Information Technology, India: I
This is a collection of articles archived for the excellence of their content. |
Apps created by Indians
2018-19: India vis-à-vis China
Sindhu Hariharan, Dec 26, 2019 The Times of India
With majority private capital raised by new-age tech businesses going towards user acquisition and marketing, Indian apps managed to claim more installs than key Chinese rivals in 2019, despite TikTok and PUBG’s global domination. Chinese app downloads dominated Indian ones in 2018.
An analysis of India’s top 200 apps by install volume, by app intelligence firm AppsFlyer, showed that 41% were developed by local developers and firms in 2019 compared to 38% in 2018. The share of Chinese apps dropped to 38% in 2019 from 43% last year.
“Whereas 2018 marked the dramatic rise of Chinese apps in India, the momentum this year has shifted back in favour of local players such as Indian payment apps,” AppsFlyer’s noted.
However, the “blue-sky” potential of the Indian market will bring in more foreign competitors in the coming years, the study said.
With 6.5 billion installs in second and third quarter (up to September) of 2019 in India, foreign markets have started to take note of rise of Indian app economy, analysts at AppsFlyer said, adding that the Chinese continue to gain on popularity in categories where they do well such as news, entertainment and gaming.
`The rise of app market has also led to growth of non-organic installs (NOI) — app installs arising from a brand’s marketing activity and spends, and not spontaneous. The average NOI per app grew by 38%, with hyper-competitive finance (107%), gaming (51%) and food and drink (51%) categories, spending most to add installs. App retention rates, though on an upward trend from 2018, are still at dismal levels in India, as only two out of 100 apps remain on users’ phones by day 30. In 2019, retention rate was 23.4% on day 1 and it fell to 2.6% by day 30.
This is an increase from 22.8% and 2.3% in 2018 respectively.
“Retention rate is a function of high competition across categories, quality of apps, and average storage space in an Indian user’s device, among others,” Deepak Abbot, an analyst in the app market, said.
Data literacy
India most literate in [2019?]
From: February 22, 2020: The Times of India
See graphic:
Data literacy in India, Germany, Japan, the UK, the USA and other countries, presumably as in 2019.
Employment in India
2020: over 1 lakh Americans in Indian IT industry
Shilpa Phadnis, April 2, 2022: The Times of India
BENGALURU: The top four Indian IT firms have over 55,000 American employees in the US. The number is sharply up from a few years ago, and reflects the companies’ efforts to overcome visa barriers and become more global in their operations. Including Cognizant, which is US headquartered but has an India heritage, the tally of American employees is over 1 lakh. Cognizant employs 46,400 people in North America.
Data from a variety of sources shows that TCS has 20,000 such employees, Infosys 14,000, HCL 13,400, and Wipro 10,000. For all of them, these numbers are about 70% of their overall US employee strength (including those on visas).
Infosys had committed in 2017 to hire 10,000 American workers at its US operations. The data shows it is now well over that target.
TCS HR head Milind Lakkad recently told TOI that the company is hiring 1,500 freshers from campuses in the US and Europe this year, one of the highest in recent times.
Including those on visas, the Indian IT industry had 1.7 lakh employees in the US in fiscal 2018, as per estimates by research firm IHS Markit Research. This is up from 1.5 lakh in fiscal 2015.
TOI reported recently that Indian IT firms are estimated to have paid an average compensation of $96,300 to its US employees in 2018, higher than the average wage of $94,800 that IT professionals get in the country. This is also data from IHS Markit Research.
While visas is one reason to have local hires, the other is the newer kinds of digital and outcome-based work that IT companies are now doing, and which require client proximity. Infosys, for instance, has set up half a dozen technology centres across Indiana, Connecticut, Rhode Island, Texas, North Carolina and Arizona.
Indian IT’s local hiring will also serve to reduce subcontracting costs, which have been soaring in recent years. To meet people requirements quickly, the companies depend on subcontractors who supply staff. But these expenses can be prohibitive. For Infosys, this expense rose by 40% to Rs 6,031 crore in 2018-19, compared to Rs 4,298 crore in the year before. For TCS, subcontracting expenses rose by 26% to Rs 11,330 crore in 2018-19.
Financial services
Banks’ in-house staff replaces outsourcing, hurts Indian IT/ 2018
From: Shilpa Phadnis, Avik Das & Sujit John, New enemy of outsourcing: DIY by banks, August 15, 2018: The Times of India
From: Shilpa Phadnis, Avik Das & Sujit John, New enemy of outsourcing: DIY by banks, August 15, 2018: The Times of India
Here’s the big reason why most of the big IT services companies are still struggling to accelerate: Many large banks have got into a do-it-yourself mode for their IT. Where once they outsourced work, they are now choosing to do more of it in-house, mostly in their own global inhouse centres (GICs) in countries like India.
The financial vertical has long been the bread & butter of the IT services business, but the sector’s contribution to overall revenue has fallen for most of the big vendors over the past few years.
For TCS, financial services was 33.4% of overall revenue in 2016-17 — it was down to 31.1% in the last quarter. For Cognizant, it’s down 3 percentage points in the past two years, and for Infosys it’s down 1.4 percentage points.
There are also no signs of a reversal in this trend. In the last quarter, TCS’ financial services vertical grew at 4% year-on-year, when its overall revenue grew 10%. The corresponding figures for Cognizant were 4.5% and 9.2%, and for Infosys 2% and 6.8%. Compared to the preceding quarter too, growth was anaemic, far lower than the overall quarter-on-quarter growth, suggesting that the sector continues to weigh on the IT industry.
At the last quarter earnings announcement, Infosys COO U B Pravin Rao admitted as much when he said the company had a negative impact in the quarter from two of its clients due to insourcing. The company’s revenue from financial services declined by 1.5% compared to the preceding quarter. HCL Technologies’ revenue from the financial vertical shrunk by 1.4% in the June quarter and the company said it was due to some of its clients insourcing work Neither Rao nor HCL named the clients that are insourcing, but it is possible to make some guesses based on who outsources to whom.
‘Bank IT staff more efficient than outsourced employees’
Deutsche Bank, Bank of America, Citibank and UBS have been some of the biggest outsourcers of IT, according to IT advisory firms TOI spoke to. Deutsche Bank has an annual outsourcing spend of $6 billion and counts DXC, IBM, Atos, Wipro and Infosys as IT partners. Bank of America outsources $5 billion of IT annually and has contracts with IBM, Accenture, Infosys and TCS, among others. Citibank is estimated to outsource between $1.1 billion and $1.5 billion, to vendors including TCS, Wipro, HCL and NTT Data. UBS outsources about $1 billion and its vendors include Capgemini, Epam, Luxoft, HCL and Genpact.
All of these financial institutions are now insourcing, as also those like RBS, Credit Suisse, ANZ. “Citi had sold their captive business to TCS and Wipro (in 2008) and now they again have a captive business with 4,500 people in Pune alone, and plan to be 8,000-strong there,” said an industry executive who did not want to be named. Citi has centres in Pune, Mumbai and Chennai, employing about 16,000 people, and is growing everywhere. Citi declined to provide a comment for the story.
A UBS spokesperson disputed the outsourcing figure provided by third parties to TOI, but acknowledged that the bank had insourced around 2,000 jobs in the last six months, with the primary objective of improving effectiveness and efficiency. The spokesperson said, “UBS’ business solution centres abroad and in Switzerland have grown in recent years. We now have a global and consistent network that includes India, the US, Poland, and China, as well as the nearshore centres in Switzerland (Schaffhausen, Biel and Ticino). This has created the conditions for insourcing where it makes sense.”
The bank told TOI that one of the main reasons for insourcing is that it wants to retain and strengthen strategic and market-differentiating expertise within the bank — activities that differentiate the bank as a financial services provider from its competitors. “In the technology area, there are topics such as blockchain, digitisation or artificial intelligence. Or operational activities that generate added value for our clients. Or also positions in research, analytics, finance and risk management,” the spokesperson said, with reference to strategic and market differentiating areas.
Deutsche Bank declined to provide a comment for this story. But former Deutsche Bank COO Kim Hammonds told TOI last year that when she came to the bank in 2013, about 80% of the tech was outsourced, and she had since brought it down to 50%. The bank had during that period hired some 4,500 engineers, many of them in its India technology centre. Hammonds, who left the bank in May, had told TOI that she intended to insource some more.
Deval Shah, MD of Danske Bank’s IT and support services centre in India, said a lot of the banks have started realising that their productivity is much higher when they insource. “In this day of digitisation, the time to market is very important. So now when we are working in a very agile environment, with the business, with IT, the ability of your own IT staff to comprehend the business is 10 times more than the ability of a contractor to understand the business. I don’t see vendors building that kind of expertise to help any bank reduce their time to market,” he said.
As for the traditional areas of IT, where vendors have expertise, much of it is getting automated. And even that work some banks are choosing to do in-house. “Service providers that do billing on FTE (hours worked by one employee on a full-time basis) have no motivation to do automation. We (Danske India) are not a revenue centre, but a value centre. From our perspective, we are always focused on automation,” said Shah. The Danish bank had in 2006 outsourced much of its IT to L&T Infotech, but took back the entire operation in 2014, and has since been building up its own centre in India.
Phil Fersht, CEO of IT research firm HFS Research, said a study they had done with KPMG on the state of outsourcing found only 30% are seeking to renew similar contracts with their current providers, while a similar percentage will only stay with their current provider if they can shift to more outcome-based pricing and have more automation to reduce cost and headcount. Another 44% will either pull work back in-house or change provider.
Peter Bendor-Samuel, CEO of IT research & consulting firm Everest Group, said the Indian players have been living in denial. “They have all been forecasting good years in banking and we have been telling them that for many reasons this was unlikely to happen. The banks’ GICs have matured and they are clearly growing them at the expense of third parties. For some functions, they are also bringing work back on-shore and this work they are keeping in-house. They have largely decided that they like the big Indian firms as their legacy (partners to maintain their traditional IT),” he said.
Bendor-Samuel said that even when companies are seeing some growth in the financial services vertical, it’s coming from areas other than banking — for instance, TCS’ deals in insurance, including the $2-billion Transamerica deal.
However, K Krithivasan, president of the banking and financial services business unit of TCS, said that things are changing even in banking, with players moving from a compliance mindset to a growth mindset. Banks, especially those in Europe, have been bogged down in dealing with compliance issues, including the General Data Protection Regulation (GDPR), forcing them to take their eye away from IT investments. “Banks that are focusing on leveraging technology for growth and transformation are engaging with us very strongly because of our investment in cloud, AI, automation and location-independent agile,” Krithivasan said.
But as the European banks return to IT investments, the big question is, will they prefer to do more of it in-house? The message from Deutsche, Danske and UBS — as indeed the American banks — isn’t good for Indian IT.
From: Shilpa Phadnis, Avik Das, Indian IT expands market share in global banking services, January 23, 2019: The Times of India
Indian IT services companies are winning a bigger share of the outsourcing by the banking, financial services and insurance (BFSI) vertical, indicating that the companies are managing to win the confidence of customers even in the new digital world.
Data from IT outsourcing advisory Everest Group shows that the Indian service provider group (including TCS, Cognizant, Infosys, HCL Technologies, and Wipro) gained a market share of 1.5-2% over the global service provider group (including Accenture, Atos, Capgemini, CGI, DXC Technology, IBM, and NTT Data) between 2016 and 2018. The former now is estimated to have a market share of 42%, and the latter 58%.
Recent commentaries from TCS, Infosys and Wipro too suggest that the companies are making significant gains in the banking sector in North America. BFSI is by far the biggest vertical for IT services companies, accounting in many cases for 30% or more of total revenue. The industry had significantly slowed down on IT spending for about two years, as they dealt with various regulatory issues. But their outsourcing has now once again picked up smartly. Over $15 billion of BFSI contracts are up for renewal this year, and a lot more of discretionary spends are expected. Indian service providers are expected to get a good part of this.
"Indian-heritage IT services majors are continuing to increase their wallet share at the expense of IBM, DXC and others, due to strong execution capabilities, aggressive pricing and a genuine empathy from IT leaders to working with Indian firms, which has been 20 years in the making. Plus, we see firms like TCS, Wipro and Infosys prepared to take more risks to win clients over and also take more complex projects, and commit to outcomes," said Phil Fersht of IT consultancy HfS Research.
Ronak Doshi, practice director at Everest Group, said the centre of this shift to Indian service providers is the fundamental war for talent, as BFSI enterprises need a talent alternative at speed and scale. “Investments in building this scaled talent pool helped the India pure-play service provider group to bounce back in 2018. With the exception of Capgemini and Accenture, the rest of the global players are not keeping up with their competition to make these investments, leading to wallet share shifts," he said.
For TCS, the growth in revenue over the last five quarters has been driven primarily by BFSI. In the latest quarter, BFSI grew by 8.6% on a constant currency basis year-over-year, compared to 4.1% in the first quarter. Wipro has shown the best growth amongst the three, growing its BFSI sector at 14.4%, 16% and 17.5% in the three quarters of this year.
Doshi expects the number of deal signings (volume) to continue to go up in 2019, but said that the size of deals (average total contract value) is on the decline. Many of the digital deals are smaller, though some are also coming as part of larger infrastructure deals. Peter Bendor-Samuel of Everest Group said clients are also demanding 30-50% reduction in pricing for older contracts, when they come for renewal, given that there has been significant efficiency gains through adoption of automation and other means over the past few years. Indian providers are generally well placed to offer such pricing.
International Olympiad of Informatics
2023
Sindhu Hariharan, Oct 11, 2023: The Times of India
From: Sindhu Hariharan, Oct 11, 2023: The Times of India
In late August, when all eyes were on India’s chess prodigy R Praggnanandhaa, not many noticed four youngsters – Kshitij Sodani, Sushil Rajaa, Shreyan Ray and Paras Kasmalkar – making India proud on another global arena.
They were medal winners at the 2023 International Olympiad of Informatics (IOI), a global test of algorithmic and programming skills for high school students, held in Hungary this year.
India won only its second gold medal ever, after a nine-year gap, this year, and also bagged two silver medals and one bronze making it the country’s best ever performance at IOI in a year when the challenge was also said to be the toughest. Kshitij won gold, Paras and Shreyan won silver, and Sushil won bronze.“While India has been generally doing well in IOI, a gold medal is rare,” says Madhavan Mukund, director of Chennai Mathematical Institute, who is also the national coordinator of the Indian Computing Olympiad (ICO) that selects the team of four to represent India at the IOI. “Worldwide, companies like Google and Facebook actively seek out winners of competitive programming contests, both at school and college level,” he adds. The majority of IOI members and winners from India have ended up in big tech majors, and reached there after a Bachelor’s or Master’s in computer science. “Some of the problem solvers have subsequently gone on to launch their own startups, while a small number has remained in academia,” adds Mukund.
Having cracked a challenge that is regarded to be tougher than the JEEs, the winners of the Olympiad have large ambitions. They have their eyes set on international under-graduation – some by choice and some because global universities offer scholarships for their victory but IITs do not.
17-year old Kshitij, the youngest gold medallist in IOI history, wants to delve deeper into computer science and mathematics. A 12th standard student of Disha Delphi Public School, Kota, Kshitij is applying to international universities. “I want to make a significant impact in the tech sector and am also interested in research,” he says.
Silver medal winner Paras, who studied at The Orchid School, Pune, and who is now at University of Wisconsin-Madison, US, has not yet chalked out his professional journey, but is leaning towards a PhD. He loves theoretical computer science.
For Shreyan, the other silver medallist, this was the first time in any such setting, and he was in awe of the global challengers he met. Shreyan graduated from La Marti niere for Boys, Kolkata, earlier this year, and is now in IIT Kharagpur doing the mathematics and computing course. He says his school introduced him to the world of competitive programming through inter-school competitions. For Sushil, 17, it was an event with many firsts. “It was my first time at the IOI, it was my first time going abroad, and the first time I met the brightest people in informatics from different countries. I made friends with many of them,” he says. He is in the 12th grade at Budding Minds International School in Chennai. He dreams of going to IIT, but rues that his Olympiad victory may not make it any easier. “It’s a pity medallists aren’t recognised by the IITs; IIT-Gandhinagar is the only IIT that recognises IOI. I may be forced to look at universities abroad,” he says.
All the winners said they received support from their parents to spend time training for the Olympiad – a time that parents often insist be spent on JEE classes or school exams. While India’s high schools are filled with exceptionally talented STEM students, not all crack the Olympiad. What’s the secret sauce, I ask CMI’s Mukund.
“Students who study programming in school generally study only the syntax of the language. There is no focus on algorithmic problem solving. So, students have to rely on self-learning to prepare for it,” he says. Not surprisingly, the winners had spent hours honing their problem-solving skills on online platforms like Codeforces, Codechef and Atcoder, and also by looking at the archives of previous Olympiads.
Their advice to those aspiring to ace this Olympiad – practise consistently, stay motivated, get creative in solving problems, and also enjoy solving them.
Lobbying
USA, 2015-17
From: Rachel Chitra, Indian IT cos’ lobbying spends jump nearly 40% in Trump era, December 10, 2018: The Times of India
The Indian IT industry’s lobbying spends have increased sharply from the time Donald Trump became US President. It rose by nearly 40% in the first three quarters of fiscal year 2018, compared to the same period in the previous year. The spends are largely going toward dealing with immigration issues, including the higher rejection of H-1B visa applications.
A report by investment firm CLSA shows that IT majors TCS, Wipro, Cognizant, Infosys and industry body Nasscom were collectively spending up to $2.4 million for lobbying in the US in fiscal year 2015. That number increased to $2.9 million in FY16 and then to $3.3 million in FY17 — the fiscal year when Trump assumed power. In the first three quarters of FY18, the figure is already at $3.2 million (it was $2.3 million in the same period in FY17).
The need for such lobbying efforts might increase going forward as the Department of Homeland Security (DHS) last month proposed to make certain changes for filing new H-1B visas. The focus appears to be on ensuring H-1B visas go to the most skilled or highest paid petition beneficiaries.
Analysts also point out the increased difficulties with administrative processes for Indian companies. “Overall, the visa environment is becoming onerous and eventually, if the cost of doing business in the US increases, it could be detrimental to margins (of IT majors),” said Parag Gupta, equity analyst, Morgan Stanley.
Nomura analyst Ashwin Mehta sees “pressure from pricing in legacy, onsite staffing due to immigration tightening and recent appreciation of the rupee”.
CLSA notes that for Infosys and Wipro, lobbying spend has gone from negligible sums to a run-rate of $320,000 and $200,000 a year respectively. “While TCS has increased its lobbying 4X to $380,000 from $80,000, Cognizant has long outspent Indian peers with a $3-4 million budget and extensive engagement at senior levels in Washington. It has had the most extensively staffed immigration office and is the largest sponsor for green cards,” said Ankur Rudra, analyst, CLSA. Citi analyst Suvendra Goyal said the visa renewal process is already creating cost/ flexibility challenges.
Software developers in India
1/3rd of developers are self-taught/ 2017
Shalina Pillai, 1/3rd desi developers self-taught: Survey, January 25, 2018: The Times of India
From: Shalina Pillai, 1/3rd desi developers self-taught: Survey, January 25, 2018: The Times of India
See graphic:
Top languages, modes of learning to code and preferred resources used by software developers in India, as in January 2018
The majority of Indian developers are learning to code through websites like YouTube, coding sites like Git-Hub and Stack Overflow, and online courses, rather than relying on educational institutes. As high as 70 per cent of around 3,700 Indian developers surveyed recently said they had taught themselves how to code, either exclusively, or in addition to school. And 33 per cent (around 1,217 developers) said they were exclusively self-taught, without any academic help.
The survey, done globally among 40,000 developers across 42 countries, was conducted by talent evaluation company HackerRank. HackerRank is a technical hiring platform that helps businesses evaluate software developers based on skill. It has a leader board that hosts talented coders with a live score board that gets updated on a real time basis. Most industry biggies, including Amazon, LinkedIn, Quora and Facebook, keep an eye on this leaderboard to hire the best of coders across the globe.
Stack Overflow, an online community of developers to code and learn, was the most popular platform to learn coding, with over 70 per cent of Indian developers and students choosing it (over 8,000 deveopers and students were surveyed for this). This was followed by YouTube.
MOOCs (massive open online courses) like Udemy, Udacity, Coursera, and online tutorial websites like Pluralsights and Lynda were also more popular than books among students trying to learn coding.
About 11 per cent of Indians start coding before they are 15 years old (that's lower than the global figure of 31 per cent), and 71 per cent do before they are 20.
India is somewhat old school in terms of the programming languages that developers know. C, one of the oldest known programming language, was the most known language among Indian developers - 80 per cent of the 3,700 surveyed knew the language. C++, Java, and JavaScript were languages that more than half the Indian developers knew.
Vivek Ravisankar, co-founder & CEO of HackerRank, said that it is good that Indian developers were still wellversed with the old languages. "Languages like Python is easier to learn since it's the closest programming language to English. But C and C++ are tougher and it's good that Indian developers know those basics," he said.
However, 42 per cent of Indian programmers also know Python, though that is less than the average of 54 per cent for all other countries surveyed.
2014-19/ Open source usage: India is no.3
From: Nov 26, 2019: The Times of India
See graphic:
Open source usage in India and the world, 2014-19.
The most attractive IT/ITeS outsourcing locations
2013-14
Bangalore top IT hub, Mumbai slips to No. 3
Manila At No. 2 As Philippines Gains | 6 Indian Cities Among Top 10, Tier-2 Centres Move Up
Sujit John & Shilpa Phadnis TNN
Bangalore: Bangalore remains by far the most attractive IT/ITeS outsourcing location in the world, and six Indian cities are part of the top 10 most attractive outsourcing locations, says the latest annual ranking by consulting firm Tholons. The other cities are Mumbai, Delhi NCR, Chennai, Hyderabad and Pune.
But the 2014 edition of this survey, which ranks the top 100 locations, also points to some interesting trends – several Indian tier-2 cities, as also cities in the Philippines, Poland, and South America, have significantly improved their attractiveness over the past year.
Chandigarh (at No 23), Kolkata (25), Jaipur (38) and Ahmedabad (63) have all improved their rankings. Ahmedabad rose the most, by six ranks, compared to last year’s ranking, suggesting that Gujarat chief minister Narendra Modi’s economic initiatives are paying off even for the IT/ITeS industry. It is seen to be particularly good in finance & accounting BPO and in certain aspects of IT. However, Coimbatore (31), Bhubaneswar (55) and Thiruvananthapuram (68) slipped a little.
“Efforts by Nasscom (IT industry body) and others to promote tier-2 & 3 cities are paying off,” said Vikrant Khanna, principal at Tholons. But he said it remains to be seen whether these cities can evolve to service a diverse portfolio of services.
Manila, capital of the Philippines, has risen to the No. 2 spot, dislodging Mumbai, which is down to No. 3. Other cities in the Philippines, including Davao City, Santa Rosa (Laguna) and Bacolod City, all rose up the ranks, while Cebu City maintained its No. 8 position.
“The Philippines was predominantly in voice-based BPO, but now, non-voice BPO is also growing significantly,” said Khanna. Global companies, he said, are showing a lot of interest in doing work there, as also service providers in India who want to derisk their business.
The Philippines’ close cultural ties with the US has helped, but it has less than a tenth of India’s population, so those established centres there are looking at building strengths of 1,500-2,000 people over three years. That’s unlike in India where companies are able to scale quickly to many thousands of employees.
Industry analysts say India has no reason to have any immediate worries about the Philippines. “The India story is compelling with 3.5 million graduates coming out of colleges every year. A lot of heavy lifting will be done from India. The Philippines still has a lot of catching up to do in nonvoice areas,” said Keshav Murugesh, CEO of business process management company WNS Global Services.
Tholons ranks cities based on six parameters – scale & quality of talent; cost; business catalyst (economic profile of city); infrastructure; risks (political and social risk, risk of natural disasters etc); and quality of life.
As many as 39 of the top 100 locations in the latest survey are from Asia Pacific. But other continents too are seeing more action now.
Point of sales terminals
As in 2019
May 30, 2020: The Times of India
From: May 30, 2020: The Times of India
See graphic:
Point of sales terminals in use in India, as in 2019.
Policy: India’s IT policy
N Vittal
N Dayasindhu, August 11, 2023: The Times of India
Many of us IT professionals work in offices that are part of a SEZ (special economic zone). We pass by signs that mention SEZ, hardly ever noticing them. SEZ is a successor to the STPI (Software Technology Parks of India) policy introduced in 1991 by the department of electronics, and played a pivotal role in the growth of Indian IT.
The STPI policy provided a singlewindow approval to IT services exporters, shielding them from other government departments. There were no restrictions on the geographical location of a software technology park. Companies could easily set up offices in locations where talent was available, and expand into multiple offices. The STPI policy allowed duty-free import of equipment like computers. The software technology park was an import tariff-free area. A very attractive tax holiday was provided to IT services exports. The policy provided exemption from domestic levies on capital goods acquired in India, and gave permission to IT services export companies to sell up to 25% of software exported in the Indian market. The policy allowed 100% foreign equity participation in IT services export companies. Capital invested, royalty, dividends, etc, were allowed for repatriation after the payment of requisite taxes. These concessions catapulted both Indian IT services companies and the IT subsidiaries of multinational companies on a high growth trajectory.
N Vittal, the secretary of the department of electronics at that time, was the architect of the STPI policy. His successful tenure as commissioner of the Kandla Free Trade Zone in Gujarat in the mid-1970s made him aware of how overcoming the scrutiny of multiple government departments in that era was required for export-oriented companies to grow. He was among the few bureaucrats who intuitively understood the immense potential of an export oriented IT services industry to India, and diligently worked to remove the obstacles facing this industry.
Vittal was also a central figure in the negotiations between a fledgling Nasscom and department of electronics – an exemplar of how India’s potential was unshackled when policy and industry worked with each other. Harish Mehta, one of the founders of Nasscom, recalled that Vittal asked them for a list of impediments faced by the Indian IT services industry. Nasscom came back with a list of about 300 policies and processes which were impediments. Vittal patiently listened to them and asked them to prune the list to focus on the important ones that he could present in a meeting of the committee of secretaries.
In this meeting, Bimal Jalan, the then finance secretary, told Vittal that the IT services exports that financial year was about $100 million. He asked Vittal that if he accepted all the demands of the industry, what would be the quantum of exports that the IT services industry could guarantee for the next financial year. Vittal indicated $300 million, and Jalan wanted the target to be $500 million. They mutually agreed on $400 million.
Armed with this agreement, Vittal attended Nasscom’s annual event. Narayana Murthy recalled that there was a stunned silence in the room when Vittal announced the $400 million export target. Realising the sombre mood among the leaders of the Indian IT services Industry, Vittal, an excellent orator, regaled them with a Birbal-Akbar story to motivate them and lighten the mood.
Due to some annoying circumstances, Akbar decided to end Birbal’s life. But Akbar agreed to hold off for a year because Birbal claimed he would make the king’s horse fly. When asked why he agreed to such an incredulous challenge, Birbal explained that one of three things could happen in a year. The king could die, or Birbal could die, or the horse could fly.
Many years later, Vittal said the horse – the Indian IT services industry – indeed flew and flew high!
Next time we walk by a board that mentions the SEZ affiliation of our office, let us spend a few seconds to thank N Vittal for placing India on the centerstage of the global IT industry.
N Dayasindhu is a cofounder of itihaasa Research and Digital
Salaries
Specialisation in languages fetches top dollar
Shilpa Phadnis, June 2, 2018: The Times of India
From: Shilpa Phadnis, June 2, 2018: The Times of India
HIGHLIGHTS
Techies who can code in languages like Clojure, Erlang, and Haskell are poised to earn the most in the industry, according to a survey
India reportedly has 5 million developers, only a 5 per cent of which know these languages
If you’re a programming ace in Clojure, Erlang, and Haskell, then you would be earning top dollars in India, according to the developer survey by Stackoverflow, an online community for developers. This small, exclusive club of developers currently get fat paycheques because of the demand-supply gap and a steep learning curve. Undergrads in India are still not exposed to these languages.
Most are still largely in the Java and C++ environments, though many are also now beginning to use languages like Ruby, R and Python.
Stackoverflow did not call out salaries of Indian developers separately this year, but in the 2017 report, it said the survey respondents using Python received an average of $8,809 (Rs 5.8 lakh) annually, those using Java got $7,341(Rs 4.8 lakh) and Javascript $7,047 (Rs 4.6 lakh). Stackoverflow surveyed 1 lakh respondents from 183 countries with European developers making up for 39,000 respondents, followed by North America and Asia with 25,016 and 24,700 respondents respectively.
In the US, Erlang and Scala developers are the highest paid, at $115,000. Globally, respondents who use F#, Ocaml, Clojure, and Groovy earn the highest salaries, with median salaries above $70,000. Python respondents get $56,000. F# is an open source cross-platform programming language that runs on Linux, Mac OS, Android, Windows and iOS.
Erlang, Haskell and Clojure are a smaller community in India, for several reasons. These are called functional languages and follow a different coding paradigm. A Quora post two years ago by Tikhon Jelvis, a professional Haskeller, said that Haskell is increasingly used in the financial sector. He gave examples of how Haskell is used by JP Morgan for projects in the new product development group and, Barclays in their equity derivatives quality assurance group.
Viral Shah, CEO of Julia Computing and co-creator of the Julia programming language, said that most Indian developers are still focused on Java and C++ that power a majority of the world’s infrastructure. “Languages like Erlang, Scala, Haskell, and Clojure are not mainstream. I believe that the number of programmers is naturally small compared to the popular and widely used tools, and they usually attract programmers who are passionate about computer science and like to experiment with new ideas. The kinds of systems implemented in these also tend to be special purpose and mission critical,” he said.
Vivek Prakash, co-founder of HackerEarth, a hub for 1.5 million developers, said these specialized languages are not taught to undergraduates in engineering colleges. “These languages are still new to the Indian developer ecosystem. These languages (Erlang, Haskell) are functional languages with a different programming and learning curve compared to Java or Python,” he said. Prakash said that India has 5 million developers out of which less than 5% know these functional languages.
Software imports
No need to deduct tax at source/ SC, 2021
Lubna Kably, March 3, 2021: The Times of India
The Supreme Court (SC) ruled that payments made by resident Indian end users or distributors (such as technology companies) to overseas suppliers on import of ‘shrink-wrapped’ software — generally known as off-theshelf software — is not a ‘royalty’ payment. Thus, no withholding tax obligations arise in India against such payments.
During assessment and at various levels of judicial appeals, payments made for import of shrink-wrapped software to overseas suppliers were held assessable to tax as ‘royalty’ under section 9(1)(vi) of the I-T Act and Article12 of the respective tax treaties. This classification as ‘royalty’ required tax to be deducted at source (TDS) when making payment to the overseas suppliers.
As TDS obligations were not met, the Indian distributors were held to be ‘assessees in default’ and heavy tax demands, which included penalties, were raised on them. They will now be able to file for refunds which, according to industry observers, could run into several lakhs.
Over several days in February, the apex court heard more than 80 appeals covering this issue of ‘royalty’ payment. The companies involved in this prolonged litigation that lasted nearly 20 years included Samsung Electronics, IBM India, Sonata Information Technology, Infineon Technologies and GE India Technology Centre, to name a few.
In short, the contention of the companies was that the use of software by the Indian importer was limited to making a backup copy and/ or redistribution. They did not have the right to modify the shrink-wrapped software that was imported.
So, the payment made to overseas supplier could only be treated as business income in the hands of the entity — instead of as ‘royalty’ — and no tax withholding obligations arose. On Tuesday, in an order spanning 226 pages, the Supreme Court upheld this stand and set aside high court judgments that had held otherwise.
KPMG India senior partner Hitesh Gajaria said, “This welcome judgment ends the controversy and gives relief to Indian companies who were being pursued by the I-T department for alleged non-withholding of tax. Even as a new Equalisation Levy on non-resident e-commerce operators selling goods and services has come into force with a mind-bogglingly vast scope and coverage, thankfully here the burden has been cast on overseas companies to comply with the provisions of this new levy.”
Sources of revenue
2020: legacy technology; aerospace and defence
Legacy technology-based services and products will continue to constitute a meaningful part of revenue for IT service providers even as the share of digital business is growing at a faster pace – this was the general view at an ET roundtable organised at the Nasccom summit on Friday.
CP Gurnani of Tech Mahindra, Keshav Murugesh of WNS Global Services and Cyient BVR’s Mohan Reddy discussed how their companies, and the industry in general, were handling legacy businesses when the focus is increasingly turning towards emerging technologies in areas like cloud, blockchain, machine learning, artificial intelligence, cyber security, quantum computing and IoT.
“The old has not extinguished as fast as people have always thought. Mainframe still exists,” Tech Mahindra managing director Gurnani said.
“The transformation or digital adoption is not new. What we have noticed is that if there is a job replacement, it is substituted by a better job. If there is a process change, it has only created a better demand.” His company reported a 10.6-percentage-point increase in digital revenue in the quarter through December from three months earlier, accounting for 41% of overall revenue.
Cyient chairman Reddy said clients of the engineering and technology solutions company were continuing to improve upon their legacy software and hardware infrastructures rather than replacing those entirely with new, digital products.
“It’s not like they are dumping off old design work and asking us to make new products… The legacy continues. There are a few areas where the new technologies are disrupting the old. Otherwise they are augmenting it and they will work with each other,” he said.
Aerospace and defence contributes close to a third of Cyient’s revenue.
Reddy said clients in the sector were looking at rewiring existing aeroplane engine architecture, which costs about $3 billion to build, with new digital technologies. Engines typically have a life space of 40 years, he said.
“They are at this point making sure to incorporate new digital technologies to get new applications. A good example could be engine health monitoring systems — sensors are placed to provide the ability to crunch data to understand the behaviour of the engine during a flight.”
Start ups
History: 1970s, 1980s
N Dayasindhu, July 28, 2023: The Times of India
We identified some of the pioneering startups like Softek, NIIT, Tally, and Cyber Media founded in the 1970s and 1980s in an earlier column. Today, we look at a few more pioneering startups – Mastek (productised solutions), TVS Electronics (peripherals), Microland (distributor for IT products), and IIS (IT services).
Mastek had its origins in the early 1980s in the dorms of IIM Ahmedabad where their founders Ashank Desai, R Sundar, and Ketan Mehta studied. Mastek initially focused on the domestic market. They developed an ERP solution called MAMIS in the mid-1980s. Even when they got into IT services exports, they were a productised solutions company at heart. Mastek was probably the first Indian IT company to list on the stock market, in 1992. Mastek incubated Majesco, an insurance software product company. In 2015, Majesco was probably the first Indian enterprise software product company to list on the New York Stock Exchange.
In the mid-1980s, Gopal Srinivasan, a scion of the TVS Group, started TVS Electronics to manufacture dot matrix printers. Gopal’s motivation was based on the premise that the PC and digital revolution was unravelling in India, and the demand for peripherals like printers and keyboards would increase in tandem. TVS Electronics continues to make peripherals and point of sale products, and are known for their rugged peripherals that are workhorses in the hot and dusty environment in India.
Pradeep Kar started Microland in the late 1980s. Microland made bets on emerging technologies like computer networking and the internet for the Indian market. It was known for its go-getter spirit. The leadership team cold-called the head of the education business at Novell when he was on an India visit, and became among the first in India to start certification training in computer networking. They also incubated Indya. com, an early Indian internet portal, and Planetasia, a services com- pany focused on the internet. Microland is now a leading IT infrastructure management company.
Saurabh Srivastava founded IIS Infotech in the late 1980s as a software services company focus- ing on the UK market, which was harder to crack for an Indian startup. IIS Infotech was among the first Indian IT services companies to focus on their quality processes when they obtained their ISO 900127 / TickIT28 certification. The quality wave caught on, and by the turn of the century, Indian IT companies and GCCs were leading the world with the highest global standard Software Engineering Institute Capability Maturity Model (SEICMM) certifications. IIS Infotech was later acquired. Some may wonder why these Indian IT startups from the 1970s and 1980s are such a big deal. We forget the huge difference in the macroeconomic context between then and now.
India in that preliberalised era was defined by ‘licence raj’, scarcity of foreign exchange, and import restrictions. Indian trade unions worried about job losses from computerisation. The number of IT professionals was in the thousands, and almost all preferred to work in large private or public sector companies. There were no angels and venture capitalists. Banks would not lend without collateral. The seed funding for startups came from the savings of entrepreneurs, their family, and friends. There was no startup ecosystem to nurture IT startups.
N Dayasindhu is co-founder of itihaasa Research and Digital
The chutzpah, grit, and determination of our entrepreneurs working in a very difficult macroeconomic context in the 1970s and 1980s is an integral part of the history of Indian IT. KV Ramani of FutureSoft had to station himself in New Delhi to align the commerce and finance ministries, to allow him to import telecom test equipment at zero percent customs duty that they were eligible for as per policy. NIIT had to procure their first colour TV and VCR from diplomatic staff who were having a garage sale since they were relocating from India. Microland struck a partnership deal with Netscape in a car park.
Supercomputers
The most powerful supercomputer systems
See graphic:
World’s 500 most powerful supercomputer systems
Technology hubs
2012, 2014-17
July 29, 2018: The Times of India
ii) 2014-17: growth/ decline in investment in start-ups in the Technology hubs of the world;
iii) 2014-17: Major deals closed in Bengaluru, New Delhi and other major Technology hubs; iv) Fate of investments in Bengaluru, New Delhi and other major Technology hubs.
From: July 29, 2018: The Times of India
See graphic :
i) 2012-17: There were 3 Indian cities among the world’s Top 18 Technology hubs;
ii) 2014-17: growth/ decline in investment in start-ups in the Technology hubs of the world;
iii) 2014-17: Major deals closed in Bengaluru, New Delhi and other major Technology hubs; iv) Fate of investments in Bengaluru, New Delhi and other major Technology hubs.
YEAR-WISE DEVELOPMENTS
2019-20: 8.4% growth
Shilpa Phadnis, February 13, 2020: The Times of India
Nasscom expects the Indian IT and BPM industry to grow 8.4% in constant currency to $191 billion in 2019-20, marginally lower than the rate in the previous fiscal.
The growth is seen to underscore the resilience of the Indian IT sector in a fragile global environment marred by geopolitical risks, trade sanctions and customers in its mainstay banking and financial sector turning cautious on tech spending. In reported numbers, it is expected to close the year with 7.7% growth, Nasscom said at the annual edition of its Strategic Review in Mumbai. The organisation said the Indian IT industry made a net addition of 2.1 lakh people this year, the highest in four years.
Nasscom has stopped giving growth forecasts, citing a dynamic technology landscape, and has replaced it with a CEO survey to call out qualitative data points as they see it panning out in the industry. The Nasscom CEO survey said the Indian IT industry is cautiously optimistic about 2020. About 53% of the 100 CEOs surveyed expect a stronger world economy in 2020.
IT exports this year is expected to grow 8.1% to $147 billion, from $136 billion previously. Domestic business will touch $44 billion, from $41 billion. The growth was led by engineering services and software products that grew 11% and 9.6% respectively. E-commerce is expected to grow at a pace of 25.6% to $54 billion.
