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designed for growth

Many Indian information and communications technologies companies have moved from providing services to partnering with corporations abroad.MANSI THAPLIYAL

Last month, a few days before tennis pro Rafael Nadal took on world champion Novak Djokovic at the ATP World Tour Finals in London, his uncle and coach Toni Nadal happened across the work of some Indian computer experts .

India's second-largest information technology company, Bengaluru-based Infosys Ltd., had recently inked a deal with the Association of Tennis Professionals for a strategic technology partnership to "revolutionize engagement with tennis fans by providing unprecedented insights and predictions about every tournament, every match and every point."

Toni Nadal was deeply interested in that data, said Infosys chief operating officer Pravin Rao in an interview from Bengaluru.

Spain's Rafael Nadal hits a return against Canadian Milos Raonic in the men's singles match of the International Premier Tennis League competition in Manila on December 8, 2015. AFP/Getty Images TED ALJIBE AFP/Getty Images

Spain's Rafael Nadal at the International Premier Tennis League competition in Manila on December 8, 2015.  TED ALJIBE/AFP/GETTY IMAGES

Mr. Rao's hobnobbing with professional tennis insiders illustrates how far Indian technology has come in the past few decades. Founded in 1981 with seed capital of only about $250 (U.S.), or $300,000 in 1981 dollars, Infosys today has a market capitalization of $42.51-billion and employs about 187,000 people globally.

"When we started, we didn't think that Infosys would grow to be so large, or that India would become such a hub for information technology," said Mr. Rao, one of Infosys's first 40 workers. "Our employees used to share desktops and use large mainframes to work on solutions that can now be done on smartphones. It took us 18 years to earn a hundred million dollars, but 18 months after that, we were a billion-dollar company."

Companies such as Infosys inaugurated an IT revolution in India in the late 1990s by creating a successful model of software development that catered to international markets.

In addition to creating millions of jobs in India, Infosys, as well as HCL Technologies Ltd., Tata Consultancy Services Ltd., Wipro Ltd. and others, were largely responsible for rebranding India's image from a land of ancient temples and snake charmers to one of English-speaking programmers.

Today, India is the workhorse of the global IT industry. Indian programmers, developers and others produce 55 per cent of the products and services in the United States' $146-billion market in information technology, for example.

The sector has increased its contribution to India's GDP to 9.5 per cent in 2014 from 1.2 per cent in 1998. IT directly employs 3.5 million Indians and indirectly creates more than 10 million jobs in the country, according to the India Brand Equity Foundation, a trust established by the Indian Ministry of Commerce and Industry.

The sector is forecast to more than double, too, from $132-billion in 2015 to $350-billion by 2025, according to a recent joint report by consulting firm McKinsey & Co. and the National Association of Software and Services Companies, an Indian trade association. Exports are expected to reach about $280-billion in 2025, the report said.

Those numbers could grow even more if Indian Prime Minister Narendra Modi succeeds in his plan to expand Internet access to all of India's 1.2 billion people. As of 2013, the most recent statistics available, just 15 per cent of the country had access to the Internet. The plan is part of Mr. Modi's vision of improving India's business climate.

"We want Internet and smartphone penetration in every town and village," said Ashutosh Chadha, co-chairperson of the Information Technology Committee at the Federation of Indian Chambers of Commerce and Industry in New Delhi. "The government is simultaneously very focused on increasing ease of business, so all in all the sector is likely to register the phenomenal growth being predicted for it."

India is still a poor country that faces significant obstacles.

In Bengaluru, which is often referred to as India's Silicon Valley, it is not uncommon for drivers to spend as much as two to four hours navigating traffic jams to cross the southern Indian city.

Staffing is also a problem. More than a million people join India's workforce every month. Higher education has not been able to meet the quality standards set by India's IT Industry, however.

"Most schools do not have faculty that can teach well and inspire," said professor M. Balakrishnan, faculty member at the department of computer science and engineering at the Indian Institute of Technology in New Delhi. "It's a concern that the Indian government has already flagged and is trying to address by creating more Indian Institutes of Technology and funding other academic institutions. Industry has also taken a lead and set up or funded various schools."

Infosys ships off fresh graduate recruits to a six-month foundational course at its campus in the southern Indian city of Mysore, where more than 1,000 would-be workers train at a time, in order to bring them up to speed in its offices around India and the world. Other Indian companies have similar programs.

"It's true that Indian graduates are very talented, but are they ready to enter the workforce?" asked Mr. Rao. "Unfortunately not. The reality is that quality of talent is a major concern, and the government is trying to address it, but industry must take responsibility."

But many young Indians are skilled and ambitious enough to launch new companies. India's startup ecosystem now ranks third globally, with more than 4,200 startups now operating, according to the National Association of Software and Services Companies. Three to four startups form every day. Almost $5-billion of venture capital has been allocated to the sector this year, the report said.

That new generation of companies is likely to change the character of information technology in India.

In July, Infosys chief executive officer Vishal Sikka, who divides his time between the company's Bengaluru headquarters and its Silicon Valley offices, told Forbes Asia that India's IT miracle had ended. The comments sparked consternation among Indian techies and politicians who have banked on the sector's growth.

But Mr. Rao said it was crucial to see Dr. Sikka's comments in context. When Infosys launched 34 years ago, he said, the Indian information technology sector was based on outsourcing. India has now moved on. The miracle has matured, in other words.

"There have been tremendous transformations and disruption in the sector, and Indian companies have been under pressure to adapt to newer business models," said Mr. Rao. "From that perspective, perhaps the miracle of easy funding and easy jobs is over. But, it would be incorrect to say that India is not relevant any more. India continues to be a dominant player in the sector."

Mr. Chadha concurred.

"Indian companies were told what to do, and they did it well," he said. "That phase is now over. Instead, the sector has now evolved and begun focusing more on software development, and creating technology-based solutions for global clients. In many ways, the Indian IT companies today are partners in progress with their clients, as opposed to vendors who provide some services."

Clarification note: Toni Nadal happened across the tennis information of Infosys, rather than reaching out to them, according to the company. This is the clarified version of the story.

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