SOFTWARE INDUSTRY PERFORMANCE IN INDIA AND CHINA
Stanley Nollen
Georgetown University
McDonough School of Business
Washington DC USA
full report here: *ttp://www.ris.org.in/India_Globalisation_Software%20in%20India%20and%20 China_Stanley%20Nollen.pdf
The Indian software industry is the world’s leading exporter of software services and among the
world’s fastest growing software industries. The Chinese software industry is equally as large as
the Indian industry – maybe larger – and equally fast growing, but it is mainly oriented to the
domestic market.
The Indian software industry is predominantly a software services industry while the Chinese
software industry is more evenly balanced between products and services...Most of the
Indian software services consisted of production of customized software from project-based
engagements with clients. Much of this work consists of programming, testing, and maintenance,
and in total probably more than three-quarters of Indian software services production is at the low
end of the knowledge capital continuum.
In China, services accounted for less than half of Chinese software industry revenue according to
some sources (NASSCOM..and China Center for Information Development..)
...Chinese software products consist mostly of systems software, middleware, and applications software.
English is spoken by all educated Indians but not by all educated Chinese, and that is an often
cited reason why India is a major software exporter and China is not. The largest market for
software exports by far is the English-language speaking United States.
Technology has not been critical to the development of the Indian software industry. Indian
software firms lag behind their Chinese counterparts in technology inputs and outputs, but that
lag hasn’t hampered the Indian industry’s growth. Fewer Indian than Chinese software firms
have R&D expenditures, and those that do spend less. This result is due only in part to the
greater concentration of software services rather than products firms in the Indian industry –
software products firms are more likely to have R&D expenditures than software services firms.
In addition, Indian software firms introduce fewer new products than Chinese software firms.
Until very recently, the software business wasn’t an especially high technology business.
Advanced technology was not the basis on which firms competed, especially for software
services. The export business was mostly customized software services, much of which was
low-end entry level work for which neither R&D nor new product introductions were important.
Indian software firms lag behind their Chinese counterparts in both technology inputs and
outputs, but this weakness was not critical for most of the work done by Indian customized
software services firms.
China's software industry revenues, January to December 2009
Revenue (RMB bln) Y-o-y change (%)
Software products 328.8 ($48.13billion) 26.3
Software services 212.63 ($31.12billion) 31.4
Of which: software outsourcing 30.7($4.49billion) 35
System integration software 220.29 ($32.24billion) 23.7
Embedded software 167.36 ($24.50billion) 22.1
IC design software 22.22 ($3.25billion) 10.1
Software exports $18.5 billion 14
Of which: software outsourcing $2.4billion 15
Industry total 951.3($139.24billion) 25.6
Source: MIIT
*ttp://tmt.interfaxchina.com/news/2609
