The NASSCOM Story

NASSCOM (National Association of Software and Service Companies) is a trade association. It started by serving the needs of the still-in-infancy software companies, but has expanded to include BPO’s, R&D centers, and startups.

“(NASSCOM is) India Inc brand builder, a think tank, a lobbyist group, an interventionist or more.”

 

This may sound like a reviled lobbying and backroom dealing entity, but as Harish Mehta writes in The Maverick Effect, back in 1988 (when NASSCOM was founded), it was a necessity.

“NASSCOM was incubated at a time when it was an uphill battle to even get software recognized as a tangible product or a service, and something different from computer hardware.”

Hard to even imagine such a confusion today…

 

Back then, the Indian body representing software companies was really a body for computer hardware companies, MAIT. MAIT treated software as the poor cousin. Mehta and a few others wondered if the only way was to form a dedicated body to represent software:

“(The government) duplicated the regulations for hardware to govern software…. However, these rules did not work for software. For example, you can’t show the customs department a sample of something that is being exported through data lines… The only hope was an industry association dedicated to giving this intangible business an identity.”

To have any chance of success, the new body needed all the top software companies to join it. But would they join? Many were competitors of each other. Fortunately, most software companies too felt with the need for such a dedicated body to represent their interests and so all the big ones joined.

 

This was the pre-liberalization era. India was always short on forex. Hence, the government was receptive to industries that might bring in precious forex. NASSCOM showed bureaucrats data comparing the forex revenue for IT firms v/s other forex earning industries, like the diamond export (the biggest forex earner at the time). Not only that, they argued, IT created more jobs than the diamond industry. Surely, they argued, the growth of the IT industry aligned better with the needs of the country, both on forex and job creation fronts.

“The software industry could provide their children with the future they dreamed of right here in India, without calling upon political power or influence.”

 

Such arguments worked with many bureaucrats:

“There were plenty of bureaucrats who genuinely wanted to make a difference.”

N Vittal, the Secretary of the DoE (Dept. of Electronics) was one such bureaucrat. He started as a champion of the electronics industry (software then was a subcategory under Electronics!), but he was open-minded – he agreed to a minor yet consequential request from NASSCOM that they be consulted on any matter involving the term “software”. This meant NASSCOM could weigh in on policy matters, but not decide. Yet, this arrangement led to Vittal learning more about software, and over time, translated into actions from his side.

 

Things had started moving, but it was still a crawl. Then, in the early 90’s, as India tottered on the brink of bankruptcy, the government went around begging bowl in hand everywhere. One of the potential lenders, the World Bank (WB), conducted its own study as to which Indian industries might help in a turnaround. One of the promising areas, the WB concluded, was the software industry. This was a huge shot in the arm for NASSCOM. Vittal too paid attention to the report – it led to his decision to create the STPI (software technology parks of India) initiative. It meant tax breaks, and ease of exporting and importing. NASSCOM convinced him that STP’s be setup inside the city, not outside. Unlike other industries, they argued, IT didn’t cause pollution, so why couldn’t it be within city limits? This point would prove key in the ability of new and small IT companies to get going easily – imagine how tough it would have been for a new or tiny IT company to attract engineers to come work in some remote place?

 

As software started to pick up, NASSCOM successfully lobbied the government to eliminate import duty on software tools (They made the case that easing software exports would bring in far more money than the loss of import duty). Money saving for IT industry aside, this also eliminated delays in procuring software tools, which in turn helped IT companies have more predictable schedules.

 

As India opened up, contradictory needs had to be resolved e.g. when foreign companies wanted to set up back-offices in India. Should NASSCOM support them and lobby their case that they could be 100% subsidiaries of foreign companies? Or should they favour policies that were beneficial to local Indian companies? Ultimately, they decided they’d favour whatever “develops the human capital of India” – nation over individual companies.

 

Over time, all those software skills have produced good things for the country – from the online railway booking system to tax payment mechanisms to passport seva kendras to Aadhar to the COVID portal and yes, UPI.

“India stands tall as one of the largest digital hubs in the world… finding solutions for India.”