| Linking up with the global economy: A case study of the Bangalore software industry |
 
Asma Lateef
(Endnote 1)
Imagine how much could be accomplished if companies could operate on a 24-hour workday. Thanks to breakthroughs in telecommunication and information technology and a nearly 11 hour time difference, some software companies in the United States and in Bangalore, India have joined forces to achieve just that. There are many ways this form of shift work across oceans can work. For example, two software professionals, one in Silicon Valley, California and one in Bangalore are working on a joint project. While the one in Bangalore sleeps, the one in California is working. At the end of his workday, he sends a message to his long-distance colleague, updating him on his progress. When the Indian software engineer arrives at work in Bangalore, a couple of hours later, he notices that a message awaits him and gets to work on the project straight away. By the end of his workday he relays the results of his efforts back to California, just before his counterpart there arrives for work the next morning. No time has been wasted. By the way they communicate and work together; it is as if they were sitting in adjoining offices. Once in a while they organize meetings through video-conferencing, each in his own office thousands of miles apart, and when the need arises, one or the other flies across to meet in person.
This type of 24-hour workday is still a fairly un usual concept, being put into practice only by a few businesses, but it illustrates the way in which the Indian software industry is creating new and innovative links with the international market. Indian software expertise, on the other hand, is becoming increasingly evident in the day to day functioning of businesses in a variety of industries. The accounts of Swissair and the scheduling of flights of Swissair, American Airlines and Singapore Airlines are tasks being performed in India. Reebok and Nordstrom's have their inventory software developed and supported by Infosys, one of the leading software companies in India. Software for the banking sector is a particular focus of Indian software developers (Financial Times 1995 b, p.1).
Although the Indian software industry is more than twenty years old, it is only in the last decade that the industry really took off and only in the last 5 years that India has become a global player. For example, the turnover of the Indian software has risen from $10 million in 1985, to approximately $835 million in 1995, according to estimates made by the National Association of Software and Service Companies (NASSCOM) of India (1996, p. 12). Although these figures are low by global standards, the industry's average annual rate of growth in the last five years has been 46 per cent, with exports growing much faster than domestic sales. Exports currently make up nearly 60 per cent of the industry turnover (NASSCOM, 1996, p. 13).
This paper presents a case study of the software industry in Bangalore, with the aim of analyzing the factors that led to its integration into the global software industry and the development dilemmas that arise for Bangalore from this integration. The geographical dispersion of the software industry, which spans from Silicon Valley all the way to Bangalore brings to light the nature of global integration or globalization. This type of integration has become all the more prevalent in the last decade in a variety of industries. Production, even in a high-tech, knowledge-based industry such as software, is increasingly organized as a set of discrete processes or steps, which can be performed or undertaken in different parts of the world. Given the advancements in telecommunication technology and transportation, these production activities can be located just about anywhere. Location depends on a number of factors including resource availability, cost and infrastructure.
The analytical framework for this study builds on the "global commodity chains" approach, which was developed by Gary Gereffi (Gereffi, 1994 et al.) to capture the interlinkages between various locations in the production chain of a final good. This approach consists of analyzing firm strategies at the many stages of the production chain, with the aim of examining the decisions and choices made by firms and the impact that these may have on the rest of the chain. This approach recognizes the interdependence between actors, and hence, between locations. It is this particular aspect that makes it useful to this study, as it views the process of globalization as occurring not only through the activities of multinationals and local firms but also through the integration of locations and labour markets.
This study is based on field research conducted in Bangalore and Delhi in March/April 1996, which entailed interviews with a number of software companies in both cities, as well as with government officials and journalists. The paper is organized as follows: the next section shortly describes the globalization of the software industry and the particular role that India plays in that process. Section 3 analyses the role of policy in leading to India's involvement in the ind industry. Section 4 presents the case study of Bangalore, followed by the summary and conclusions.
Endnote 1:
I am grateful to Duncan Campbell and the International Institute for Labour Studies for their support in the preparation of this paper. The paper has benefited from comments by Martin Brownbridge, Gary Gereffi, Charles Gore, Nita Lal, Jorg Meyer-Stamer, Florence Palpacuer, Aurelio Parisotto and Gowrie Ponniah. Special thanks go to Greeta Varughese and Solomon Pushparaj of the Confederation of Indian Industry (Southern Region). All errors and omissions are my own.
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