Indian IT industry: Is the future secure without patents?

Balwant Rawat and Hedda Pahlson-Moller (Evalueserve)

According to a Datamonitor report [1], the global software and services industry generated total revenue of $2,239 billion in 2008, growing at a compound annual growth rate (CAGR) of 12.2% for the 2004-08 period. The industry is expected to grow at a CAGR of 10.4% from 2008 to 2013. Looking at the Indian market, the impressive growth of this sector takes on even more significance – the success of the Information Technology (IT) and services businesses (of which off-shored software services comprise a large component) has changed the entire economic landscape. India's exports of software and services in the year ended March 31, 2009 are estimated to have grown 16-17% to about $47 billion, according to the lobby group National Association of Software and Service Companies (NASSCOM).

The success of the Indian industry has so far been mainly due to the cost advantage and vast pool of skilled IT professionals. However, in order to maintain this growth, Indian IT firms will need to concentrate on innovating to maintain competiveness and continue to move up the value chain [2, 3 and 4].

This article explores the role of intellectual property (IP) rights in ensuring future growth of the Indian IT industry. It is a well-established fact that IP rights play a significant role in industries by protecting innovation, deriving value out of innovation and in turn, promoting further innovation on a long-term basis. This article looks into the patent-specific issues for the IT industry, and provides suggestions for incorporating IP strategy in overall business strategy to ensure India maintains its pole position.

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