Closing Case: A BOOM IN BANGALORE
What is the fastest growing industry in India? Software, by far. The software industry serves as a poster child for the success of India’s economic reforms and the benefits of opening up its economy. For decades India’s universities annually graduated tens of thousands of well-trained engineers, but its inward-looking economic policies often failed to utilize the engineers’ talents. In 1991, however, the Indian government relaxed its control over the economy. It reduced trade barriers, opened the door to new foreign direct investments, and modernized the country’s financial sector. The government’s economic reforms, coupled with the blossoming of the Internet, have made the Indian software industry a powerful force for modernizing India’s economy. Since the reforms were initiated in1991, the industry has grown by an estimated 50 percent annually. Software is rapidly becoming India’s primary export. In 2002, software accounted for over $7 billion in export earnings; one government agency believes this venture capital flowed into it, double that of 1998. Experts estimate that by 2008 India’s software industry will annually attract $10 billion in venture capital from foreign firms eager to access the knowledge of India’s best and brightest students.
Bangalore is the epicenter of India’s software industry; Bombay, New Delhi, and Hyderabad also house many software and information technology firms (see map 12). Bangalore is home to Wipro Ltd. and Infosys Technologies Ltd., which are now India’s third and fourth largest companies when measured by market capitalization. Both companies have tapped into India’s large pool of highly trained English-speaking workers. Although occupying different market niches, both companies have stressed quality and the need for a global approach. For example, each qualifies for a high-quality rating from the Software Engineering Institute, a certification program sponsored by the U.S....
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