Three Technology Trends

SANJAY KUMAR, PRESIDENT
AND COO, COMPUTER ASSOCIATES INTERNATIONAL

These are exciting times
in the evolution of the Indian software industry. Just recently, software revenues for
India exceeded $ 1 billion a year, a threshold that till a few years ago many analysts in
India had put into the next Millennium. Clearly, the accomplishments of the Indian
software industry have earned it a new level of respect and admiration throughout the
world. Now the big question is how can India capitalize on its successes, thrive in a
world of feverish competition, and emerge as an undisputed global leader in every aspect
of IT?

align="right" hspace="0" width="136" height="227">My take on this question focuses on
three critical success factors that underscore the most successful IT economies.
Understanding where IT is headed is becoming harder, not easier. But the global trends,
that reward those who are willing to take big risks for big rewards and accept stewardship
of the technology entrusted to them, are relatively well defined. The theme that unifies
the three trends, that follow is how technology itself often takes a back seat to more
fundamental decisions such as definition of markets, tolerance of risk, and the beneficial
role of technology in the greater society.

Theme 1: Look To The
Value Chain

I think we can agree that crossing $ 1 billion in revenues for the first time is a
milestone. But India must ask itself why it took the industry so long, given the
substantial number of outstanding software professionals who have contributed to the
software sector.

The simple answer is that
there have been a number of factors limiting the size of the software industry in India.
Traditionally, the industry was driven by a range of activities that can be characterized
as reactive, externally-focused, low-risk, and component-based. Till very recently, a vast
bulk of the Indian software industry's revenues were derived from activities such as
component development, custom software programming, contract programming, and providing
support for the third-party software. This work is important and contributes to the
economy. But as the majority of the risk and real value are added elsewhere, the majority
of the profits (if any) are extracted elsewhere, as well.

If India is to take its proper
place in the world economy, it must take on more of the high-value activities that are
rewarded by the emerging knowledge-based global economy. The country especially needs to
do more software R&D, more software design, as well as more complete product
life-cycle work. Investments and partnerships in India by Computer Associates and others
will help move the country forward on this path, but it must not entirely rely on foreign
investments.

I believe the Indian software
industry must make a fundamental shift from focusing on external work-adding value to
products developed outside-to emphasizing work on products designed and developed within
the country. It is by controlling the value chain that the Indian software industry will
find its greatest reward.

Theme 2: With Limited
Risks, Come Limited Rewards

The Indian software industry needs to accept a new risk-reward paradigm. It is true that
as long as the software industry accepts only work that is conservative, stable, and
predictable, the risks are going to be acceptable. However, what is also true is that the
rewards too are going to be limited. There is no way around this basic tradeoff. If the
industry wants the rewards that the global economy offers its winners, it must also be
prepared to take on the risks that the economy places on its losers. The industry must
face squarely the institutional and cultural impediments that have historically penalized
high-risk commercial initiatives. Many of these impediments have been and are being
dismantled. But the biggest obstacle can be the universal human nature of resisting
change. When the day is done, the choice to take on a new mindset about risk is an
individual decision that everyone in the software industry needs to take on at an
individual level.

Fortunately, the lessons
learnt by software professionals across the world offer clues about maximizing
opportunities while minimizing risks. I encourage the software industry in India to be
adroit students of which strategies have worked and which have failed. From my experience,
reward of the global economy will be driven by the following activities.

VALUE-ORIENTED
COMPONENT WORK: Today's software is built from many components assembled together
to create large products. India's software industry is uniquely qualified to take on the
challenges of designing these components, adding real value, and integrating them into
cohesive products.

COMPLETE PRODUCT CYCLE
WORK: Given the technical resources available, Computer Associates as well as
many other companies are bringing complete product life-cycle work to India. Getting
experience in this area is critical if the Indian software industry is to take the next
step up the software value chain.

EMPHASIS ON THE
ENTREPRENEUR: India needs to be better represented among the ranks of technical
innovators and business leaders who are comfortable with extending their dreams and taking
risks. Another term for such people is entrepreneurs.

THINK GLOBALLY, ACT
GLOBALLY: The experience of adding value to software designed elsewhere is good
for India, but it is only one step. The ultimate goal, of course, is for Indian
entrepreneurs to originate such work in the country and then contract with partners,
perhaps in the US or Europe, to add value.

Internet/intranet/multimedia:
These areas represent tremendous opportunities for careers that will be highly paid and
richly rewarding. These technologies are the fast tracks to the next millennium. That's
where the future is and, with my Computer Associates' investment in India, that's the
direction we hope the software industry here will too go. The result will be a much higher
reward in exchange for a little more risk.

Theme 3: Giving Back

I believe now is the time for the Indian software industry to start thinking about how IT
can be made to serve society in the broadest scope possible. I am talking about accepting
our role as stewards of the information revolution and I would encourage everyone
connected with the industry to consider how you can return a portion of what you have
earned to those less blessed, less powerful, and less connected.

If India benefits, as I know
it will, from the enormous investments and opportunities now being presented, there are no
limits to what it can accomplish. There has never in the history been a force like IT to
empower people and to make the world a better place to live in. The software industry in
the next millennium will flourish careers and make fortunes. The lives of everyone
connected to the Indian software industry will be improved.

I am convinced that we have it
within our power to use our skills to make unprecedented contributions to the societies in
which we operate. Let me close by describing just two ways Computer Associates has found
it can leverage what we do best-software-to improve the lives of children across the
world.

The company does extensive
work for the National Center for Missing and Exploited Children, a non-profit
organization, dedicated to locating children who have been abducted or otherwise separated
from their legal guardians. Our work includes developing and hosting the organization's
web site and championing its cause internationally. Computer Associates is also involved
with the Save A Smile Foundation, which sends doctors and nurses in different parts of the
world to repair cleft palates and other facial deformities. The company is currently
working to equip a train which will travel across China and give medical assistance to the
needy children in remote towns and villages in the country.

These initiatives are
representative of the kinds of social needs that the Indian software industry will find in
abundance. While the information revolution will be good for the professionals working in
the software industry, it also needs to serve mankind in a larger way. If you are going to
be stewards of the information revolution, I encourage you to pursue two broad goals.
First, pursue the business opportunities in technology-which are unlimited. Second, I
encourage you to acknowledge the needs that India has, needs that can be uniquely
addressed by the same set of IT skills and work ethics that have brought the country
recognition and admiration throughout the world.