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Economic Development.rev

Economic Development.rev

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Published by Nishit Chouhan

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Published by: Nishit Chouhan on Apr 07, 2011
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A study of problems and prospects of Indiansoftware industry in its contribution to Indianeconomic development
For the award of the Degree of Doctor of Philosophy
Rakesh Chouhan Dr.Manish SitlaniReader,IIPS, Indore
INSTITUTE OF MANAGEMENT STUDIES,DEVI AHILYA VISHWAVIDHYALAYA, INDOREDean (Management) ChairmanDevi Ahilya University, Board of Studies (Management)Indore Davi Ahilya University, Indore
“A study of problems and prospects of Indian software industry in its contributionto Indian economic development”
In current knowledge economy, information and access to information have replacedtraditional factor inputs such as land, labor and capital as the primary inputs intoproduction. This transformation, caused by recent technological revolutions and rapidchanges in business models around the world, has presented enormous opportunities todeveloping countries. India, which was supposed to be a slow adopter of technology andtechnology based development strategies, appears to have successfully leveraged thisopportunity and its large endowment of human capital to establish a fast lane to economicgrowth.The India’s technology-based economic development even in the face of a globalrecession has caught the attention of policymakers, academics and industry experts.While future prospects for growth are unanimously reckoned to be high in every forum,one question is commonly posed: is this growth sustainable? Numerous studiesconducted in the last few years point to a serious debate that India’s competitiveadvantages, especially the advantage stemming from India’s large technology workforce,may be eroding over time. While industry perceives challenges to growth lie in theshortage of human resources, policy makers in India contend that India is well preparedto meet future demand for the information technology workforce.Support to Indian economy have come from the software exports sector, that has built aglobal reputation for quality software, has grown an average of 30-40% in the 1990s andgrowing at the rate of 30% (NASSCOM IT Sector Report). It has successfully withstoodthe recessionary pressure in the recent years. While the growth trends experienced by thissector and its contributions to India’s economic development have been phenomenal. Thequestions have begun to arise on its sustainability. This thesis will explores thoseconcerns in detail and examines the threats to the industry’s competitive advantages.This study intends to carefully examine the recent economic, industry and technology-related trends that challenge earlier assumptions of demand and also purports to expandcertain supply side constraints overlooked in earlier studies. The ultimate goal of thisexercise is to understand the inflow and outflow patterns relating to human resources inthe software industry and to compare the positions of the government sector and theindustry on the adequacy of knowledge professionals to meet the projected and desiredgrowth in India’s software sector. It is hoped that this study will enrich the policy debateconcerning India’s information technology related skills base.
Numerous studies have been conducted in the recent past to understand and explain thevarious features of India’s Information Technology industry. While most of these studieshave focused on the evolution aspects and the inherent growth dynamics of this youngindustry (Bhatnagar and Madon, 1997, Saxenian, 2000, Arora, 2006), a considerablenumber have studied the linkages between the rapid growth experienced by this industryand India’s economic development (Bajpai and Shashtri, 1998, Arora and Athreye, 2002,Kambhampati, 2002, and D’Costa 2002). Only a handful of others have studied theinnovation spillover from the information technology sector to other industries in India.In an attempt to decipher the drivers of growth in this sector, some studies have alsoexamined the strengths and weaknesses of the software sector (Bajpai and Radjou, 1999,Saxenian, 2000), The growth scenario of IT industries in India was studied by PhalguniGupta(2001) in which various factors affecting of the IT industries in India were studied.In a study “
From Underdogs to Tigers: The rise and Growth of the Software Industry inBrazil China, India, Ireland and Israel” (Ashish Arora),
pointed out the emerging marketof software industry and the contribution of developing countries in this industry.According to him this industry has contributed to the image and economic growth of these countries up to a great extent.
NASCOM (National Association of Software & Service Companies) is keeping primarydata of the IT firms in India. The Ministry of Information and Technology is alsokeeping data related to the Software Industry field. Dr.Ashish Arora of Carnegie MellonUniversity is working on the effect of software industries growth on developing countriessince 1999.
Various studies have pointed out strength of India in software export industry. It has beenstudied that the basic ingredients for software industry lies in India, which can makeIndia leader in software export. But the industry is facing new challenges which can givemajor setback to the software industry of India. The increased labor cost, fluctuatingexchange rate, economic recession, Political scenario, availability of quality work force,government policy and regulations are going to be very crucial for the existence of Software Industry. Not much has been done in this area. The rational behind this study isto bridge this gap and explore the avenues for continued and sustainable development of software industry in India.

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