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Information Communication Technology and Economic Development

Learning from the Indian Experience

Edited by Tojo Thatchenkery and Roger R. Stough

Information Communication Technology and Economic Development reveals new insights regarding the complex process of globalization. It shows how the generation and circulation of intellectual capital in the US and India in ICT have led to greater productivity in the US while facilitating the economic development of India. Most industrialized nations now see the vast intellectual capital-based services that India provides at extremely competitive rates as key to their own national competitiveness in the global arena. The contributors’ findings suggest that India’s ICT-led growth will accelerate in the next ten years, launching India as a major global economic power next to the US and China.
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Chapter 10: Managerial Synergies and Related Diversification: Software Services and the Business Process Outsourcing Sector in India

Suma Athreye and Vasanthi Srinivasan


Suma Athreye and Vasanthi Srinivasan INTRODUCTION Until 1995 most of the work done by Indian software companies was on site, with teams of programmers traveling to the client site in order to write software and implement the systems that were written. With the proliferation of software technology parks, high-speed data communication services and visa restrictions in the USA and European countries, the offshore model proved to be a cost-effective option. In the offshore model of software delivery, most of the programming work was done in India with firms’ managing the development of software to client specifications. The proportion of offshore revenues in software exports climbed steeply as Figure 10.1 shows. They now account for a little less than 60 per cent of all revenues. The significance of this development in the evolution of the Indian software industry is that from trading in skilled labor in the late 1980s, Indian firms built up the capability and reputation of being able to deliver a subcontracted service at a low cost with adequate quality and on-time delivery. In the process, generic organizational capabilities were developed in managing large-scale labor resources, their training and deployment and being able to maintain the processes required for delivering outsourced services. The offshore model of software delivery is an example of the generic outsourced service model. The existence of an information technology (IT) link connects the service provider with clients. Since 1998 outsourcing of business processes has been on the rise and increased from Rs. 565...

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