The Birth & Growth Of A New Industry
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COMPUTER AD WARS
The computer had arrived; and advertisers were grinning. The hardware industry was slated to spend over Rs 1.5 crore on advertising — a sum that not even the most optimistic advertising professional would have predicted three years ago.
READY FOR THE BOOM
The new liberalised computer policy predictably generated a burst of enthusiasm in the computer industry. Tata Consultancy Services (TCS), India's largest software developer and exporter (gross revenue: Rs 14 crore for the year ended March 1984) was one of the companies poised for major expansion.
THE BIG SHAKEOUT
Rapid-fire changes in policy abolished capacity limits, cut import duties on components from 100 per cent to 60 per cent, scrapped excise duties on computer hardware and lifted the ban on manufacture of computer systems and peripherals. The sector was stunned.
Wipro, which had made its computer foray in 1981, left its rivals breathless. In 1987-88, Wipro Information Technology sold 232 computers in the small and medium range, second only to leader Hindus-tan Computers (now HCL).
Overseas, they were found in many an executive's lap, but in India, laptops were still lap-shy, partly because of lack of aggressive marketing.
Y2K: A TIME BOMB
Indian IT companies saw big opportunity in the global concern over Y2K — at the stroke of midnight, 31 December 1999, many things were expected to go wrong. Bills and invoices generated by computers on 1 January 2000 were likely to be incorrect as computers could not recognise the turn in the calendar.
SMELL OF JAVA
A new computing language threatened to burst the growing bubbles of software — Java. Produced by one of the world's premier networking companies, Sun Microsystems, it allowed users to simply bring in the required application over the Internet.
INFOSYS: GLOBAL GAME
Infosys was big in India. But could it take on the big daddies of the global software services, many of which had annual revenues of above $1 billion? Or was it a risky gamble? N.R. Narayana Murthy had a quick answer: "The ship is safest at the harbour, but that is not where it is supposed to be."
Four months after Michael Dell flew into India to launch his direct model of selling Dell products, the pieces fell into place. A few weeks ago, Dell had opened its call centre at Bangalore, and customers could directly order computer hardware on a toll-free line.
But things were also falling apart. A slowdown in the US economy had forced companies to cut down on IT spends and defer non-critical projects. This had a ricocheting effect. In March alone, some 30,000 jobs were axed. Over a period, about 100,000 Indian IT professionals (yes, that's right) were benched.
Even as the dotcom meltdown was playing out, a change was taking place in the background. A new genre of networked businesses started using the Internet to tie in suppliers, dealers and customers on the same platform — a radical departure from the older ‘unconnected' systems.
A period of slowdown in core applications and IT software companies in India had to rethink their strategy. Quarterly growth was now flat or negative, and the future looked bleak.
By 2002-end, the first signs of an upturn were seen. The big boys reported impressive results after more than five quarters of slow growth. But this was not a return to the high adrenaline days of Y2K.
PAUL BETS HIS SHIRT
Wipro Technologies went through its two worst years financially. While peers such as Infosys and Satyam had been cutting costs and tightening operations to combat the slowdown, Vivek Paul was buying up firms, upping marketing spends and chasing the consultancy dream.
AWAKE AND HUNGRY
TCS, which had pioneered the factory model of Indian IT services nearly two decades ago, was suddenly in a big hurry. CEO S. Ramadorai set the goal: Top 10 by 2010.
|The founding team of Infosys, who dared to take Indian IT to the world (BW Archive)|
BIG BLUE'S BIG MOVES
So, what was IBM doing? It was changing its address for one. Though still headquartered in Armonk, New York, its centre of gravity was really moving out of the US. In India itself, more than 73,000 employees saw the famous three-letter lined logo on their paychecks every month.
Cognizant overtook Wipro to become the third-largest Indian IT player after TCS.
CLOUD WITH A LINING
In a downturn, startups and small and medium enterprises (SMEs) in India, key to an economic revival, are
embracing cloud computing — a virtual computing environment that uses the Web to access a variety of operating systems. In India, the market potential is estimated to be just over $1 billion. TCS, Infosys and Wipro are exploring opportunities for creating private clouds for big companies. Reliance Energy and Aditya Birla Nuvo are also said to be considering setting up private clouds.
(This story was published in Businessworld Issue Dated 12-12-2011)