Origins and Growth of the Software Industry in India

The paper explains the evolution of India's software industry. Domestic entrepreneurship emerges as the key factor for origination, survival and innovation in a hostile industrial policy environment. The maturing of the industry required a shift to a supportive government policy; maturation was also critically enabled by the modularization of the programming function through new technologies. These changes favored domestic firms that provided programming services. Later policy and technological changes induced transnational entry and led to higher value-added output. The paper shows that technologically sophisticated industries can develop even when many conditions typically present elsewhere are missing. We provide conditions under which this may happen and show their effect on subsequent developments.