CNET News India Tech

8/8/2019 CNET News India Tech

http://slidepdf.com/reader/full/cnet-news-india-tech 1/11

Beyond offshoring, a new powerhouse is in the makingLed by a young work force, the country of 1 billion people is expanding into all things technology.

Part 1: Move over, ChinaIndia is striving to become a brand name in everything from tech consulting to consumer electronics.

Part 2: U.S.-style labor painsThe boom has created high turnover and other Western-like problems in India's labor market.

Part 3: The $100 computer India may be the first country to reach the once-unthinkable goal of a $100 computer.

Plus: India's rise - An oral history

For the full report online, including photos and reader-contributed content and opinions, go tohttp://news.com.

Editor: Mike Yamamoto Associate editor: Karen Said Copy editor: Leslie Katz

Design: Ellen Ng Production: Mike Markovich



By Michael KanellosStaff Writer, CNET News.comJune 28, 2005 4:00 AM PT

BANGALORE, India--The outsourcing boom that has transformed this country's economy can be traced in part to atechnology discovery made in 1995.

That year, engineers at Tata Consultancy Services found that a set of software tools called CasePac, developed toconvert code for IBM, could be used to change the date field in other programs.

"We realized this could be used for the Y2K problem," said Nagaraj Ijari, a senior executive at Tata's offices, located ithis city at the epicenter of India's thriving technology industry. Companies from around the world sought Tata'soutsourced services to fix the "millennium bug," and the company's annual revenue has climbed from less than $170million to $2.24 billion in the years since.

The success story illustrates how quickly India's fortunes have changed in just a few short years, as the country'sburgeoning technology industry has provided such services at a fraction of the cost of Western counterparts. Building othis foundation, India is now entering an important new phase in its economic evolution.

Once fairly anonymous organizations hired to run support desks and developserver applications for large multinational corporations, Indian companies areraising their profile as brand name suppliers in hardware design, softwaredevelopment, consulting services and virtually anything else in technology.

Infused with new blood from a young tech-savvy work force, the new movemenis a major advance toward economic independence that carries broadramifications for a country whose past includes colonial rule, experiments insocialism and devastating poverty.

"There is a huge Indian domestic opportunity and an export opportunity beyondoutsourcing," said Rishi Navani, managing director of WestBridge CapitalPartners, a venture capital firm specializing in Indo-American deals. "Over thenext 12 months, you will see three to four new Indian Nasdaq listings."

India's growing entrepreneurial spirit is reflected in its forays into consumer electronics--a highly competitive market that has long been considered theprovince of Japan, China, South Korea and other Asian nations, as well as theUnited States.

Tata recently won a deal to create an environmentally friendly cell phone for aU.S. carrier, for example, while rival Wipro Technologies is designing MP3players for Europe and a flat-panel TV for an American company. Suchentrepreneurial ventures in the consumer market are not confined to the largestplayers: Mumbai-based Celetronix produces set- top boxes for a U.S.-basedsatellite TV carrier.

"Our evolution will be similar to the evolution of Taiwan," said Ramesh Emani, president of Embedded & ProductEngineering Solutions at Wipro, noting that in India, there would be greater emphasis on hardware design than onmanufacturing.

As was the case in China, domestic demand is a significant factor in India's technological expansion.



India has only 100 million phones for its population of 1 billion people--including both cellular and land lines--but thatnumber is expected to grow to 250 million in the next two years. Cellular service costs only about $4 to $7 a month,and future phones will also sport cricket scores, lottery ticket purchases and other types of services seen in SouthKorea and Japan.

"The volume is enormous," said Sanjay Nayak, CEO of network equipment specialist Tejas Networks, which has wonlarge contracts in India against multinational competitors.

High growth is also expected for the computer market in India, which counts only 14 PCs for every 1,000 people.Several companies hope to court that market with computers priced at less than $250, many of them packaged withresidential broadband service that costs about $12 a month for a 128kbps connection.

"It is our fastest-growing emerging market," said Ketan Sampat, president of Intel India. "We've had a growing middleclass. PCs are part of that."

Beyond the home, some hardware companies are targeting the enterprise marketin and outside India. VXL Instruments, for example, delivers stripped-downdesktops to the likes of Air France and Goodyear Tire & Rubber.

New Delhi's FinalQuadrant Solutions sells a server appliance for the travelindustry. Travel agents pay only a modest amount for the server but handFinalQuadrant a small fee for each hotel room night or travel leg booked throughthe system.

"We're making every single (travel) reseller as powerful as Expedia," CEO Anuj

Gupta said. The company, which made $1 million in net profit in 2004, hasmostly sold its products in Europe and is expanding to the United States.

For India's service companies, perhaps the most natural expansion is the consulting business. Outsourcing stalwartssuch as Tata, Wipro and Infosys Technologies have begun significant consulting operations as outgrowths of their outsourcing work. Each of these "Big Three" companies has seen revenue grow in the 30 to 50 percent range everyyear for the last five years--a period in which Western companies saw revenue flatten or decline.

Most of their consulting engagements largely address how best to implement services already provided by thesecompanies. But they are nevertheless long-term commitments that will pit them against the formidable white-collar armies at large U.S. companies for years to come.

"We are not McKinsey. We do not want to hand over the report and run away," Tata's Ijari said. "Our competitors areAccenture and IBM."

The new competition on many fronts from India has prompted U.S. companies to increase their presence in the countrWestern companies such as Sun Microsystems and Hewlett-Packard have set up shop in India as part of theoutsourcing trend, to keep engineering labor costs in line with those of their competitors. But U.S. companies face aproblem: Other types of employees, such as managers and sales executives, also have relatively low salaries--meaninthey cost India rivals less.

Such concerns explain why U.S. venture capitalists are increasingly insisting that any U.S. start-up seeking fundsmaintain a presence in India. A company might cost $50 million to $70 million to build in the United States but, withrelatively inexpensive labor overseas, might cost $12 million to $20 million in India.

U.S.-Indian businesses can take all manner of hybrid forms. Some were conceived in the United States and have builresearch and engineering departments in India. Others were born in India but have located high-level executives inAmerica. Still others, such as Tejas and Telsima, are founded and based in India.

Whatever the mix, functions often monopolized by Silicon Valley in the past are now spreading overseas. To lure newinvestment, for instance, Silicon Valley Bank brought a number of American venture capitalists to India in September 2003 and subsequently opened offices that it lends to visiting VCs and their budding start-ups.

"Before, India was an afterthought," said Ash Lilani, head of global sales and marketing at Silicon Valley Bank. "Now itis thought of at birth."

From blackouts to corruptionStill, challenges persist. With an estimated 600 additional cars on Bangalore's streets every day, traffic has ground togridlock. The five-mile drive to Electronics City, the main tech hub, can take an hour from the center of town. Anexpress road that was supposed to have been completed last year remains a tangle of rebar and cement pilings.



Electricity is another pressing concern. In nearly every Indian city and state, power outages occur fairly regularly. Thelack of an adequate power grid is one reason that no foreign company has built a semiconductor fabrication facility inthe country. A South Korean entrepreneur has signed a preliminary agreement to build a chip foundry near Hyderabadbut many sources privately doubt that the project will get far, because of the water and power demands of a modernfab plant.

"The government realizes that there needs to be foreign investment" in infrastructure, WestBridge Capital's Navani saidadding that development funds are being negotiated with large banks.

Tech companies also routinely complain about India's tax system. On the plus side, the onerously large import duties othe past are fading away, and the government has passed laws requiring the equivalent of benefits offered by placeslike China and Taiwan, including one that gives companies exporting tech products a 10-year exemption from incometaxes.

Yet executives are well aware that the government has a history of adding taxes through its national budget, asexemplified recently with a so-called fringe benefit tax. Under this provision, companies that throw parties for clients orhost them at conferences must pay a tax on the expenses, said Ravi Pradhan, India manager for Via Technologies.

Moreover, as in other parts of the world, corruption remains a problem whencomes to influencing clients and government officials. "In America, you mighttake them to the Super Bowl. Here, you give them money," one source said.

And even for Indian entrepreneurs who know how to navigate the unofficialways of doing business, help from multinational manufacturers is stillnecessary to build their industry.

"We have engineers who are good technicians, but we need productmanagers," said Vinod Dham, founder of NewPath Ventures, a venture capitfirm that specializes in Indian investments. The services business, he added,has "made a culture of people who say, 'Tell me what to do.'"

Reverse outsourcingThis should lead, at least in the near term, to a form of reverse outsourcing, with U.S. experts heading overseas toprovide services for Indian businesses. Indian-based companies, for their part, will need to install an increasing numbeof employees in Europe and North America to land contracts--which means paying higher Western salaries.

"You need guys who worked on Wall Street," said Jessie Paul, head of marketing for iGate, a Bangalore-basedcompany that provides consulting and other information technology services.

However, while these factors may temporarily slow progress, few expect it to stop the industry. Many Indian companieare becoming more integrated into the business processes of its customers, making offshore outsourcing a permanentarrangement.

"The level of people who are visiting us today is very, very high. They are actually the strategic decision makers. In thdot-com days, it was more reactive," said Srinath Batni, a board member of Infosys. Outsourcing, he added, "hasbecome a long-term strategy."

That marathon approach is viewed as a key advantage for India. Many executives and entrepreneurs note that India'stech boom is driven by a demographic bubble that will be difficult to match for other nations. India has a largepopulation of young people who are driven, well-educated and work for relatively low wages.

"The average age of the working population in India is 27 years," said Supratim Sarkar, manager of strategic marketingat Wipro. "That is one of the biggest levers we have."

Not surprisingly, optimism is running high as younger generations come of age. The national exuberance has inspiredmany entrepreneurs, including Rajesh Jain, who sold an Indian-based Web portal, IndiaWorld, for around $100 millionin 2000 and who is now incubating companies that he expects will bring computing to the masses in his country.

"For the first time," he said, "there is confidence that tomorrow will be better than today."




BANGALORE, India--Vinod Dham was faced with a personnel issue he had never encountered before: the father- in-law.

Nevis Networks, a company that Dham's NewPath Ventures had backed, reported one day that a top engineer hadgotten engaged and suddenly gave notice of his resignation. His fiancee's father, it seems, had never heard of theyoung security company and wanted him to work instead for an established entity like Intel or IBM.

Thinking quickly, Dham had a press release drawn up, and a reporter was cajoled into writing a story about Nevis. Thfather-in-law saw the article and heartily approved of the young man's career choice.

"All of the VC funds want to go to India," said Dham, whose venture capital firmis based in Silicon Valley, "but most don't know how to do it."

Such cultural clashes reflect the rapidly changing nature of India's high-techworld, where an industrial renaissance has created not only an unprecedentedeconomic boom, but also Western-style growing pains in employee recruitmentand retention. Turnover in the software services industry runs at about 15percent a year on average, and can exceed 30 percent at some companies,according to various sources.

Relative to their counterparts in the United States and other developed nations,workers at Indian companies are both plentiful and inexpensive to employ. Thischeap labor, however, has led to explosive growth and, in turn, to unprecedentecompetition for qualified employees. Double-digit raises are the norm.

"What if someone offered you double your salary?" said Rishi Navani, amanaging director at WestBridge Capital Partners. "There would be no debate."

Evidence of India's chaotic job market is everywhere. Upon learning of layoffs aU.S. chipmaker PMC-Sierra's lab in this city, for example, Dham and hisNewPath partners caught a red-eye flight to India and took all 65 fired employeeto dinner; they hired 31 of them.

Large public companies such as Tata Consultancy Services each hire about10,000 employees a year--the equivalent of a small town--in an effort to keep uannual revenue growth that can reach 50 percent. Although the turnover rateslisted in the financial reports of these companies are substantially below thenational average, services giant Infosys Technologies alone is absorbing 1,000employees every month, said Srinath Batni, a company board member.

A fresh engineering graduate at a leading Indian company might receive a starting salary of 15,000 to 28,000 rupees amonth, or $4,300 to $8,000 a year, according to various sources and figures from the New Delhi-based NationalAssociation of Software and Service Companies (NASSCOM).

A director-level manager might make $30,000 to $51,000 a year, while a division head might make $76,000, dependingon experience. Those salaries are less than half that of equivalent positions in the United States.



But the gap is quickly narrowing, thanks to large multinationals that have descended upon the Indian labor market.Companies such as Hewlett-Packard, Intel and Sun Microsystems can (and will) double or even triple the salary offereby Indian counterparts, sources say.

The lure of lucrative salaries has extended beyond the private sector. The labs at the government-run DefenceResearch and Development Organisation is losing about 60 scientists a year to various industries.

At the Indian Institute of Science, the country's premier research organization and graduate school, automotive andelectronics companies from the West have been hiring students on the verge of finishing their Ph.D.s for 30,000 rupeea month. By law, assistant professors earn only 20,000 rupees a month, though recent changes allow them to keep 60percent of all fees for consulting and patent licenses.

"We have a problem with internal brain drain," said Professor M.L. Munjal, chairman of the mechanical sciences divisioat IIS. "This is the price we pay for globalization."

Problem or opportunity?Over the past 20 years, India has transformed its school system to churn out graduates for the information technologyindustry. In the mid-1980s, around 70 colleges nationwide admitted about 5,000 students into IT and computer scienceprograms, said Professor Deepak Phatak, who heads up the Kanwal Rekhi School of Information Technology at theIndian Institute of Technology at Bombay (in the city now known as Mumbai).

Today, he said, 250,000 new students at 1,750 colleges enter undergraduate and master's programs in computer science and electricalengineering. Another 100,000 students enroll in mechanical, civil andchemical engineering programs. (Different sources give varying totals for

the number of colleges in the system, but the number always exceeds1,000.)

"The total number of engineering students in all four years of college isover a million at any time," Phatak said. "So you see, this is our problem,and this is our opportunity."

A prolific source of this educational bounty is Karnataka, the state whereBangalore and a large percentage of the IT industry is located. There, 130colleges produce 30,000 graduates in the field each year, said M.K.Shankaralinge Gowda, the state's secretary of the department of information technology.

That translates to jobs. Since 1997, the number of technology professionals employed in the state has risen more than

tenfold, from 25,000 to 285,000, Gowda said. In all of India, the number of software and service workers rose from522,000 at the end of 2001 to 813,000 last year, according to NASSCOM.

While most students focus on software, chip design is growing. Five years ago, the Indian Institute of Technology setup a chip design program and a semiconductor lab that graduates 20 students a year. The university is replicating it atother institutions, according to Sunil Sherlekar, head of embedded systems at Tata Consultancy Services.

Large U.S. chipmakers have set up design centers in the country. Intel is designing a server chip at its Bangalorefacility, said Ketan Sampat, president of Intel India.

"Quality" not just a sloganFor India's services companies, fast hiring and high turnover are significant competitive concerns. To avoid wasting timbetween projects, service companies must be able to move teams of employees from one project to another rapidly,Batni and others say. "Quality" and "customer satisfaction" are viewed as more than empty slogans; they are measure

quantities that affect profitability and growth.

Achieving these goals requires rigorous employee training. At Tata, newly hired college graduates sit through 52 daysof training. Among other assignments, they have to read excerpts of novels such as "Gone with the Wind" and thenconduct a group discussion in front of a class.

"India is a very competitive world. It is heavy on the 'I,'" said Nagaraj Ijari, the delivery center head of Tata's officeshere. "We change it to a 'we.'"

Yet it is a habit that is difficult to shake, especially in a society that stresses individual achievement from an early age.The competitive nature of the technology field is reflected in a contest sponsored by Tata for 13- and 14-year-olds inKarnataka. More than 60,000 teenagers participated in the contest, which awards prizes to those most adept atanswering questions about the history or products of different technology companies.



After 10th grade, students must declare their collegiate paths and endure strenuous board examinations. Schools takeout full-page ads in newspapers to congratulate students who score in the 90-plus percentiles.

Not surprisingly, the college admissions process is rife with anxiety. Theseven campuses of the Indian Institute of Technology receive more than150,000 applications a year and admit around 3,500 undergraduate andgraduate students.

During the five-year curriculum, "you're as good as in a prison," said M.TKarunakaran, president of Telsima Communications and an IIT alumnusOne week, students might work on engineering theory, he said; the next

they might be asked to learn how to weld.

The Indian Institute of Science is similarly stringent. The graduate schooreceives more than 100,000 applications and accepts only a few hundre-an acceptance rate of 0.3 percent.

The long odds then continue when it comes time to get a job. Infosysreceives a million employment applications annually. The 10,000 hired represent only 1 percent of the applicant pool.

To stand out, job candidates will often fashion resumes five or six pages long. "It might include the elocution contestthat they won in grade school or what they did in the Boy Scouts," said Supratim Sarkar, manager of strategicmarketing at Wipro Technologies.

Jessie Paul, head of marketing at iGate, a services and consulting firm, said a bank teller once told her that his

granddaughter was looking for a job. Later that night, she got a call from him at home. "He got my phone number froma loan application," she said.

But the hard work pays off for those employees who do get hired and eventually establish themselves. Then, they areexposed to a very different kind of competition--one that casts them as the object of pursuit.

"The real issue here is the growth in the salary levels. The salaries in India are still growing at 18 to 20 percentannum," said Sanjay Nayak, CEO of Tejas Networks. "The stickiness of people to companies is very low. A little bitmore stabilization is needed."




MUMBAI, India--One of the critical ingredients for the $100 computer is probably in your garage.

In about three months, a little-known company called Novatium plans to offer a stripped-down home computer for about $70 or $75. That is about half the price of the standard "thin clients" of this kind now sold in India, made possibin part by some novel engineering choices. Adding a monitor doubles the price to $150, but the company will offer used displays to keep the cost down.

"If you want to reach the $100 to $120 price point, you need to use old monitors," said Novatium founder and boardmember Rajesh Jain, a local entrepreneur who sold the IndiaWorld portal for $115 million in cash in 2000 and hasstarted a host of companies since. "Monitors have a lifetime of seven to eight years."

It is this kind of entrepreneurial thinking that has made Jain the latest visionarto seek out today's Holy Grail of home computing: a desktop that will start tobring the Internet to the more than 5 billion people around the world whoaren't on it yet.

The first $100 computer is a fitting icon for a country undergoing major changes in the development of its technology, economy and society. As Indiacompanies increasingly break away from the limitations of handling outsource

services for Western corporations, innovations are likely to multiply and inspirthe rising number of independently minded engineers and executives who areleading the country's technology industry to new frontiers.

Because of thriving exports and low PC penetration, India has become theepicenter for projects on the cutting edge of computing hardware. AdvancedMicro Devices has started to sell its Personal Internet Communicator for $235including monitor, through a broadband partner here. It says a fully equipped$100 personal computer in three years isn't out of the question.

The innovative spirit that pervades the industry is producing a variety of new approaches toward affordable computingTata Consultancy Services is tinkering with "domain computers" that reduce costs by just handling fixed functions suchas bill payment or word processing, said Nagaraj Ijari, a senior executive in the company's operations in Bangalore.

About 200 miles away in high-tech center Chennai, formerly known as Madras, Professor Ashok Jhunjhunwala of theIndian Institute of Technology has developed a $1,000 automatic teller machine that can also serve as an Internet kiosfor villages. He has also built a wireless data system that has been exported to Brazil, Iran, Fiji and Nigeria.

Creating a product that cuts costs without reducing functions isn't easy, as exemplified by the Simputer, a handheldcomputer designed for the masses. And many products face formidable logistical and infrastructural obstacles.

Professor Jitendra Shah, from the Centre for the Development of Advanced Computing, is examining ways to reduceelectricity usage by setting up solar-powered computing terminals that tap into battery-powered PCs acting as servers.

"We are looking at ways to take advantage of unconventional sources of power. Practically in every village you will finda truck or car battery that you can use when the regular power grid fails you," said Ketan Sampat, president of IntelIndia. "You also want to design something that is more tolerant of dust."



Living in a material worldThe key to success for the $100 computer lies in the sum of its parts. Even though the industry has seen continuousprice declines for components--including metal, plastic and other raw materials--many executives believe thatmanufacturing a full-fledged PC for even less than $200 is probably still impractical.

"We are not able to fix the monitor and hard-drive problem," said P.R. Lakshamanan, senior vice president of ZenithComputers, one of India's largest local PC makers.

With these realities in mind, some companies are adjusting their price goals. Xenitis, for example, has come out withPCs that cost just under $250, equipped with an older 1GHz processor from Via Technologies, 128MB of memory, a40GB hard drive, Linux software and a 15-inch screen.

Via will join in with its own Terra PC in the fall. The Terra comes with the same basic configuration as its Xenitiscompetitor, but the operating system and the basic applications are loaded on a flash memory chip, not the drive--making the computer less susceptible to viruses and other problems.

Via, however, admits that it will need to select battle-hardened software. "There is no way I am going to take care of aof the problems," said Ravi Pradhan, country manager for Via. "The idea is to get as close to perfect as possible."

Others are taking a more socialistic approach to lowering costs. Intel, for instance, promotes communal arrangementsthat spread the cost of a computer across an entire village.

In the southern state of Kerala, Intel has helped the government launch a program that assists local entrepreneurs inlining up financing to set up an "Akshaya Center"--sort of an Internet cafe--and pays them to provide PC training to onmember of each family in a village. The Akshayas also provide videoconferencing for families with overseas relatives,data entry for local cooperative banks, and links to commodity exchanges.

The system is modeled after a long-established practice in which India'subiquitous pay phones are owned by individuals, not the nationaltelecommunications companies. "Akshaya could become one of theseprograms that scales out across the country," Sampat said.

Thin is finally inThe Indian market may also finally provide an outlet for the so-called thinclient, a type of basic computer tried repeatedly in North America and Europeby Oracle and Sun Microsystems with little success. Thin clients, sometimesknown as network computers or "dumb terminals," effectively are used only tocommunicate with a server; the server itself is the device that stores the data,houses the applications, performs the calculations and connects to the

Internet.

Although a server can only handle a finite number of thin clients, advocatessay the systems reduce both hardware costs and support headaches.

Professor Deepak Phatak of the Indian Institute of Technology conducted a study of computer use in a bank anddetermined that thin clients would cost about a third as much as multifunctional personal computers. A large insurer installed 13,000 of the machines after the study, he said, and other companies are contemplating similar moves.

"Ninety-five percent of the employees only used a single application," Phatak said. "Fifteen thousand rupees ($357)gets you a thin client with support for three years."

Moreover, proponents say, these systems are more than just typical thin clients with used monitors.

"Just because we are an emerging market doesn't mean we want an inferior product," said Jain of Novatium. Theengineering behind his company's base model illustrates his point.

Instead of a microprocessor, it will contain a digital signal processor that compresses and decompresses music andvideo files. In addition to lowering costs, the technology is designed to provide access to the full range of the Internetwithout bogging down the machine's operations. (Novatium would not disclose which chip brand it would use, but oneof its investors is also the chairman of digital signal processor designer Analog Devices.)

Using Linux applications and software from Jain's Netcore Solutions, these machines will be tweaked so that multiplepeople can use them. This would reduce the cost of memory in the server that does the bulk of the computing work fothe Novatium thin clients on its network.

Jain will also try to establish "operator grids," local businesses that run the servers while acting as an Internet service



provider. Eventually, instead of buying their machines, he said customers could have the option of paying a gridoperator $15 to $20 a month for all hardware, software and storage needs.

While acknowledging the risks inherent in any start-up venture, Jain speaks eagerly of what he calls the phenomenonof the black swan--a rare, but not impossible, event.

"Google was a black swan," he said. "No one expects the next Microsoft or Intel or Cisco to come out of India, but Ibelieve it is entirely possible."



Tata's headquarters in Mumbai

Credit: Tata Group

Rajiv Gandhi was theyoungest Prime Minister of India.Credit: Prime Minister's office

Former U.S. President Bill Clinton withPrime Minister Dr. Manmohan Singh.Credit: Prime Minister's Office


1946-1950: The Indian Institute of Technology founded. With seven campuses, which admit3,500 out of 150,000 applicants each year, it has become the intellectual core of the country'sindustry. Its professors sit on advisory boards, while alumni are behind successes such asInfosys. The five-year program is "grueling," said Ravi Pradhan, Via Technologies' manager for India.

1968: The Tata industrial conglomerate forms software services unit Tata Consultancy Services."We had six employees," said Nagaraj Ijari, the delivery center head at TCS' Bangalore offices."Now we have 40,000."

Mid-1970s: IBM exits India. Import duties of 150 percent or more mean that VCRs cost $3,000and TVs cost $6,000. Wipro starts to create India's first homegrown PC.

1985: Prime Minister Rajiv Gandhi makes speech imploring the country to move into tech. A transcriptof the speech is passed out on paper to the audience, thanks to speech-to-text computing.

"It was 60 percent correct, but you could see the power of it," said A.K. Bhuwania, chairman of thePriya Group, a distributor. That day, Bhuwania decides to expand from chemicals into techcomponents.

1986: General Electric expands engineering presence and its Six Sigma methodologies here. Ex-GEemployees become key leaders in several companies. "They became like Fairchild" asserts VinodDham, co-founder of NewPath Ventures.

1991: National financial crisis causes government to introduce major reforms. Finance Minister

Manmohan Singh (now prime minister) emerges as hero.1993: A group of IT leaders determines plan for IT industry. Professor Deepak Phatak predicts India'sIT output will hit $100 billion by 2010. "Everyone thought that sounded crazy, so we changed it to $50billion by 2008," he said. The latter figure is on track.

1994: Telecom liberalized. "That helped a lot. Before that, it was all FedEx," said Supratim Sakar,manager of strategic marketing at Wipro.

1995: TCS determines that its CasePack tool developed for IBM can be used to scan software for Y2Kproblems. An industry is born.

1999: Y2K contracts pile into India. "The biggest boost of all was Y2K. In some ways, theU.S. created this monster." Ash Lilani, head of sales and marketing at Silicon Valley Bank.

2002: Indian companies expand hiring to handle incoming work resulting from massive

layoffs after the dot-com bubble burst and the U.S. tech industry fell into a recession. "Wehad a little bit of breathing space," said Sanjay Nayak, CEO of Tejas Networks.

2003: Led by service conglomerates such as Wipro and Infosys, India becomes a primarydestination for offshore outsourcing as foreign companies seek to lower labor costs. Thetrend leads to political controversies around the world (link to last year's special report)."

2004: Singh becomes Prime Minister. High tech fairly ingrained in daily life for many in cities.

"Ten years ago, you had to stand in line for money at the bank," said Srinath Batni, a boardmember at Infosys. "It was what people did on the weekend."

2005: Entrepreneur Rajesh Jain begins to promote thin clients costing $100 to $150 ascomputers for the mass population. "It's not that we need just cheaper solutions. We need the newest technology, but atfundamentally lower price points," Jain has said.

Documents

CNET News India Tech