Software product development in India: Lessons from six cases

Abstract

While the software industry is considered a highly successful economic growth engine in India (NASSCOM, 2002a), its rapid growth in recent years has been achieved by firms primarily providing manpower-intensive customized software development and maintenance services to foreign clients (Arora et al., 2001). While this business model has enabled Indian software companies to transit smoothly from software ‘body-shopping’ services to offshore software development in India, it has also made them vulnerable to the business cycles in client countries. The software services model is manpower intensive, and growth is achieved only by a proportionate increase in the number of software engineers employed. This results in large organizations that become increasingly difficult to coordinate and control. The competitive advantages of this business model are narrow (Arora, Gambardella and Torrisi, 2001) and may over time be eroded by lower cost countries like China.