Edited by Jon Sundbo and Marja Toivonen
Chapter 7: Innovation Strategy in the Indian IT Service Industry: User Centred Issues on Innovation
Markus Holzweber, Jan Mattsson, Doren Chadee and Revti Raman 1 BACKGROUND: THE INDIAN RISE OF IT AS A SERVICE INDUSTRY AND THE GROWTH OF GLOBAL IT The rise of the IT service industry and especially the Internet is characterized by great exuberance and the belief in the seemingly unlimited potential of the Internet. Over the years the profitability and economic viability of companies and business models have changed tremendously. The fundamental driver of the Internet boom and the IT services industry is the belief that it would be possible to increase value creation, because the Internet would lower costs while increasing customer benefits at the same time. The IT services industry includes mass-produced software, custom programming, custom computer systems design, offshoring and the outsourcing of business processes. However, the primary reason for growth in these areas has been changes in business processes in the Western economy. Offshoring occurs when jobs and production are relocated to a foreign country. It can be contrasted with outsourcing, which occurs when a firm contracts with another firm to perform part of their work, but does not necessarily shift to a foreign country. The global market for services offshoring consists of two main sets of players: IT spenders (demand side) and IT service providers (supply side). On the demand side, the USA (37 per cent), Western Europe (35 per cent), and Japan (14 per cent) are the main IT spenders (EITO, 2006). Other major demand side players include Canada, and selected countries from Latin America,...
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