New Internationalist

Silicon Valley East

Issue 286

Silicon Valley East
The computer industry is creating jobs in India. But can the
subcontinent cope with high tech? Dilip D’Souza reports.

Young girls training for work in Bangalore's burgeoning computer business.
JORGEN SCHYTTE / STILL PICTURES

When I left engineering college, it seems a century ago, I was offered a job with a then fledgling software company called Tata Consultancy Services (TCS). I didn’t sign up with the firm. Instead, I flew to the United States a few months later to pursue a graduate degree in Computer Science.

Soon afterwards I was astonished when several of my friends who had joined TCS turned up in the US. They’d been sent abroad as consultants for their American clients. This was a fairly routine thing, this so-called ‘bodyshopping’. From the company’s point of view it made sense. India had a large supply of qualified engineers and programers and Western companies were happy to off-load software projects to Indian developers since they got the same quality of work for much less money.

This is how the Indian software industry really took flight – by offering skilled software development at knock-down rates. In 1995 the country’s software industry had sales of more than $2.2 billion and that sum is growing at more than 40 per cent a year. Half the industry’s income is from exports.

The main site of this economic boom has been Bangalore – a once quiet, leafy-green city with a benign climate in the state of Karnataka. Bangalore has almost self-consciously built an image for itself as the city for young, affluent professionals. It’s become the first city in India where pubs are accepted places for the white-collar set simply to hang out. There are technical reasons for Bangalore’s rise too. After Independence, the Government established several large public sector engineering companies and institutes there: Indian Telephone Industries, Hindustan Machine Tools, the Indian Space Research Organization and others. There are also many good colleges and at least two top-notch post-graduate research institutes.

‘Bangalore took off because of the quality of people here and the quality of life,’ says Nandan Nilakeni, founder of Infosys Technologies. Infosys is one of Bangalore’s largest software companies with sales of more than $28 million last year. It used to be that Infosys would send platoons of software engineers across the Atlantic. No longer. Now most of the work is done in Bangalore via satellite links. The time difference means Indians sort out programing snags which their American clients receive in time for breakfast.

But the situation is changing fast. Indians are now anxious to produce their own software. ‘Indian companies have to go up the value chain,’ Nandan Nilakeni told me. Infosys is doing just that and hopes to earn 40 per cent of its revenues from its own software sales within four years.

After Indian companies like Infosys decided to locate in Bangalore multinationals were also attracted to the city. Texas Instruments was one of the first big foreign companies to set up shop there, in 1984. It was followed by giants like Digital, Hewlett-Packard, IBM, Motorola, Siemens and Groupe Bull. Today, a third of the nearly 300 software firms in the city are multinationals.

Software now employs about 10,000 technically qualified people in Bangalore.

A rosy picture? For some. Software has certainly brought prosperity to thousands of people in India’s Garden City. But there is a downside too: municipal services have not kept up with the rapid population growth; city garbage is often uncleared and water is getting scarce. Traffic is a nightmare, public transport hopelessly inadequate. Corruption and red tape are rife and real estate prices beyond the reach of ordinary people.

Critics like ex-Member of Parliament Mrinal Gore think foreign software companies ‘may cut down employment in the long run’. India should be thinking about the impact of computers on local employment, according to Ms Gore. ‘Will our own industries be able to compete?’ she asks. ‘Competition is necessary but not at the cost of closing down our own industry.’

But the real problem is that Bangalore has become an island of prosperity in an ocean of endemic poverty. Rushing towards the 21st Century, half the country is illiterate. Six of ten people in our cities live on the streets and in slums, without water and sanitation.

Vivekanandan, a successful 36-year-old engineer at CG Smith Software in Bangalore sums up the dilemma. Seated in his plush offices you could easily be in California. Yet outside the window cattle with blue-tinted horns browse through piles of garbage. While software flits back and forth across the Atlantic, the bank around the corner still uses voluminous paper ledgers. And in the neighbouring state of Tamil Nadu, says Vivekanandan, ‘my family has to pay three rupees for a pot of water’.

Dilip D’Souza is a journalist with Sanctuary Features Service in Bombay.

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©Copyright: New Internationalist 1996


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