When IT industry came for first time, there was no established leader in Indian market, there was no entry barrier. Also like any other newly born industry this industry also has high risk of failure with similarly high return prospects. This gave birth to “First Generation IT Entrepreneurship” (as referred by industry experts) in India. These were the people with little investment and nothing to lose focused on the high return prospects unlike the business institutions who were more concerned on the higher risks of IT. The net business was little less than $100(unconfirmed fig) million during this phase with around 500 (unconfirmed fig) companies in total majority of which were very small. The industry started gaining recognition in the early eighties, as these companies took up export of trained software manpower, especially to USA. Very soon, instead of just exporting persons, several companies started taking up software projects at customer sites, and sent their professionals to carry out this task. Starting with routine jobs, most companies graduated to more and more sophisticated tasks and India started getting recognized as having special talent for software development and management of software projects.
In early nineties, the Indian software industry shifted its focus on “Business Process Outsourcing” done by majority of US and UK companies for cost optimization, an area where the country enjoyed a natural cost advantage. They were able to win contracts in a large scale to carry out software projects off-shore (in India). From then on, projects have become more sophisticated and bigger. This success of service business inclined the entrepreneurship from product to service business attracting engineering and the MBA graduates focused more on risk avoidance rather than reward maximization in this established segment. Thus came the “Second Generation IT Entrepreneurship”. With time and the continuous growth across the world, the Indian software industry has grown from a mere US $ 150 million in 1991-92 to US $ 50 billion in 2008, with the annual growth rate not sliding below 50 percent since 1991. Easy availability of loans, interest of venture capitalists and increased usage of internet and computers further boosted the entrepreneurship during this phase. The sector contributed significantly to increase nation's GDP, generate urban employment and exports. During the year 2008, the sector maintained its double digit growth rate and was a net employer. The IT industry has become a growth engine for the economy. The low entry barrier and continues growing domestic an international market had helped grow the number of Indian IT companies to almost 70000(unconfirmed fig) till 2008.
But the changing environment and emphasis of Organizations around world on reducing operating cost made the Indian IT Inc to change their strategy. Especially 2008 was a year of transformation for the Indian IT and related services sector as it began to re-engineer challenges posed by macro-economic environment (global recession and corresponding stringent measures by governments & companies worldwide), though the worldwide spending aggregate estimated to reach nearly USD 1.6 trillion, a growth of 5.6 per cent over the previous year. In recent times, The Indian IT & IT Services industry has displayed resilience and firmness in countering the unpredictable conditions and reiterating the viability of India’s fundamental value proposition. But the factors have caused change in the paradigm entrepreneurship giving rise to “Third Generation IT Entrepreneurship” (as termed by industry experts). Though the worldwide spending in IT space is expected to increase but the percentage of outsourcing will reduce. Now the entrepreneurs are focusing towards product development and emerging spaces like Engineering (automobile, robotics, aeronautical, mining) solutions, graphics, gaming, Web2.0 etc along with traditional spaces (service) unlike Second Generation IT Entrepreneurship. With the cost leadership and global reach this model is expected to be more successful. But as more focus will be on technology the entry barrier is expected for non technical (functional) resources.
In early nineties, the Indian software industry shifted its focus on “Business Process Outsourcing” done by majority of US and UK companies for cost optimization, an area where the country enjoyed a natural cost advantage. They were able to win contracts in a large scale to carry out software projects off-shore (in India). From then on, projects have become more sophisticated and bigger. This success of service business inclined the entrepreneurship from product to service business attracting engineering and the MBA graduates focused more on risk avoidance rather than reward maximization in this established segment. Thus came the “Second Generation IT Entrepreneurship”. With time and the continuous growth across the world, the Indian software industry has grown from a mere US $ 150 million in 1991-92 to US $ 50 billion in 2008, with the annual growth rate not sliding below 50 percent since 1991. Easy availability of loans, interest of venture capitalists and increased usage of internet and computers further boosted the entrepreneurship during this phase. The sector contributed significantly to increase nation's GDP, generate urban employment and exports. During the year 2008, the sector maintained its double digit growth rate and was a net employer. The IT industry has become a growth engine for the economy. The low entry barrier and continues growing domestic an international market had helped grow the number of Indian IT companies to almost 70000(unconfirmed fig) till 2008.
But the changing environment and emphasis of Organizations around world on reducing operating cost made the Indian IT Inc to change their strategy. Especially 2008 was a year of transformation for the Indian IT and related services sector as it began to re-engineer challenges posed by macro-economic environment (global recession and corresponding stringent measures by governments & companies worldwide), though the worldwide spending aggregate estimated to reach nearly USD 1.6 trillion, a growth of 5.6 per cent over the previous year. In recent times, The Indian IT & IT Services industry has displayed resilience and firmness in countering the unpredictable conditions and reiterating the viability of India’s fundamental value proposition. But the factors have caused change in the paradigm entrepreneurship giving rise to “Third Generation IT Entrepreneurship” (as termed by industry experts). Though the worldwide spending in IT space is expected to increase but the percentage of outsourcing will reduce. Now the entrepreneurs are focusing towards product development and emerging spaces like Engineering (automobile, robotics, aeronautical, mining) solutions, graphics, gaming, Web2.0 etc along with traditional spaces (service) unlike Second Generation IT Entrepreneurship. With the cost leadership and global reach this model is expected to be more successful. But as more focus will be on technology the entry barrier is expected for non technical (functional) resources.
But is the industry really mature enough to take on this transition. Do we really have such kind of visionary leadership in IT.
Please share your inputs.......
(Disclaimer: The text of the material is taken from various websites. Data may be in-accurate. I only intend to give a brief description before startig the discussion)
