The Indian It Service Industry in 2007

The Indian IT Services Industry In 2007

In the early 1960s, India’s growth in the technology sector was hindered due to mercantilism which meant that country encouraged exports and discouraged imports. The case looks at Porter's theory of competitive advantage which emphasizes the need for enhancing productivity to retain competitive edge over others and to be profitable in a particular industry through continuous upgrade of technology. Governments also play a crucial role in industrial competitiveness in this case because they’d have to ensure feasible policies are implemented, instead of relaxed ones.

The software industry in India has performed much better than most other Industries because they benefited from local currency depreciation and ease in restrictions for imports. The IT industry had was the focus and had support from the government. Infrastructure was developed to address barriers and encourage offshore investments in India. Another benefit that was seen was the liberalization of telecommunication and no duty on imports because they were exempted from the 30% corporate tax for 10 years. Development of institutes for technology were also beneficial because they resulted in producing well trained professionals equipped with the skills to work for foreign companies and foreign projects.

The move to offshore development affected India’s software Industry’s competitive position positively because there were costs reductions due to less travel, and involvement of other employees in projects which increased overall efficiency. They also benefited by having the highest percentage of cost reduction (97%) as stated in the offshoring research Network. India also benefited by providing high quality specialized services at lower costs to the clients to cater for the demand leading to reduction of overall production costs for the larger international companies. They benefited from smaller companies who outsourced to India for R&D as well.

India’s...