These are heady days for the Indian information technology industry. An Internetage IT Bill has just been passed by the Parliament, and experts laud it for creating a conducive environment for the anticipated take-off of e-commerce. Watching developments in Europe, analysts here in India beam at reports by research groups such as IDC predicting that shortfalls of millions of jobs in Europe's computer industry in the next few years will need to be filled by IT workers from countries such as India.
The Indian software and services industry has mushroomed from $10 million in 1985-86 to $50 million in 1988-89 and $3.9 billion in 1998-99, over half of it in exports to western countries. The industry covers the entire spectrum - from low-skilled medical transcription and remote call centres to high-end telecommunications software and e-commerce services - and in the past few years a number of Internet pioneers have emerged as well.
Thanks to its large, English-speaking scientific workforce (second in size only to the US), higher education, specialist computer institutes, and low costs of software talent (11 to 13 times cheaper than in the US, Japan and Germany), India will soon have more software companies with ISO 9000 certification than any other country, predicts Michael Connors, author of The Race to the Intelligent State.
A study commissioned by the World Bank in the 1990s showed that India was the most favoured nation for outsourcing of software development among vendors in the US, UK and Japan.
So Germany wants them, the US wants them, even Ireland wants them. Why are Indian software workers so much in demand? How has a country with some of the worst human development indices still managed to create a software elite. And how will this "software superpower" now turn its attention from the global market to develop its own Internet economy?
Part of the reason for this success is that the software industry has been favoured with good leased line connectivity to the Internet, enabling it to tap into the global web market. Indian culture is very rich in content and has strong community ties - thus making it easy to set up Internet media properties tapping the global Indian diaspora.
The educational system strongly favours the mathematical and engineering streams, creating a foundation on which software talent can be built. This is now augmented with scores of professional training institutes which offer mid-career coaching in various software skills.
The four mega-cities of New Delhi, Bombay, Madras (now renamed Chennai) and Calcutta, though groaning under the enormous population pressure of over 15 million citizens each, offer superb germinating ground coupled with economies of scale for the urban Internet industry.
And a basic flair for enterprise is now coupled with strong venture capital and investment drives from the US, western Europe, to Singapore and Hong Kong.
The road has not been easy, however. Stifling infrastructural and bureaucratic roadblocks in the mid-1980s effectively squashed much of India's domestic hardware industry. By the early 1990s, the collapse of the Soviet bloc - which India was favourably disposed to politically - and a major foreign exchange crisis made India re-think its global priorities and dismantle some of its state-controlled economic apparatus. Industries such as IT began to be viewed more favourably.
While many Indian IT companies shifted to software and services in the late 1980s, some retained a hardware and networking focus. Many of those early entrepreneurs have now reinvented themselves in the Internet age.
India is an example of a relatively new phenomenon: the "info-tiger economy", which "exists within the broader economy but depends relatively little upon it; it operates according to its own rules and transcends national borders with unprecedented ease," observes Michael Connors.
But beneath the breathless hype, there are also some sobering realities. India has less than one per cent of the world software market, so its claims of becoming a software superpower or "the software development centre of the world in the 21st century" may be unduly optimistic.
A highly publicised report on the infotech industry in India, released late in 1999 by Indian-born Rajat Gupta, chief executive of McKinsey Consulting, urged the Indian software and services industry to lift its revenue goals from $3.9 billion in 1998-99 to $87 billion by 2008.
But government telecom providers are still playing an uncompetitive and restrictive role in the Internet age. Many analysts fear that government agencies in the country still do not understand the complex links necessary for developing a national information economy, and are dragging their feet in opening up the telecom and datacom markets to domestic and international private players.
This is where India is lagging behind other countries like Ireland and Singapore, according to the McKinsey software report. Ireland and Singapore are thus much more stable as regional software and services hubs. "If India is successful, the IT sector will propel India to the centre stage of the world and make a significant contribution to economic growth over the next decade," Gupta told a spell-bound audience in New Delhi during the release of the hefty 16-chapter report. "India will also have to develop over 2.2 million highquality knowledge workers in software-related areas by 2008," he said.
Still, the Internet hype continues to captivate the imagination. Marine Drive in Bombay and the various highways leading to the airports are dotted with hundreds of billboards, and at times almost half of them advertise Indian dotcoms with English and Hindi names: IndiaInfo.com, Baazee.com, indBazaar. A few multinational brands are sprinkled in as well, such as the Microsoft Network, IBM, Intel, and Singapore's Pacific Networks.
These ads indicating a well-heated Internet economy also disguise a tale of two Indias - one firmly rooted in the cyber age, the other still mired in poverty. The vast stretches of slums, and pavement dwellings are sometimes visible right under dotcom billboards.
Plugging into the global economy is one challenge. A far bigger one is extending the benefits of the IT revolution to the rest of a third-world society like India, where a quarter of the people live around the poverty line, a third are illiterate, and PC penetration has yet to breach five million PCs in a country of over a billion.
Grants for Internet kiosks, local-access community centres, new local-loop technologies, and low-cost Internet devices are some of the proposals in the pipeline. PCs cost almost twice as much as the monthly average wages of an urban office worker; low-cost devices and promotion of Internet access via more common devices like TV sets will therefore play an important role.
As for basic research and development in Internet technologies, the investment level in India still leaves much to be desired, considering that emerging economies such as Mexico have already identified the Internet as a key priority. Some academics are also voicing concern about avoiding an electronic publishing gap and a knowledge gap between scientific establishments of north and south India.
"While a part of India glides into the cyber-millennium, over 50 years after independence vast stretches of rural India have no water, let alone water that is potable," observed an anguished editorial in The Times of India newspaper during a drought-induced famine in northern India earlier this month.
As Deepak Phatak, computer science professor at IIT Bombay, says: "Perhaps India will be a country where bullock-carts and e-commerce will always continue to exist, side by side."