Dot Capitalism (2012)

Book Review from the November 2012 issue of the Socialist Standard

Dot.compradors: Power and Policy in the Development of the Indian Software Industry. by Jyoti Saraswati. Pluto, £17.99.

India is a major centre for software services, the provision of software for specific users (as opposed to general packages such as Microsoft Office); an example would be the system for the London Underground. This book is a useful and informative survey of the Indian software industry’s structure and history.

Four multinational companies dominate Information Technology consultancy, one of them being IBM. In addition to these global ‘Giants’, there are three Indian ‘Majors’. As an illustration of India’s role, about one in three of the employees of the Giants works in India. Partly, of course, it is cheaper to employ highly skilled English-speaking staff in India than in, say, in the US. The Giants also have a habit of poaching staff from the Majors, who spend time and money training them only to find their best workers upping sticks after a few years.

As for why such a profitable and technologically advanced industry should flourish in a developing country such as India, Saraswati rejects simple analyses in terms of just market forces or state intervention. Rather, more complex interactions need to be examined. As long ago as 1962, defeat in the Sino-Indian war revealed the importance of IT, and by 1970 the government had taken steps to set up a computer industry protected from international competition. The Indian hardware industry was unable to survive, but the software industry did pretty well, providing software for computers that did not come with ready-bundled general packages. In the 1980s the US became an enormous market for software services, which, unlike many parts of a business, can be provided by remote delivery. To aid this, the Indian government provided telecommunications infrastructure, augmented with satellite links.

The Indian software industry set up its own business club, the National Association of Software and Service Companies (NASSCOM) in 1987. But since the local subsidiaries of the global Giants were allowed to join, this eventually came to be controlled by the multinational companies. The Giants are now generally doing better than the Indian Majors, which have themselves begun to establish delivery centres abroad (in China and Mexico, for example), which they hope will be free of the poaching mentioned earlier. It is worth noting that the Chinese government has tried and failed to establish a major software service industry there, so state intervention is not enough by itself.

In case you are wondering about the title, a comprador is, in Saraswati’s definition, ‘An individual of, and in, a developing country who serves Western interests’. The top people in NASSCOM are compradors, he argues. They serve the interests of Western capitalism by, among other things, supporting improved access by the US to Indian markets in return for more visas being issued to Indian IT professionals for short-term work in the US. But clearly the embedding of the Indian software industry in global capitalism goes far beyond that.

Paul Bennett