Ethical Issues in Globalization: The case of the "Indian" Software Industry
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		Srinivas Narayanan
	        Dept. Of Computer Science,
		University Of California at Berkeley,
		email:snarayan@cs.berkeley.edu

			ABSTRACT	 

The balance of payments and foreign debt situations in India made
export performance and increased participation in global trade
important factors in designing economic policies in the late 1980's
and early 1990's.  Economists cited experiences of ASEAN NICs as
paradigmatic examples of how liberalization and export oriented
policies can lead to better social and economic conditions through
increased international trade.  This led the government to pursue
economic policies whose content has enabled rapid changes which go far
beyond what can be attributed to World Bank and IMF pressure.

The pace of reforms, its widespread effects on different sectors of
the population, and the current political landscape (especially after
the 1995 State election cycle) make it worthwhile to revisit some of
the objectives of the Congress(I) economic policy (increased global
trade, exports and growth) and the ethical and social issues raised by
its current implementation. In this paper, I evaluate the highly
globalized and increasingly critical Software industry which has
enjoyed explosive growth rates and seems to be a clear success of the
current liberalization policy.

I argue that the growth of the software industry in India depends on
the confluence of several variables, both local and international. An
important local variable has been the economic policies of State
governments in creating preferential environments for the creation of
software companies.  Infrastructure (such as transport) and the local
availability of trained personnel have been important local
facilitators. The wage levels and immigration policies of advanced
capitalist economies are important international variables.

With recent elections, the Congress (I) economic policies have
received a severe setback as evidenced in the recent state elections
in Maharashtra, Gujarat, and Orissa. After the election, the
relatively industrialized western parts of India and the capital city
of Delhi have BJP governments in power. The highly globalized city of
Bangalore and the government in Karnataka is under Janata Dal
control. It would seem therefore that the central arguments and
criticism made by the opposition parties have resonated with most
voters in these states.

In this paper, I examine the central aspects of the critique and the
actual impact of the implemented policies in the area of Software
technology. In particular, I focus on the following factors:
 
1) The continued importance and influence of Multi-nationals in
India's Software industry. This is evidenced by the fact that 13 of
the top twenty software companies in India are either foreign owned or
joint ventures.  One critical aspect of exporting software is the cost
of "product marketing" (both to gain market access as well as
advertising).  Most indigenous companies are forced to depend on
foreign collaboration for market access. This creates a fundamental
contradiction between the two objectives of a) increasing exports and
b) increasing Indian ownership of software companies.

2) The consequence of the GATT/Dunkel proposals. The left argues that
the current proposals lead to "unequal competition" which will result
in increased takeovers and mergers by multinational corporations. The
standard Marxist critique based on value theory is problematic when
confronted with open economies where surplus transfer occurs across
national boundaries. In the case of software technology, the average
worker in the advanced capitalist economy can be seen to benefit from
the 'monopoly' positions of their employer's capital. I argue that the
relationship between capital and labor has to be fundamentally
reexamined in light of India's experience with the software industry.
 
3) High-tech industry in India shows a high degree of geographical
concentration. Bombay, Bangalore, Delhi, Madras, and Calcutta are the
major centers of software production and export. This makes the
political and economic conditions in these areas a critical variable
in evaluating the future course of the software industry. The fact
that all these cities are part of states that have non Congress (I)
governments makes the current situation an interesting one and yields
insights into the possible course of the industry.  The Congress (I)
central government has adopted an extremely liberal policy toward
foreign investors in high technology industries like software in order
to attract investments both in terms of ensuring low entry costs and
by providing physical infrastructure to facilitate the software
development process. Both BJP and JD state governments have much more
conservative economic policies and this suggests a very different
future.

4) The dependence on foreign collaboration for market access combined
with immigration policies of the late capitalist societies has created
the "software sweat shop" phenomenon, whose social and ethical
consequences are far reaching. 

In addressing these issues, I propose to examine the role of the state
in expanding high-tech industries, including the strategy (part of
both BJP and JD economic policies) of preferentially focusing
liberalization (through the tax and customs code and through
subsidies) to certain types of goods and services. I believe that the
structural issues raised by my investigation are shared by other
globalized industries and hence the analysis should be relevant in
other sectors (such as telecommunication and infrastructure).