Indian Software Industry : Structure, Trends And Constraints | Chandana Chakraborty & C. Jayachandran

Based on a survey of software-related companies in the major cities of India, this paper critically examines the organization and size of the Indian software industry. Based on the analysis, the paper also outlines the future possibilities for the industry and identifies its major constraints towards growth in the desired direction. With regard to organization and size, the analysis suggests the following broad trends. First, it suggests that the industry is represented mainly by private domestic firms, majority of which are small both in terms of their assets and level of earnings. Second, it reveals that more than 80% of revenue for this industry is generated in the export market. Further, the export market is concentrated in the U.S., which accounts for 60% of the total export revenue. Third, a compositional breakdown of export indicates that the industry relies mainly on software services export, and lacks diversification in packaged software products. This is in sharp contrast with the export pattern of its competitors in Asia and Latin America. With regard to future trends, the analysis suggests that despite opportunities, growth potential of the Indian software industry would depend mainly on degree of reform in infrastructure planning and regulatory rules.