Are Indian Software Firms Innovative?

SpicyIP has, in the past, lamented about the dearth of innovative products from Indian software firms. And our previous posts queried as to why Indian IT majors never really made the transition from “services” to “products”.

In an excellent article, one of my favourite economists, Ashish Arora argues: “…many of the leading Indian firms have tried to develop products, with limited success. The lack of success ought not to surprise anyone. Penny pinching and risk averse management habits ingrained while growing in an infrastructure and capital scarce and labor abundant environment are unlikely to make for successful technology innovators. Development organizations geared to fulfill requirements laid down by clients are unlikely to be able to divine the needs of as yet unknown buyers of their product, and nor are sales organizations used to answering RFQs best suited to sell a product that the customer has not yet felt a need for.”

On a different note, I had a heated exchange last night with a friend who argued that the initial impetus for the software sector in India came from favourable government policies and an enlightened bureaucarcy. I countered, arguing otherwise: the key reason why software firms sprung off so well at the initial stage was because of less interference (“benign neglect”) by the government. In other words, software firms didn’t need a specific “license” to operate in a “license raj” era. Also, since they operated as “services”, a number of regulations on “manufaturing” carved out by the Fabian socialist state model engendered by Pandit Nehru did not apply to them. On this point, Arora argues as below:

“Athreye (2005a) argues that during the crucial years of its development, the software industry flew “under the radar”. The domestic market was small (and therefore there was little to be gained from protection) and as a service, it was naturally exempt from many of the laws and regulations that have stifled the growth of Indian manufacturing.

Neither were the large investments in the 1960 and 70s in science and engineering directed at software. Instead, the objective was to supply the manufacturing sector, whose slower-than-hoped-for growth resulted in the excess supply of engineers described to earlier. In more recent years, of course, the software industry and its industry association, NASSCOM, have come to exercise substantial political influence and helped craft favorable public policies. But that is the consequence of its success, not its cause.”

Shamnad Basheer

Shamnad Basheer

Prof. (Dr.) Shamnad Basheer founded SpicyIP in 2005. He's also the Founder of IDIA, a project to train underprivileged students for admissions to the leading law schools. He served for two years as an expert on the IP global advisory council (GAC) of the World Economic Forum (WEF). In 2015, he received the Infosys Prize in Humanities in 2015 for his work on legal education and on democratising the discourse around intellectual property law and policy. The jury was headed by Nobel laureate, Prof. Amartya Sen. Professional History: After graduating from the NLS, Bangalore Prof. Basheer joined Anand and Anand, one of India’s leading IP firms. He went on to head their telecommunication and technology practice and was rated by the IFLR as a leading technology lawyer. He left for the University of Oxford to pursue post-graduate studies, completing the BCL, MPhil and DPhil as a Wellcome Trust scholar. His first academic appointment was at the George Washington University Law School, where he served as the Frank H Marks Visiting Associate Professor of IP Law. He then relocated to India in 2008 to take up the MHRD Chaired Professorship in IP Law at WB NUJS, a leading Indian law school. Later, he was the Honorary Research Chair of IP Law at Nirma University and also a visiting professor of law at the National Law School (NLS), Bangalore. Prof. Basheer has published widely and his articles have won awards, including those instituted by ATRIP, the Stanford Technology Law Review and CREATe. He was consulted widely by the government, industry, international organisations and civil society on a variety of IP issues. He also served on several government committees.

One comment.

  1. Avatarnikita

    ah ha. a journalistic take on the state as well as the nature of enterprise and innovation. perhaps the other evening was two very different types of conversations/ideas. on two very different pitches. no wonder it went where it did.


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