Table Of ContentFROM UNDERDOGS TO TIGERS
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From Underdogs to Tigers:
The Rise and Growth of the
Software Industry in
Brazil, China, India,
Ireland, and Israel
Ashish Arora and Alfonso Gambardella
1
3
GreatClarendonStreet,Oxfordox26dp
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Fromunderdogstotigers:theriseandgrowthofthesoftwareindustryinBrazil,
China,India,Ireland,andIsrael/AshishAroraandAlfonsoGambardella.
p.cm.
Includesbibliographicalreferencesandindex.
ISBN0–19–927560–2(alk.paper)
1. Computersoftwareindustry. 2. Globalization. I. Arora,Ashish. II. Gambardella,
Alfonso,1961–
HD9696.63.A2F762005
(cid:1)
338.47005—dc22 2004026997
ISBN 0–19–927560–2
3 5 7 9 10 8 6 4 2
TypesetbyNewgenImagingSystems(P)Ltd.,Chennai,India
PrintedinGreatBritain
onacid-freepaperby
BiddlesLtd.,King’sLynn,Norfolk
CONTENTS
ListofFigures vii
ListofTables viii
NotesontheEditors xi
ListofContributors xii
1. Introduction 1
AshishAroraandAlfonsoGambardella
PartI COUNTRYCHAPTERS
2. TheIndianSoftwareIndustry 7
SumaS.Athreye
3. TheIrishSoftwareIndustry 41
AnitaSands
4. TheIsraeliSoftwareIndustry 72
DanBreznitz
5. TheBrazilianSoftwareIndustry 99
AntonioJ.JunqueiraBotelho,GiancarloStefanuto,and
FranciscoVeloso
6. TheChineseSoftwareIndustry 131
TedTschangandLanXue
PartII CROSS-CUTTINGCHAPTERS
7. OrganizationalCapabilitiesandtheRiseoftheSoftware
IndustryintheEmergingEconomies:Lessonsfromthe
HistoryofsomeUSIndustries 171
AshishArora,AlfonsoGambardella,andStevenKlepper
8. TheRoleoftheMultinationalCompanies 207
MarcoGiarratana,AlessandroPagano,andSalvatoreTorrisi
vi Contents
9. SojournsandSoftware:InternationallyMobileHuman
CapitalandHigh-TechIndustryDevelopmentinIndia,
Ireland,andIsrael 236
DeveshKapurandJohnMcHale
10. BridgingtheGap:Conclusions 275
AshishAroraandAlfonsoGambardella
Index 303
LIST OF FIGURES
2.1. IndianSoftwareRevenues(1984–2003) 9
3.1. PrincipalActivitiesofSoftwareFirmsinIreland 48
4.1. SalesperEmployee 76
4.2. IsraelbyPatentTechnology1994–99 78
4.3. VentureCapitalRaisedinIsrael1991–2000 92
5.1. AverageAnnualGrowthofITMarketinBrazil(CurrentValues) 105
5.2. GrowthofExternalFinancinginaSampleofLead
BrazilianSoftwareFirms 119
5.3. ExportStrategiesforSampleofFifty-fiveLeading
SoftwareFirms 120
6.1. ThePossibleImpactsoftheChineseEconomy’sGrowth
onSoftwareFirms 148
7.1. Entry,Exit,andNumber(a)ofAutomobileProducers,
1895–1966;(b)ofTireProducers,1901–80;(c)ofTelevision
Producers,1946–89;(d)ofLaserProducers,1961–94 175
7.2. PercentageofTelevisionProducersinNewYork,Chicago,
andLosAngeles,1946–89 177
7.3. FractionofLaserFirmsinSiliconValley,1961–94 182
9.1. LostSurplusfromEmigration 247
9.2. NewIrishGraduatesOverseas,1982–97 257
9.3. EstimatedAnnualNetMigrationtoIreland 259
9.4. MigrationFlowstoIreland:ReturningIrishEmigrantsand
Non-IrishNationals,1995–2001 260
10.1. India,Ireland,andIsrael:SWExportShares1991–2002 279
LIST OF TABLES
2.1. India’sManpowerandRevenues/Man-year 10
2.2. TopTwentyExportersandtheOriginsoftheFirms(Rankedby
AnnualRevenue) 11
2.3. EntryDatesandCompositionofFirms,2000–01 12
2.4. LookingBack:InstabilityofMarketSharesOverTimeofthe
TopTenFirmsin2000–01 13
2.5. EntryDatesandtheRegionalLocationofFirms,2001 14
2.6. InternationalDifferencesintheSalariesPaidtoSoftware
Professionals(US$PerAnnum):1995–99 15
2.7. ComparativeAdvantageinSoftwareProductionAcrossSelected
Countries,1995 16
2.8. PolicyChangesAffectingtheSoftwareSector:1972–99 18
2.9. DecomposingtheAnnualGrowthofIndianSoftware
Exports,1987–93 26
2.10. IncidenceofCertificationAmongVariousTypesof
Entrantsin1999–2000 28
2.11. CharacteristicsofFirmsintheMedianandThirdQuartile 29
2.12. LargeContractsBaggedbyIndianSoftwareFirms
ReportedinNationalNewspapers(2001–03) 31
2.13. ITES-BPORevenuesbyServiceLines 33
2.A1. TypesofEntrantFirms 38
3.1. OverviewStatisticsfortheIndigenousandOverseas
SectorsoftheIrishSoftwareIndustry(1991–2003) 44
3.2. LeadingSoftwareMultinationalCorporationsLocated
inIreland 47
3.3. Leading(TopThirty)IndigenousIrishSoftwareCompanies 54
3.4. SizeAnalysisofIndigenousSoftwareCompanies(1998) 57
3.5. WorkExperienceofIrishSoftwareEntrepreneurs 64
4.1. SoftwareSales,Exports,andEmploymentinIrelandandIsrael 74
4.2. Israel’sTopSoftwareCompaniesbySales2001–2002 77
4.3. Israel’sTopPatentIssuers1996–2001 78
4.4. TheOCS’Budget1988–99(in2000$USDmillion) 90
5.1. SoftwareMarketinSelectedCountriesin2001 101
5.2. MainIndicatorsfortheBrazilianSoftwareIndustry 106
5.3. BrazilianITServicesMarketin2002(ShareofRevenues) 107
ListofTables ix
5.4. HistoryofFirmCreationinBrazilbyCompanySize
(Surveyof681Firms) 108
5.5. LargestSoftwareFirmsinBrazilin2001 109
5.6. DatesofFirmCreationforSampleofLeadingCompanies 110
5.7. ComparingSoftwarewiththeOverallBrazilianIndustry 110
5.8. KnowledgeIntensityofFirmsDevelopingSoftwareforLeading
SectorsVersusAverage 115
6.1. NumberofFirmsbySoftwareandSISales(inUSD) 133
6.2. TopTwentySoftwareFirmsby2000Sales 134
6.3. LargestPackagedSoftwareVendorsbyRevenueand
MarketShare 139
6.4. TheChineseSoftwareIndustry’sSalesbyMajorSectors
(inbillionUSD) 140
6.5. GrowthinSalesofTypesofProductsforSelectedYears
(billionUSD) 140
6.6. ITMarketbyIndustryVerticals(US$M) 149
6.7. ChinaERPSoftwareMarketRevenueBreakdownby
Vendor,1999–2000 153
6.8. Hardware–SoftwareBreakdownforTotalITMarket 154
6.9. SoftwareWorkforce 156
6.A1. FirmsthatwereDirectlyInterviewedandtheirBasic
Characteristics 162
7.1. LocationofTelevisionandRadioProducers 176
7.2. OriginsoftheLeadingChineseSoftwareFirms 187
7.3. OriginsofSomeLeadingIrishSoftwareFirms 188
7.4. OriginsofSomeLeadingIsraeliSoftwareFirms 190
7.5. EntryDatesfor125IndianSoftwareStart-ups
(ExcludingMultinationalsandBusinessHouses) 192
7.6. SelectedForeign-bornPopulationsintheUnitedStates
Aged25andAbove 194
7.7. ImportanceofDifferentFactorsasSourcesofLocation
AdvantagesinIreland,IrishSoftwareFirms 200
8.1. PatentsGrantedtoDomesticandForeignAssignees
(1976–2002) 214
8.2. AverageNumberofICTPatentsinDomesticandMNCFirms 216
8.3. IrishSoftwareFirmFoundersbyPreviousOccupation
(1981–2002) 217
8.4. IrishSoftwareFirmFoundersbyPreviousOccupation
andbyYearofFirmFoundation(1981–2002) 217
8.5. DomesticInventorsFormerlyEmployedbyMNCs
(1976–2002) 220
8.6. PatentsCitationsinDomesticPatents,1976–2002 221
8.7. SampleFirmsbyNationalityoftheParentCompany(2001) 222
8.8. SampleFirmsbyYearofEstablishment 223
Description:In 1980 the Indian software industry was practically non-existent. By the 1990s the industry was one of the largest employers in manufacturing. Similar patterns of growth can be found in other emerging economies. So given that the software industry is commonly viewed as a high-tech industry, how is
