March 2001
Volume 3 • Number 2

Contents

TALKING POINTS
The Success of the SPI Efforts in India

by Pankaj Jalote, Indian Institute of Technology Kanpur

Over the last few years many Indian software companies have been assessed at level 4 or 5 of the software Capability Maturity Model (CMM). This article examines some of the reasons behind this spectacular success, based on the author’s experience with many of the high-maturity organizations in India, and inputs from various industry leaders and consultants. The factors have been grouped in three categories: people related, business related, and management related. This article shows that the reasons are a mixture of business necessity, natural advantages, and smart management.

Key words: business models, competitive advantages, high-maturity organizations, human resources, management involvement

INTRODUCTION

The software industry is a relatively young industry in India, with most of the organizations being less than 20 years old. Most of the growth in the industry came in the late 1990s, after the economic liberalization within the country. (With liberalization, import-export restrictions were eased, which made it much easier to import computing equipment and export software services without government permission; import duties were slashed, resulting in reduced cost; and government regulations for starting companies eased.) Starting with a total turnover of less than $100 million before 1990, the total turnover is now more than $5 billion. The industry has been growing at more than 50 percent a year since around 1995. Information technology (IT) and IT-enabled services are projected to become a $50 billion to $80 billion industry before the end of this decade. Overall, the industry has done remarkably well, continues to do so, and is expected to do so for the foreseeable future.

The Indian software industry has been maturing in many dimensions. In the value chain, it started primarily as a subcontractor for technical manpower. Later it gradually shifted to doing complete parts or phases of projects, usually the later phases of coding and testing. From this, it matured to providing complete solutions offshore (that is, in India). Today most leading companies are operating in the high-end software services business and are also making efforts to enter the products segment.

The industry has also matured in the process and quality dimension. In the early days of technical manpower-based solutions, the focus was squarely on software work-products. As the nature of work changed, process orientation also took root. When ISO 9000 was introduced in the early 1990s for software (ISO 1987; ISO 1991; BSI 1995), the Indian software industry quickly adopted it in an effort to improve its quality processes and gain recognition. Hundreds of software companies got ISO 9000 certified. In the last five years or so, for process improvement, almost the entire industry moved to the software Capability Maturity Model (CMM) (Paulk et al. 1995). And in keeping with their tradition of fast pace, within a few years, a large number of software companies matured to level 4 or level 5. India now has more than half of the total high-maturity organizations that are in the Software Engineering Institute’s (SEI’s) database.

This rapid move to high maturity, which is somewhat contrary to the conventional wisdom that software process improvement (SPI) is a slow process, has lead to speculation and discussions about the possible reasons for this phenomenon. Some articles have also been written on this (Batra and Mohnot 1998; Paulk 2000). This article attempts to explain some of the reasons behind the success of Indian software organizations with SPI. The observations and explanations are based on the author’s experience with implementing a high maturity level in one of the premiere organizations in India (the implementation itself is described in (Jalote 1999)), helping some in reaching high maturity levels, and conducting a study on use of metrics in high maturity organizations (Jalote 2000). Inputs and feedback have also been taken from many industry leaders in India and from some assessors/consultants operating in India.

Many reports have been published in literature regarding SPI efforts in specific organizations. This article focuses not on an organization but on trends in an industry in a country. Obviously no simple explanation can fully explain the phenomenon, and there are likely to be many contributing factors. The factors discussed in this article have been grouped in three categories: business related, people related, and management related. For SPI efforts, these categories cover most of the key factors.