Chapter 17. India s IT Sector and Government Initiatives in Education

Chapter 17. India's IT Sector and Government Initiatives in Education

The Indian IT sector developed out of a much-needed government emphasis on economic reforms . Spurred by the economic crisis of 1991, the Indian government took widespread action to liberalize and open the economy to major foreign investments. This shift began with the election of Rajiv Gandhi, whose administration was the first to recognize the potential of the Indian IT industry for the nation's economic development, and continues under the current administration of Prime Minister Atal Bihari Vajpayee in 2002.

In the interim, the Indian IT industry has shown remarkable growth, especially in the area of software exports. Today, the service-based sector of the IT industry has made significant progress, gradually shifting from the low value-added IT tasks of writing applications for foreign software to creating their own. The low costs of offshore development have been a key factor in India's presence in the global IT service industry. India's competitive base however consists of an increasingly large set of English-speaking, technically skilled professionals, motivated and inspired by India's recent success in the software sector.

Our focus on the Indian Institute of Technology as an example of India's leading technical universities showcases the ability of a developing nation like India to mobilize its existing strengths to combat its weaknesses. For example, the degree of competitiveness and cost-effectiveness of India's engineering and computer science graduates is a strong incentive for multinational companies (MNCs) to invest in India despite its infrastructure hurdles.

A large cluster of educational institutes and IT MNC investments, combined with ideal living conditions, have created the IT cluster of Bangalore, where the majority of Indian and MNC IT software companies are located.