade barriers, which has favored the technology industry’s evolution (“Science & Technology in India”, 2021). Furthermore, the government of India focused on setting up areas such as FDI, Export Oriented Units (EOU), Software Technology Parks (STP), and Special Economic Zones (SEZ). These areas have greatly enhanced the development of the IT Industry.
Some of the initiatives held by India’s government in promoting the IT industry in the country involve the creation of technology innovation platforms. For example, the Automotive Research Association of India (ARAI), Central Manufacturing Technology Institute (CMTI), and the artificial intelligence center of excellence. This favors the software industry because many companies are often in pursuit of talented individuals in the area. This enables the company to improve its products and performance in the market (“Science & Technology in India”, 2021). Human resource is a crucial asset in the IT business, and the company is gathering more from the policies that the government of India implements. Additionally, the government promoted the usage of business computer systems by improving the network conditions in many parts of the country, thereby enhancing the performance of this industry
Culture and Business Practices
General Description of Country Culture
The culture of India is diverse, and it has been in application for more than 1000 years. Their culture tends to vary in different regions of the country. India is the birthplace of religions such as Sikhism, Buddhism, Jainism, and Hinduism. However, the country has other religions such as Christianity and Islam (“Indian culture”, 2021). Despite the introduction of these two religions, Hinduism remains the most popular religion in the region.
Indian foods include heavy spices such as cardamom, turmeric, and cumin seeds. Herbs, flavors, and other food preservatives are also included in the preparation of the food. In most places in India, Basmati rice and wheat are the staple food (“Indian culture”, 2021). Some of the religious groups in India are vegetarians, and they are limited to the consumption of animal products such as meat. The most meat consumed are chicken meat and lamb meat. In languages, India has a variety of languages, and only fifteen languages are recognized constitutionally. The official language in the country is Hindi and English (“Indian culture”, 2021). In clothing, women wear saris while the men wear dhoti traditional clothes. The saris originate from the traditional dancers who used to perform in the temples. The saris are dressed in such a way that it covers the body leaving the midriff.
Business Protocol and Communications
When communicating business matters, Indians prefer physical meetings rather than other communication means. After introduction for a face-to-face business, the Indians often follow up by phone calls and regular visits. In meetings, they usually get straight to the business agenda conservatively (“Indian business communication”, 2021). When communicating in business, Indians maintain eye contact as they perceive it to be very crucial. In business meetings, they prefer personal greetings rather than group greetings. They often make use of various body language when communicating. Facial expressions and gestures are used to pass important messages, such as raising eyebrows when confused or asking questions (“Indian business communication”, 2021). Nodding head and lifting of the chin is used to communicate agreed opinion and when shaking head from right to left or the opposite usually convey disagreed opinion. In India, constant touching is not used like in other places as it portrays inappropriate gestures.
Cultural Do’s And Don’ts
In India, there are things that, when done, give appropriate meaning and other things that give inappropriate meaning. Cultural do’s entails, firstly, treating the elders with respect irrespective of the socioeconomic status. For example, when differing their opinion, one is required to avoid speaking harshly and directly. Secondly, Patience is necessary when negotiating with an Indian business partner (“Indian culture – Do’s and Don’ts”, 2021). Indians typically take time when dealing or making decisions regardless of the importance or urgency of the decision. Thirdly, when dressing in India, it is required that one dresses respectfully and conservatively as it portrays respect for the counterparts.
The things not to be done in India include; firstly, one should avoid swearing and crude humor. India perceives such things as an offense, and they are never taken lightly. Secondly, when someone criticizes their country, they are very unwelcoming and interpret it as an insult. Thirdly, one should avoid criticism and negative comments about a person’s ability because it gives an impression of an insensitive person (“Indian culture – Do’s and Don’ts”, 2021). Fourthly, they prefer not to be questioned on their occupation or caste as some of the occupations in India are part of personal identification. Fifthly, one should not be intimated by the haggling process as they perceive haggling as an enjoyable process in day-to-day life.
Culture-Specific Business Practices
When attending meetings, people enter the meeting in respect of the ranks, with the highest individual entering first. When taking business cards, they use both hands and examine even if it is not essential. They take a good time to understand their business partner before engaging in business activity (“Indian culture – business culture”, 2021). When a given company, business manager, or director is absent, it is always impossible to reach final negotiations. In conducting businesses, they usually involve a third party as they prefer working with people they are familiar with and trust. To Indians, trust is the key to any business, and they will always look for trustworthy commitments (“Indian culture – business culture”, 2021). Business organizations are usually driven by nepotism as it always comprises of relatives and family members. When expanding their business network, they typically do it with people that they trust and are reliable.
Negotiating Style and Tactics
When negotiating or making business contracts, Indians usually asses if the person they want to do business with is reliable and trusted. Whenever the person cannot be trusted, they usually tend to end the negotiations or stall. One must form a good relationship before negotiating with an Indian (“Indian culture – business culture”, 2021). They usually require one to specify the reason they after negotiation before they make the decision. They hate pushing issues when negotiating because they perceive it as a threat to the business’s success. They always focus on long-term relationships that are fruitful when negotiating a contract or business deal.
Comparison of India and American Culture based on Hofstede’s work
Using Hofstede’s work, there are various factors to consider when comparing the culture of India and American Culture. Firstly, on power distance, India has a high dimension of 77, indicating that hierarchy in society and business organization is very much appreciated and employees depend on the direction of the managers (“Country comparison”, 2021). On the other hand, USA power distance is at 40, indicating that employees have to be consulted before decision making is reached. Secondly, India’s individualism has a score of 48, indicating that they believe everyone is responsible for their life impacts. Conversely, the USA has a high score of 91 and believes in justice for everyone (“Country comparison”, 2021). They rely less on social authority and are dependent on themselves for decisions.
Thirdly, Indians portray masculinity in their process of power successions. India has a masculinity score of 56, which is considered very high (“Country comparison”, 2021). On the other hand, the USA has a masculinity score of 62, which is portrayed by their culture and behavior (“Country comparison”, 2021). American assessments are based on the achievement of their targets (“Country comparison”, 2021). They focus on showing their accomplishments, status, and targets to friends and other people. Fourthly, India’s uncertainty avoidance score is 40, and the country accepts imperfection with a low preference for avoiding uncertainty (“Country comparison”, 2021). The USA has an uncertainty avoidance score of 46, which is also very low (“Country comparison”, 2021). They have a low chance of accepting new innovative products, ideas and willingness to try something new.
Conclusion
In conclusion, several factors have given India’s Software Industry a competitive advantage in the market. These factors include the demand conditions, supporting industries, factor conditions, strategy and rivalry, and government policy. With demand conditions, many organizations and business companies require digital solutions to their problems. This has enabled the rise of many companies in the Indian software industry to fulfill the demand for SMEs and other organizations. Secondly, related industries such as the Hp industry and Samsung for manufacturing computers and telecommunication equipment have greatly favored the development of the software industry. Also, supporting industries like the banking and airline industry have led to the development of the software industry.
Thirdly, factor conditions like talent and capital have enhanced the performance of the company. Talent helps the software industry achieve innovative goals, and capital has enabled many companies to fund technology projects. Fourthly, strategy and rival companies like Tata Consultancy Service and Infosys have enabled the software industry to grow significantly to attain a competitive advantage in the market. Lastly, India’s government policy has favored the development of the software industry by eliminating import duties on technology products and setting up FDI, organizations, and platforms. Furthermore, the government has enhanced remote areas’ network conditions, allowing the software industry to expand its business in such regions.
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