Various socio-economic and political factors have brought the high profile Indian IT industry to the cross-roads. Keeping in tune with the global trends, Indian IT companies have slowed down but there are more fundamental issues than what meets the eye in the first glance. A renewed approach to their business model is called for.

The budding Indian IT industry is in for yet another round of growth pangs. The nascent industry is coming face to face with the realities of business sans the exciting aura of easy way out. The growth of the Indian IT industry has been phenomenal in the last decade or so, riding high on the global enthusiasm for the Internet and the initiatives to go electronic on the part of companies worldwide. Statistics suggest that the expenditure on IT improved from $48 bn in 1980 to $500 bn by 2000. Indian software companies improved bucking this trend of increasing expenditure on IT.

Problems such as the Y2K, the bug that was expected to cause disruptions to data owing to the change of the calendar year to the millennium required that a large number of people work on the problem to fix it in time. This translated into a good business opportunity for Indian firms many of whom were in the initial stages of their business ventures. The Y2K problem is no longer relevant, the Internet bubble has burst and the US economy slowed down bringing down the IT spending of companies worldwide. All this culminated into painful times for the Indian IT industry. For an industry that was on a perennial drive of recruiting, paying almost unimaginable pay-slips and still making huge profits, the downturn came as a shock from the blue. IT companies in India have been around for too short a time to experience the downturn in the industry. This downturn is probably the first one they are facing and the way things are going to shape up would be a learning experience worth remembering for Indian IT companies.

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