India's Software Services Industry: The Beginnings
I am reading Harish Mehta’s book ‘The Maverick Effect: The Inside Story of India’s IT Revolution’. The book describes how the software business, facing the uphill task of making politicians and bureaucrats stuck in an analog industrial mindset understand the intangible nature of software products and services, formed a guild to prevail upon the government to form policies to empower the industry. Written by someone who led the formation the National Association of Software and Service Companies (NASSCOM), the story is quite credible.
Harish Mehta is the co-founder and first chairperson of NASSCOM. He also introduced the TiE entrepreneurship network to India and founded Onward Technologies, and co-founded Infinity Venture Fund. The NASSCOM narrative is woven together with Mehta’s personal story of returning from US and starting a software business in India.
The story begins when the new initiates in the budding software business formed the Bombay Computer Club in the mid-1980s to discuss the developments in computers and internet. In one meeting, the idea of forming an entity to pitch the software industry’s problems to the government and lobby with it to create an ecosystem supportive of software and software services industry emerged.
An industry body called Manufacturer’s Association for Information Technology (MAIT) already existed, primarily representing the hardware industry. It was felt that they would not generate the differentiation critical for the sustenance of the software industry, although it had a division to represent it. MAIT believed NASSCOM was a rebel group and was antagonistic in the beginning. The Department of Electronics, which was the government body managing the issues related to IT in the country, also did not favour the formation of an independent body. Through persistent and persuasive arguments, these bodies were finally brought around.
The founders of NASSCOM roped in experts to help draft the constitution of the nascent body. A twelve-member executive council (EC) with full decision-making authority was the core. The chairperson represents NASSCOM to the public. The procedure of electing its members and the EC’s powers and functions were clearly defined. A competent and empowered secretariat headed by a president and staffed with committed professionals would run NASSCOM. Established in 1988, NASSCOM originally had 40 co-founders.
NASSCOM went beyond transforming an industry: it transformed India. The millions of software personnel recruited, trained and deputed around the globe created a new middle class in the country and brought in direct economic benefits. NASSCOM created a new egalitarian and global work culture. It changed how the world perceived India. The older stereotypes were replaced with laptop-toting programmers and the ever-helpful call centre personnel.
For India to transform its economy, it would have to change the adversarial relationship between the government and business. The prevailing disrespect and suspicion would have to yield to respect, trust and accelerated change. NASSCOM’s initial conversations with the bureaucrats were met with the same scepticism they had for businesses. NASSCOM attempted to align the industry and government into a single-minded mission that would change the destiny of the nation. With persistent interactions, it dawned upon the bureaucrats that the entrepreneurs in the software industry differed completely from the business people they were so loath to deal with.
NASSCOM stood in contrast to how other industries were lobbying with the government: it insisted on meritocracy and did not seek favours for a preferred few. NASSCOM demanded open policies that rewarded individuals and companies based on merit alone. It asked for a level-playing field and a strategy putting India first.
NASSCOM, crowded with visionaries, needed an executor. It chose Dewang Mehta, an articulate chartered accountant and an award-winning graphic designer with good people-skills as the CEO. His writings illustrated how well he understood technology as a business.
DoE was surprised when NASSCOM merely asked to be consulted before any change was made in processes or procedures relevant to ‘software’. This flagged off a significant period in the government-industry relations. The simple mechanism of consulting NASSCOM before making any policy change became a game-changer for the industry.
Indian economy was liberalized in 1991. For the software business, the year is significant for another reason. NASSCOM met World Bank’s Robert Schware, conducting a study to assess the potential of the Indian software business and stressed that the report should highlight how it was not software products but software services that held the biggest potential for India. The report declared that Indian software services exports had the potential to be a $1 billion industry, a staggering figure compared with $150 million it was earning. The report said that software services were one of the fastest-growing Indian exports and claimed that ‘Software service exports can fuel India’s economic growth and development.’ It stated that offshoring was the future and that this segment would explode, and that India had all the elements required to capture the opportunity.
NASSCOM worked with educationists to produce talent. It helped members implement global HR practices, world class quality processes and robust corporate governance structures. It helped generate new business opportunities like the global outsourcing business with a global delivery model by cleverly leveraging wage, currency and talent arbitrage to promote offshoring of services. Outsourcing has proved to be the greatest leveller and the greatest binding force for the business community and society at large. Other technology waves exploited by NASSCOM included the Y2K scare, mobile and digitalisation of finances.
With the slogan. ‘Roti, Kapda, Makan and 3 MB Bandwidth’, Dewang Mehta, enabled NASSCOM to play a decisive role in the expansion of the data bandwidth and improving connectivity. Another initiative was the collaboration with DoE to establish the Software Technology Parks with 64 kbps dedicated connectivity and tax advantages in urban centres. The parks created hundreds of small startups. Bollywood celebrities were roped in to promote the potential of Internet to the public. NASSCOM helped put together the draft of India’s first Internet policy in the late 90s which led to the privatisation of Internet providers.
India had a serious image problem relating to trust, reliability, and transparency. NASSCOM realized that the absence of a brand India was a serious lacuna and mounted a crusade to change this. Slowly but steadily, NASSCOM worked on the perceptions of our clients abroad. The biggest dividend of the Y2K bug was not the money that India made, but a positive impact on brand India. Fortune 500 companies became clients.
A major concern was on how safeguard intellectual property. Until India could offer confidence to global product giants like Microsoft and Autodesk they would not treat us as a ‘knowledge destination’. If such companies believed India didn’t respect international copyright laws, they would shun working with us. Second, if we offered an ecosystem that protected intellectual capital, it would encourage local entrepreneurs to create IP-driven products. If India had to shine in the software products business, overcoming piracy was imperative and stringent copyright laws were a prerequisite.
A corporate entity was needed to tackle piracy and hence in 1992, InFAST, the Indian Federation Against Software Theft, for policing piracy was set up. Publicised raids made headlines the world over. Brand India Inc. was forever established in the minds of businessmen.
Following Dewang’s untimely death, Kiran Karnik took over as CEO. Skilled in explaining the complex nuances in simple yet eloquent language, he persuades various stakeholders to align with the NASSCOM way. Under him, NASSCOM became an important data and analytics organization and began guiding industry strategy. The transparent reports, including the sought-after strategy report, influenced decision making within the industry. He managed the trauma caused by the The tragedy of 9/11.
The collapse of the Satyam Computer Services of 2009 was a major setback. Brand India’s image was protected when NASSCOM, with the approval of the government, stepped in to manage the company affairs and found a buyer. The Satyam incident, happening over two decades after NASSCOM was founded, made real its values like ‘no personal agenda’, ‘India first’ and ‘collaborate to compete’.
As NASSCOM catches up with the future, three focal points are skill development, innovation and, digital transformation. To bridge the gap between education and employability, in 2020, NASSCOM launched the FutureSkills initiative. Within a year since the launch, it had over 1,00,000 active users monthly.
NASSCOM has established itself as not just a guild but a social catalyst, a movement. It focussed on building global connections, skilling, collaboration, building brand India, and inclusion. Recent developments include the growth engineering services, R&D, and Global Capability Centres of multinationals. The startup boom is a major development. The post-pandemic era has sped up digital transformation. It enabled the benefits of the 1991 reforms to be exploited. IT Services companies have become global giants. the growth fuelled by IT has percolated to even small towns and created a new middle class. It benefited people by ushering in public call offices, railway reservation system, UPI etc.
When NASSCOM was born in 1988, the export revenue from IT services was about $50 million. In 2022, this number had touched $ $227 Billion, a 40,000-times growth in close to thirty years. The membership has grown from 40 to 2600 and new initiatives include setting up Centres of Excellence in IoT and Data Science. This heady pace is reflected in this must-read book for all stakeholders in India’s tech, business, and innovation ecosystem. The book follows a storytelling format, blending comments, analysis and anecdotes. The author’s passionate belief in India’s destiny to be the software services leader of the world comes through very clearly. It will be particularly enjoyable for those who have witnessed, or have driven India’s tech story. The book is published by Harper Collins, India in 2022.