Computer Industry Report(2)

8/4/2019 Computer Industry Report(2)

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The Computer Industry

Computing is not about computers any more. It is about living. - Nicholas Negroponte

Historical development, importance and growth of the industry

under consideration

The birth of the computer

1642: The first adding machine, a precursor of the digital computer was devised in 1642 by the

Blaise Pascal

1670s: Gottfried Wilhelm improved on this machine by devising one that could also multiply

instead of just adding and subtracting

1801: Joseph-Marie invented the Jacquard weaving loom which is controlled by punch cards. In

the operation of Jacquards loom, holes are strategically punched in cards and the cards are

sequenced to indicate a particular weaving design

1821: The British mathematician and inventor Charles Babbage (the pioneer of digital computer

) worked out the principles of the modern digital computer. The Analytical Engine was designed

to handle complicated mathematical problems.

1843: Lady Ada Augusta Lovelace suggested that cards could be prepared that would instruct

Babbages analytical engine to repeat certain operations. Because of her suggestion, somepeople call Lady Lovelace the first programmer.

1880s: The American statistician Herman Hollerith conceived the idea of using perforated cards

for processing data. Employing a system that passed punched cards over electrical contacts, he

was able to compile statistical information for the 1890 U.S. census. He applied the Jacquard

loom concept to computing

1940: Dr.John V. Atanasoff, a professor at Iowa State University, developed the first electronic

digital computer. He called his invention the Atanasoff-Berry Computer or ABC. This is one of

the most significant events in history

1964: A large-scale fully operational electronic computer called the ENIAC (Electronic

Numerical Integrator and Computer) was born. The ENIAC was a major breakthrough in

computer technology. It could do 5000 additions per minute and 500 multiplications per minute.

It weighed 30 tons and occupied 1500 square feet of floor space

Categorisation

Broadly, computers are categorised as analog, digital and hybrid computers. Based on size,

speed, processing capabilities and price computers have been categorised as:

microcomputers(PC), minicomputers, mainframe computers and supercomputers. The

performance growth rates for supercomputers, minicomputers and mainframes have been just
http://www.doc.ic.ac.uk/~nd/surprise_97/journal/vol1/lpl/art2.html#PChttp://www.doc.ic.ac.uk/~nd/surprise_97/journal/vol1/lpl/art2.html#minichttp://www.doc.ic.ac.uk/~nd/surprise_97/journal/vol1/lpl/art2.html#mainfhttp://www.doc.ic.ac.uk/~nd/surprise_97/journal/vol1/lpl/art2.html#superhttp://www.doc.ic.ac.uk/~nd/surprise_97/journal/vol1/lpl/art2.html#superhttp://www.doc.ic.ac.uk/~nd/surprise_97/journal/vol1/lpl/art2.html#mainfhttp://www.doc.ic.ac.uk/~nd/surprise_97/journal/vol1/lpl/art2.html#minichttp://www.doc.ic.ac.uk/~nd/surprise_97/journal/vol1/lpl/art2.html#PC


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under 20% per year, while about 35% for microcomputers. Performance growth of PC has been

the fastest, partly because these machines take the most direct advantage of improvements in

IC technology.

Technology and Trends

Generations of computers have been made possible by the following technologies:

1950-1959: Vacuum tubes which led to electronic computers1960-1968: Transistors which led to cheaper computers1969-1977: Integrated which led to minicomputer1978-1999: LSI and VLSI which led to personal computers and workstations1999 onwards: Parallel processing which led to multiprocessors

The IC permitted the miniaturisation of computer-memory circuits and the microprocessorreduced the size of a computers CPU to the size of a single silicon chip.

Trends of a PC are greatly influenced by the technology trends of both hardware and software.Both trends determined its performance and capability.

Transistor count on a chip increases by about 25% every year, doubling in 3 years.Device speed increases nearly as fast

Density increases by just 60% every year, quadrupling in 3 years. Cycle time hasimproved very slowly, decreasing by about 1/3 rd in 10 years

Density increases by about 25% every year, doubling in 3 years. Access time hasimproved by 1/3rd in10 years

Performance over the years


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PC sales by region

The rise of the computer in India

1956: Bought its first computer called HEC-2M for a sum of Rs. 10 Lacs. It was 10 ft in length, 7ft in breadth and 6 ft in height1962: Produced next generation of computers, including India's first indigenous computer, the'TIFRAC' or Tata Institute of Fundamental Research1970: Under the Homi Bhabha Committee, the Department of Electronics (DOE) was formedunder the Prime Minister1978: The Mini computer policy opened up computer manufacturing to private sector. The

national informatics centre (NIC) was set up in 1977 which played a major role in the laterdecades to become decisive support system for the government (both the central and stategovernments)1986: Project IMPRESS (computerization of Railways ticketing) started in 1986 as a pilot projectin Secunderabad ushered in the first application targeted at aam admi (common man)1988: The formation of NASSCOM which sprang into action from 1990 gave a boost to thenascent software industry.The nineties also saw a direct push from the government through number of policy measures.Some of them include-IT Task force led by prime Minister in 1999, IT Ministry at the centre, ITfairs (like IT.com and now IT .in), IT parks, launch of public internet access through VSNL inAugust 15, 1995, launch of mobile telephony on august 23, 1995.

Many software companies took birth in 80s like-Infosys, Patni, Satyam, Softek, Tata info techand Wipro. Another interesting trend was the setting up of offshore development centres (ODC)by multi-national corporations, starting with Texas instruments in 1986.

The growth of Indian Software Industry

$200 mn(1990)

$1 bn(1995)

$8.4 bn(2000)

$35 bn(2006)

$50 bn(2010)


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Total PC (desktops and notebooks) sales (2004-10) in India

Sales of other peripherals

Importance and application of computers in the contemporary world

Computer systems has increasingly cut down the paperwork that is involved in millions ofindustries around the world

Products from meats to magazines are packed with zebra-striped bar codes that can beread by computer scanners at supermarkets. It also helps to manage inventory

Energy companies use computers to locate oil, coal, natural gas and uranium. Thesecompanies can figure out the site of a natural resource, its concentration and otherrelated figures

Computers are used in cars to monitor fluid levels, temperatures and electrical systems.Computers are also used to help run rapid transit systems, load containerships and trackrailroads cars across the country

Computers speed up record keeping and allow banks to offer same-day services.Computers have helped fuel the cashless economy, enabling the widespread use ofcredit cards, debit cards and instantaneous credit checks by banks and retailers.

Computers are helping immensely to monitor those extremely ill in the intensive care unit

and provide cross-sectional views of the body


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Computers are used to control the production of resources precisely. All robots andmachinery are controlled by computers, making the production process faster andcheaper

The computers are most popular for their uses to connect with others on the World WideWeb

Type of market structure of the computer industry

We believe after our research that the computer industry falls into the Oligopoly market. Thereare few dominant firms such as Apple, Dell along with many small ones such as Intex etc. Theproducts manufactured by these biggies are either similar or differentiated. Also, the biggerplayers have power on pricing but always have to live with the fear of retaliation fromcompetitors. The entry barriers for this industry are high. There needs to be regulartechnological advances and hence R&D costs are high. Also, the extensive use of non-pricecompetition because of the fear of price should be taken into account which considerably shootsup the barriers. Few areas of non-price competition include patent wars and advertisements.This is also a market with large economies of scale and a market which eliminates weak

competitors in its business cycles. There are also benefits that companies gain out of mergersand acquisitions in this segment. There is also the possibility of behind the scenes cartels thatcould be formed to take undue advantage of the demand.

There are two unique aspects of oligopoly competition- Mutual Interdependence- Repeated Interaction

Whenever the actions of a firm have a major impact on the other firm, there exists mutualinterdependence. If dell reduces its price to sell more of its product, HP will notice that its saleshave fallen and kick in counter measures. The oligopoly firm will affect the sales of other firms

by changing its sales, prices, marketing strategies etc.And it so happens that very often, oligopolists in an industry would have been competing withone another for a long time running into years. Dell and HP have competed within the samemarket for years together now. This lays the ground for repeated interaction as either companyremembers what happened in the past when the strategies were changed. Repeated interactiondoesnt mean that the strategy of the rival is known with certainty.

A firm in an oligopoly market faces a very complex market environment. The extent of salesdepends on the price set by the other oligopolists in the industry. Consider a situation whereDell is currently selling laptops worth $1000 numbering 10,000 units. Dell decreases the priceby $100, which most likely increases sales. But this factor of increase depends on thecompetitors new pricing. Dell would sell 14,000 units, but if say HP also decreases its price forthis product, then Dells sales would just be around 11,000 units. The rise in demand for Delldepends on both the price cut and the competitors price. The oligopoly dual demand curveshown below pertains to the example discussed. It shows the Dell demand curve for bothfactors.


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Dell and HP have had repeated interaction over the years from which they would have notedpatterns regarding the strategies. Dell might not know with certainty what HP will do if Dell

raises prices , but Dell does know that 80% of the time HP did not raise its prices in response.Dell also knows that 85% of the time HP matched a price reduction. Dell can now set theirprices with reasonable assumptions. This means that Dell can make a good guess about thedemand curve on which they will move along if at all they change their price. A double linemarks this demand curve (kinked demand curve) which is bent at the initial price and no. ofunits offered by Dell.

A way to avoid this nasty competition and even to increase profits often exists for firms in anoligopoly are by explicit/overt/tacit collusions which are considered illegal in most of themarkets. That is, if both firms move up the solid demand curve in the above diagram, both firmswill be better off. The problem is however that both firms fear that if they raise prices unilaterally,the other firm will stab it in the back by keeping its price low.

Major Players and their Shares in the Market

Over the past half century, along with the rapid and uncontrolled growth of computersfrom being a bulky tool for calculating to being an integral part of our life permeatingeverything task that we do, it has also given rise to a business which generates money


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like no other giving rise to some of the richest men in the world. Ever since the inceptionof the idea that the computer could also become a tool to make business faster andsmarter and also make easy the life of the common man, from being a scientific andmilitary tool, entrepreneurs and business houses who could envision this future andinvested in it have become some of the most recognizable names in the world. Microsoft,Dell, Sony, IBM were some of those who rode on this revolution to become leaders in

their business areas. More than1 billion personal computers have been sold from the mid 70s upto this point.

75 percent were professional or work related, while the rest were sold for personal orhome use. About 81.5 percent of personal computers shipped had been desktopcomputers, 16.4 percent laptops and 2.1 percent servers. The United States hadreceived 38.8 percent (394 million) of the computers shipped, Europe 25 percent and11.7 percent had gone to the Asia-Pacific region, the fastest-growing market as of 2002.The second billion was expected to be sold by 2008. Almost half of all the householdsin Western Europe had a personal computer and a computer could be found in 40percent of homes in United Kingdom, compared with only 13 percent in 1985.

In 2001, 125 million personal computers were shipped in comparison to 48 thousand in

1977. More than 500 million personal computers were in use in 2002. The major players in this business are Dell, HP, Apple, Acer, Sony, Lenovo, Panasonic,

Samsung, Toshiba and others. There isintense competition among these companiesand the rising and falling market shareamong them indicates the same.

The computer manufacturers market can

also be divided along the lines of Stationaryor Desktop Computers or Mobile computers(Laptops) which are further sub divided intosubgroups like Business use, personal use

etc. The Operation Systems Market The operation system or OS market is largely ruled by Microsofts hugely successful

Windows which has a no. of versions of which the latest is Windows 7. Microsoftspolicies of making its softwares exclusive to its OS and patenting discourage the use ofother OSs, thus trying to carve a monopoly for itself . Still a number of other OS such asiOS and Mac OS X, Linux are being used to a smaller extent among people.


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Servers In the servers market, microsoft based Servers have a share of 36.1% and other players

including Linux, BSD, Solaris have a share of 63.9%. Mainframes

In the mainframes market, IBM System Z has a market share of 90-95% thus making itthe largest player by a distance in this segment.

Global activities in the computer industry

As the computer industry grows, develops and matures, the global personal computer(PC)

installations keep rising and are poised to touch the 1.7 billion mark by the end of 2012. Canalys

has estimate that the industry has grown at approximately 19.2% in 2010 over 2009 withLenovo and Apple being the major gainers in market share. Apple registered a staggering 241%

growth in the same period as above.

This major shift in Apple's market share has been primarily due to the introduction of the iPad

and its unprecedented sales which has fuelled its rise to the third(3rd) position in the world

rankings as a hardware manufacturer and is expected to rise to 2nd only behind HP by the end

of the year. The global computer scenario at present is, thus, characterised by rising volumes

and falling market for most major players.

The fastest growing computer economies are the countries from the Asia-pacific, central and

eastern Europe, Latin America and the Middle east. The spurt in growth of the computer

industry is because of the expansion in the definition of the Computer as a product. Laptops,

Tablets, Mini-notes and Notebook PC's are the different products in which the computer is

perceived by the consumers today and these are products that are powering the strong growth

of the industry.

Shifting focus from the growth of the industry to that of the firms across the globe we see that of

the top 100 hardware companies in the world 40 are still based out of United States of

America(USA). But looking carefully shows that the developing and developed Asian economies

together are home to over 50 of the top 100 hardware companies in the world with Japan(21)and Taiwan(18) and this means that the growing markets are and will play a very important role

in the years to come in the progress of these companies and the industry at large.


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According to Gartner, even though mature and developed markets still contribute more than half

of the global computers industry but this percentage is coming down and fast and currently

stands around 58%. The developing markets especially India and China are now majortechnological development as well as manufacturing hubs and are predicted to be the future

leaders in the industry.

The impact of global changes in the industry can be seen in the Indian economy as well. An

Intel study says that in India:

Smaller cities contribute heavily to the PC market growth

Computers are a Youth driven category

Buyers seek value and don't buy cheap

Notebooks and other new computer items have become desirable and bring new users

into the fold


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The development and exponential rise in the sales of smart and intelligent phones is a major

cause of concern for the computers industry. The mobile industry is empowered by portability,

rural penetration and ease of usage. Handset makers like LG, HTC, Motorola, Nokia, Samsung,

Apple, etc. are the major players in this industry and these are giving strong competition at

times to their own computer products as well as their competitors products. Mobile penetration

has surged due to availability and interactive user interfaces. All this may pose even moreserious competition to the computer industry in the future.

Mergers and Acquisitions in the Computer Industry

A firm seeking to capitalize on the sales growth benefit it derives from increasing its relativesize or the profitability benefit it gains from introducing new products may find a merger oracquisition to be the optimal means of achieving its ends. Although organic growth mayalso serve as a means of attaining these benefits, and may be especially attractive to boththose firms which have reservations about their capacity to effectively integrate newbusinesses within their existing management structures and to those that are generallysceptical of structuring an M&A transaction, it typically has features which some firms mayfind unattractive. In particular, a given firm may find the time required to organically growprohibitive and/or simply lack the expertise needed to organically grow .

Lenovo and IBM

Global perspective:

With IBM taking an 18.9% stake in Lenovo, it has become its second largest shareholder. The

deal is likely to quadruple Lenovo's personal computing business. And it will be a partnershipmeaning that IBM will be the preferred services and customer financing provider to Lenovo,while the Chinesecompany will be the preferred supplier of PCs to IBM.

With IBM's global presence, Lenovo Group has already moved its PC business worldwideheadquarters to New York and has added some 10,000 IBM employees-about 40 per cent ofwhom are already in China.

Manufacturing of IBM-branded desktop and laptop products will continue. However, over thenext five years, the brands on those products will be phased out in an orderly fashion.With help of this multi-billion dollar deal the erstwhile Chinese company has alreadycatapulted itself into a cut-throat competitive world with Dell Inc. and Hewlett-Packard as rivals.More importantly, Lenovo must face off against a host of established Japanese names andTaiwanese rivals that are beginning to get dangerously global and expanding into NorthAmerican, European and other markets.

Lenovo has opted for an expansion strategy, in which it is, in principle, partnering with IBM tomove overseas. This Sino-American approach differs from the approaches taken by othercompanies, especially in regions like Taiwan.However, on the branded side, it has not tasted global success so far. With IBM's global name

being tagged with Lenovo, China's branded product story may change on the global front.


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LENOVO 2010-11 Q1 Product Performance

Idea pads

Shipments up 74% YTY; Sales up 74% Year To Year (YTY)

Launched first 3D multi-media notebook Y560d and Idea Centre A700 AIO

ThinkPads

Shipments up 29% YTY; Sales up 32% YTY

Launched L series and Think Center M90z AIO

Notebook


Notebook market share gained 2.0 points to become the fourth Largest notebook PCcompany

Desktop


Maintained solid performance through AIO and SMB targeted desktops

Mobiles


Rapid and widespread customer acceptance and encouraging initial sales

Different Notebooks and other Product Notebooks (as a whole) and other products


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HP COMPAQ (A Failed Merger)

HP bought Compaq for US$ 24 billion in stock. This was the largest ever deal in the history of

the computer industry. The deal meant combined operations in more than 160 countries and

more than 145,000 employees. HP-Compaq would offer the most complete set of products and

services in the computer industry.The motivation behind a HP-Compaq merger (whether it made economic sense) and the

problems encountered in merging operations is an interesting discussion as the stock prices of

both HP and Compaq fell within two days of the merger announcement. An estimated 13 billion

dollars was lost (in terms of market capitalization) in this time frame.

Industry analysts failed to understand the benefits HP would derive by acquiring Compaq. HP

was a market leader in the high margin printers business and Compaq, a low-margin personal

computer (PC) manufacturer. Moreover, established players like direct marketer, Dell and

leading IT service consulting company like IBM would give fierce competition even if economies

of scale were to be achieved.

Source: http://www.casestudyinc.com/hp-and-compaq-merger

PROBLEMS FACED BY THE COMPUTER INDUSTRY:-

Software Update and need for innovation-> With the competition in the field

of technology and latest versions of software, the challenge of having the

upgraded software at all times, becomes a task of utmost importance.

Patent Wars-> Apple and Samsung fighting over smart phone patents.

Increasing costs due to expensive labor, land and expenditure on

technology-> our research suggests that the costs have increased manifolds,

due to the increase in the prices of land, labor and technology.

Need for skilled manpower-> IT industry across the world is in a shortage of

skilled IT graduates.

Increase in competition and narrow profit margins-> The competition has

brought down the prices of computers, software and cutting wave technology.

Infringement of Intellectual property rights.

Increase in the bargaining power of buyers and suppliers.

Handling the e-waste-> There is a large amount of e-waste generated in theform of outdated computers and wires etc.


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Software piracy-> Pirated version of all the latest software is easily available

online and elsewhere.

Labor issues in the supply chain, due to different geographic locations with

different cultural backgrounds-> With rapid globalization, the need to bridge

the cultural gap is really important, as the various companies work in

different countries and have to get the work done.

Rising Attrition rate in IT industry-> The skilled manpower leaves the

company after 2-3 years due to various reasons and the industry bears the

loss of employing a new resource and training it again.

Problem 1. Foot-in-the-door Software

The recipe for creating foot-in-the-door software is really quite simple:

1. Design a software that can do anything with a little customization.2. Make it hard to customize. Make every protocol and specification proprietary

and hard to understand.3. Dont go anywhere near any standards.4. Provide a horde of overpriced consultants to fix all of the above problems,

and have them apply the Ninja Technique (Problem 3) so that they can stayon-site indefinitely.

Voil! Now just wait for money to pour in from miserable customers.

Solution: Empower your customers through creating standards compliant APIs andplugin environments with open and commonly used technologies for which problemsolvers can be found everywhere and anywhere. Even better, stop creatingproblems for your customers in the first place. Stop sticking your foot in the door,and focus on creating something that makes your customers the stronger one. Theywill rely on you all the more for it and it will be a relationship based on trust, notdesperation or despair.

Problem 2. The Ninja Distraction Technique (using Tech Jargon)


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The software industry has spent years (or maybe decades)educating their customers in tech jargon. Its all a part of the ninja technique ofdistraction. It is. Really. The theory goes: Keep throwing words such as Java,JBoss, Caching layers, Multi Tier Software Development Housing Fascilities Campusat the customers, and you will not only sound very professional, but whats even

better, the customers will soon forget what they really were asking you for, sotheres less of a chance chance you have to deliver.

Imagine being the customer in this scenario: Here you were looking for a a) safecar with b) comfy seats, c) low fuel consumption, d) good stereo sound and a e)large trunk for all your groceries, and suddenly you had a car salesman giving youa primer in everything ranging from the new four layer varnish coating technologyto the latest in air-pressured suspension theory and revolutions within the field offuel injection and what not. You dont want to hear about that, you want to know ifit will hold your coffee cup steady while playing your Mozart in a perfect pitch.

Well, the industry seems to have distracted you from all that.

Solution: Its about time the industry starts talking about the metrics that thecustomers can relate to and understand. And more notably, the ones that theyneed. Lets talk aboutease of use. Lets talk about performance (can you handle100 users registrations a second?). Lets talk about modifiability (can you deliver amedium sized product feature change in 1 week, or less?). Lets talkabout reliability. Is your up-time average more than 99,97%? Will your softwareautomatically restore upon any hardware problems? Can you upgrade our softwarefrequently without involving our tech-department? What is your fix time for bugs?


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INDIAS EXPORTS

PRODUCTION OF COMPUTER HARDWARE

Production of computer hardware increased from Rs. 15870 crore (US$ 3942 million) estimatedin the year 2008-09to Rs. 13490 crore (US$ 2933 million) in the year 2009-10. Production ofcomputer hardware registered a decline of 15 percent (25.6 percent in US$ terms) in the year2009-10.

EXPORT OF COMPUTER HARDWARE

Export of Computer Hardware registered a growth of 66.67 percent (45.90 percent in US$terms) during the year 2009-10 over the year 2008-09. In value terms export of ComputerHardware is estimated to Rs. 1650 crore (US$ 359 million) up from Rs. 990 crore (US$ 246

million).

MAJOR ITEMS OF COMPUTER HARDWARE EXPORTS

Various parts of Computers have emerged to be the top item of export during the year 2009-10.Total value of export of parts of computers during the year 20009-10 is estimated to be Rs. 747crore (US$ 162.42 million) . Parts of computers were mainly exported to USA and South Africa.

With the increasing usage of DVDs, there has been a surge in demand for DVD drives. Export

of DVD drives from India registered a growth of 18.38 percent (3.63 percent in US$ terms)during the year 2009-10 over the year 2009-10. In value terms export of DVD drives increasedfrom Rs. 421 crores (US$ 105 million) estimated in 2008-09 to Rs. 498 crores (US$ 108 million)in the year 2009-10 making it the top item of export under the Computer Hardware sector.

Export of personal computers also registered a high growth of 68 percent (47 percent in US$terms) during the year 2009-10 over the year 2008-09. The other major items of export underComputer Hardware during 2009-10 are head stack, Monitor, Mouse, Ink-jet Printers, Scannerand projectors.

DESTINATIONS OF COMPUTER HARDWARE EXPORTS.

Export of Computer Hardware to EU Countries, South Asian Countries, North America, MiddleEast Countries and Latin America registered good growth during the year 2009-10. EUCountries have emerged to be the top destination for Indias Computer Hardware Exports duringthe year. Export to EU Countries registered a growth of 61 percent (41 percent in US$ terms).Invalue terms, export of computer hardware to EU Countries is estimated to be Rs. 472 crore(US$ 103 million) up from Rs. 293 crore (US$ 73 million) estimated in the year 2008-09. Exportto Africa and Far East countries registered decline during the year.


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IT INDUSTRY

India has emerged as one of the biggest IT capitals in the modern world. Technologicallyinclined services sector in India account for 40% of the country's GDP and 30% of exportearnings, while employing only 25% of its workforce. Indian IT and BPO export is likely to touch$60-62 billion by FY 2011 from $31.4 billion in FY07, according to industry body Nasscom.

Exports generated around 79% of software and services revenues.(NASSCOM, 2007). Theseexports are chiefly generated through IT offshoring.

The degree of export specialisation is a commonly used indicator of a revealed comparativeadvantage. By this account, India is one of the strongest contenders: Around 16% of all Indianexports are IT services.

Share of exports of computer and information services and other business services in a country's total exports

Indias prominent position as an offshore hub for IT and IT-based business services does

not translate into a general specialisation in sophisticated products. In fact, Indias share ofhigh-technology manufacturing exports is markedly below that of other countries. Only 2.8% ofall exports are classified as high-technology. Two factors appear to have contributed to biastowards IT services: firstly, a discriminating economic policy and, secondly, rising economies ofscale. Trade barriers and red tape help to explain the somewhat low overall volume of trade inIndia. Yet, many activities in the IT sector, in particular those in the offshoring business, arefreed from such restrictions. The specialisation in IT services comes at least partly at theexpense of other high-tech manufacturing exports.

Share of IT and HT exports in a country's total exports


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In the long run, the level of development is the leading driver behind a comparative advantagein the production of skill-intensive products like IT. Offshoring allows a country to export moreskill intensively at an early stage of development, provided that transaction costs are sufficientlylow, but this model draws on low wages in the first place. Yet, wages tend to rise as countriesclimb up the development ladder. Therefore, Indian IT industry may see a decline in growth as

India develops.

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