The Rangarajan Committee Report
With one of the largest banking systems in the world, the banking and finance seg ment in India always had the potential to be one of the strongest verticals for the IT industry.

In 1969, the Indian Government nationalized the country’s major commercial banks to channel investment funds into priority sectors, such as small business, agriculture, and distressed areas. Each bank became, in effect, a "development bank."

Government control also led to dramatic expansion of banking in rural areas. In the early 1980s, the RBI commissioned the Rangarajan Committee to investigate modernization of the banking sector. The committee submitted two major reports—the first in 1984, the second in 1989. It called for eight main banks to be fully computerized—the State Bank of Bikaner and Jaipur, the Bank of Baroda, the Bank of Maharashtra, the Central Bank of India, the Bank of India, Canara Bank, Union Bank, and Vijaya Bank. It recommended that 2,000 to 2,500 branches should be computerized by the end of 1991, and 15,000 branches by the turn of the century. The Committee called for a system of teller-operated on-line terminals that would be linked by minicomputers, with IBM-compatible mainframes at central locations for back office work. Computers would be used to update credit information, plan personal investing, manage bank budgets, investment plans and cash flow. A data communication network called Banknet would link 28 public sector banks in major cities. Indian banks would also tie into the Society for Worldwide Inter-bank Financial Telecommunications to transmit messages overseas. The execution fell short of the plan, except for pockets of progress. Not surprisingly, there was panic and PSU banks had no option but to adopt IT in order to remain at the fore.

The committee also recommended standardizing banking systems on UNIX, then an unperfected operating system compared to MS-DOS. The government floated a tender for 400 Unix systems and set off a scramble among Indian companies to come up with a Unix platform. Though the local part of the contract eventually went to Sunray Computers, the report had led local vendors into the Unix arena and would eventually lead to India’s transformation into a "Unix country". According to an IDC study, 1400 Unix systems were shipped in 1987-88 compared to just 480 the year before—a whopping 191% growth.

The Siva PC
Available at a shockingly cheap price of Rs 33,000, the Siva PC hit the market in 1987. 

The price war triggered by Sterling computers led to all vendors slashing prices and by 1988 there were more than 70,000 microcomputers in the market. Siva Sivasankaran - the young son of a schoolteacher discovered Sinclair, the grand old man of computers, and introduced the home PC to India. Then in the 1980’s, he made an amazing breakthrough by creating a Siva PC costing less than Rs 30,000. This led to breaking down the barriers that had prevented PC prices from dropping in India

By 1990, he was the fourth largest PC manufacturer and was exporting globally. Recognition followed in the form of awards from the Government of India. He diversified into horticulture, food, finance, banking, real estate, holiday resorts and created a fast growing enterprise- the Sterling Group of companies.

With the coming of cellular communication wave, he won licenses for Delhi and North India. Subsequently he went on to build a formidable cellular network in Tamil Nadu and then created ETH.

Pounds of Panic: The Y2K Bug
All that this fancy sounding term stands for, is –the Year 2000. Even as the rest of the world geared up with festivities to usherin the new millennium, a panic button had sent the IT industry in a tizzy. Experts forecasted that disaster would strike every digitized aspect of life when the two-digit number we use in computers would switch from 99 to 00 that midnight. Computers had installed software programs written years earlier (when storage limitations encouraged information economies such as writing the last two digits of a year as against all four). Program logic assumes that the year number gets larger, not smaller - so "00" was anticipated to wreak havoc in a program that had’nt been modified to account for the millennium.

In the process of sorting this problem, systems were checked for time-related functions. A ‘work around’ test involving shifting the system date (say 28 years) or putting off the system before the critical date and restarting afterwards was done. Software patches (a program which modifies existing files and makes the operating system Y2K compliant) were verified and validated. And with the urgency to set this right across systems and networks, billings of service companies-especially in the backyards of Indian IT, were ticking away. Ironically, India which earned $2.5 billion providing Y2K software solutions to advanced countries, was itself spared the millennium bug.

Once the Unshakable: The Training Giants
When companies want professionals skilled in the hottest of technologies, and that too, yesterday, what do you do? You trainthem in those technologies, and fast. The need for skilled manpower coupled with the MNC vendor push for spawning a breed of professionals proficient in using their software products, had set the Indian IT training industry blazing in the late 90s. The number of Microsoft professionals for instance, grew from 470 in 1996 to 4,700 in 1997 and 83,100 in 1999! Besides, the certifications offered by the likes of Sun, Microsoft, Oracle, SAP, Lotus, Novell and Cisco and IBM offered private training institutes credibility, which they did not enjoy earlier.

As the worldwide demand for ERP-trained software professionals shot up in 1998, as many as 45 ERP training institutes cropped up in Hyderabad! In 1999-2000, the Internet did the same to e-commerce and Java. In 1999, DQ listed more than 3,000 training centers and 35 training vendors catering to 700,000 students. In 2001, training companies were hit hard interest and registrations fell and revenues slipped 37%. Only the big guns survived.

The message that an IT education is "essential for a successful career" had led droves of students to pick up the basics of Office suite operation at Rs 3,000, with some database operations and ‘historical knowledge’ thrown in for good measure. There was no employment at the end of this road and a majority of students today see no reason to invest in something that can be learnt in a few informal interactions with a computer. This is one of the reasons why the training industry’s frenzied growth of the late 90s cannot be matched for some time to come. Today, this high-volume, low-value segment has spread thinner in a bid to reach out to territory it has not ventured into before—the home user, the housewife, the senior citizen, under a fresh hat called IT literacy, and at prices never seen before.

The Birth of Offshoring
Software development had traditionally taken lace at the client site. Given that the cost of maintaining a workforce at the site is high, the cost advantage of outsourcing development work to India were obvious. This had not taken off, one of the reasons being that overseas clients wanted to see the work at various stages of development. In 1991, Satyam Computer did what would probably be a true "outsourcing" pilot for Deere & Co within the US. Initially a software solutions company, Satyam’s breakthrough happened in 1992 through its association with John Deere in Chicago. When Satyam proposed its OSD initiative, which meant developing the software in India and uploading it onto John Deere’s computers during the night, the client was skeptical. Ramalinga Raju put ten Satyam engineers in a house near the John Deere plant. They were barred from seeing or speaking to JD staff. They had a satellite link to JD’s mainframe, but worked only during the night. The exercise, named ‘Little India’, was an experiment in simulating the work conditions in India. The results surprised John Deere. In fact, it worked better than when the Satyam engineers were on site.

In 1993, the US Immigration and Naturalization Service proposed changes to the regulation that would make it difficult to get B-1 visas. The new H-1 visa required a certification from the US Department of Labor that prevailing market wages were being paid to immigrant workers. Its direct impact- clients would have lesser incentive to hire software engineers from India. Also, Indian software professionals were brought under the ambit of the Immigration act of 1990 and had to pay social security taxes amounting to 21% to the US. Eventually, what came to pass was a watered-down H1B visa.

Success Permit: The H1B Visa
The 90s saw this little piece of paper ruling the Great Indian Marriage Market. More important than a fat bank balance and a fancy employer name, the H1B visa became an absolute must-have for every Indian IT professional worth his salt. For it was this document that would take and keep the young geek in the Mecca of IT-the US of A, ensure that he earned his greenbacks there and imprint the mark of an overseas assignment on his resume. The H1B visa (or simply called H1 Visa) is a non-immigrant employment based visa for workers coming to the USA to perform a "specialty occupation." The H1B status allows foreign workers to work in the USA for a maximum of six years, is granted for three years and can only be renewed once for an additional three years.

What makes the visa attractive to those seeking permanent resident status is the duration of validity. Starting in the 90s and continuing to 2001, the tremendous demand for a good quality and relatively inexpensive Indian workforce saw body shoppers processing H1B visas with practised ease. The downturn struck and INS (Immigration and Naturalization Service) records showed that H-1B petition requests had dropped by half to 16,000 as against 32,000 petitions in February 2000. Subsequently, the cap on H-1B visas raised to 195,000.

The Information Technology Act
With the enactment of the Information Tech nology Act in June 2000, India joined a select group of 12 nations to have legislation in this arena. The Act provides legal recognition for transactions carried out by means of electronic data interchange and other means of electronic communication, (electronic commerce). This act also applies to any offence committed outside India by any person. The enactment of the Act also led to events like the establishment of India’s first Cyber Police Station in Bangalore (which registered 45 complaints in the ten months of its existence).

This act addresses crucial issues like offering legal recognition to electronic records, digital signatures and publishing rules in the electronic gazette. 

However, it has been criticized for its tendency to "over-regulate". For instance, it empowers police officers to enter and search the premises of person suspected or about to commit any offence. This could be misused. The Act is only a first step in the amalgamation of the Internet into India’s legal framework. There is still a long way to go before the Indian legal system integrates and accepts the Internet fully.

Sunny Side Up:
The HP-Compaq Merger H-P’s acquisition of Compaq in May 2002 re-sulted in California becoming CEO and chairman of the new entity, and Compaq’s chairman Michael Capellas was the new president. But the new HP that the Indian IT industry saw after the $25-billion deal in May 2002 has far more of Compaq than HP—former Compaq chief Balu Doraisamy is at the helm, and Compaq team members in strategic positions and of course. This is not surprising considering that Compaq’s share of the merged HP-Compaq revenue pie is a healthy 57% and that even in this year, Compaq’s performance superceded HP. For Compaq’s Indian operation, there is an element of poetic justice in today’s takeover. In 1998, it was the dominant partner in the merger with Digital Equipment Corporation, another well known US name in minicomputers. Today, the Digital operation in India is purely in the software arena—it self-destructed the hardware business in Compaq’s favour. With combined revenues of Rs 3,301crore in India,, the new HP will become the third largest company in India after Tata Consultancy Services and Wipro.

The Conscience-keepers:
Corporate Governance What stops an individual from doing wrong, especially when he knows that there’s little chance of being caught? The same sense of right and wrong that drives ethical behavior among people, found its way in Indian corporate corridors in the late 1990s. The winner of several Corporate Governance awards, Infosys, led by NR Narayana Murthy, was the first to advocate corporate transparency. Corporate governance guidelines began in the 1990s in the UK and the US. The Cadbury Report of the UK, the General Motors Board of Directors Guidelines in the US and the Dey Report in Canada proved to be influential sources for other guidelines.

In India, CII took the lead in framing a desirable code of corporate governance in April 1998. This was followed by the recommendations of the Kumarmangalam Birla Committee on Corporate Governance appointed by Sebi– the recommendations were accepted in December 1999, and they are now part of Clause 49 of the Listing Agreement of every Indian stock exchange.