Introduction The Indian software and services industry grew from less than $100 million in 1985-86 to $58.7 billion in 2008-09 (Table 5.1). Nearly 80 percent of this revenue comes from exports, and, indeed, by 2000, India was estimated to be the largest non-Organisation for Economic Co-operation and Development (OECD) member country exporter of software and services. Besides the quantitative expansion of the industry, it has also undergone qualitative shifts: from being a provider of low-wage, even if high-skill, services, to a source of innovation. As Table 5.2 shows, in 2006-07, research and development (R&D) and engineering services accounted for 15.7 percent of India’s software and service exports. How did a country that is among the world’s poorest and most illiterate achieve such export growth in a sector so dependent on skilled labor as a critical inputs? This chapter will explain the quantitative expansion and the qualitative shifts in Indian software service exports by examining how changing technological conditions and policies have created a historically speci c organization of production for the industry in the country. The chapter will show how these changes can be understood in ve phases.