The Digital Business Ecosystem

The Digital Business Ecosystem

Edited by Angelo Corallo, Giuseppina Passiante and Andrea Prencipe

By bringing together elements of a radical new approach to the firm based on a biological metaphor of the ecosystem, this unique book extends the limits of existing theories traditionally used to investigate business networks.

Chapter 5: Network of Relationships in the Indian Software Industry: A Novel Business Ecosystem?

J. Ramachandran and Sourav Mukherji

Subjects: business and management, organisational innovation, organisation studies, strategic management, innovation and technology, organisational innovation


J. Ramachandran and Sourav Mukherji INTRODUCTION Over the last decade, the Indian software services industry has grown at a phenomenal rate of 40 per cent. From a few hundred million in 1994–95, Indian firms exported software worth US$ 14 billion in the fiscal year of 2004. This success, especially coming from an emerging economy with little experience of export or globalization, has met with a lot of attention from popular press and management scholars. Many of them have tried to analyse the reasons behind such growth of the industry, either ascribing it to the demand for software all over the world because of increasing digitization in products, or to certain country-specific advantages that India enjoys, such as availability of a large pool of English speaking engineering graduates at a cost that is nearly a third of that prevailing in developed nations. While the aforementioned factors contributed significantly to its success and growth, they are not sufficient explanations for the rapid scaling up that has been witnessed in this industry. Unlike software products, creation and delivery of software services is people-intensive. The organizational challenges of scaling up people-intensive operations are not trivial. On an earlier occasion, we have argued that rapid scaling up, as has been witnessed in the Indian software service industry, was a consequence of several managerial and organizational innovations (Mukherji and Ramachandran 2004). The software service firms created a unique governance structure, intermediate between a market and a hierarchy that facilitated customer acquisition and...

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