Abstract
Using India as a case study, this article analyzes how the Internet influenced its export-oriented software industry. We show that prior to the Internet, domestic entrepreneurship was the key factor for the industry's origin and growth. The industry suffered from relatively low value-addition. As a result, domestic firms, though they were industry leaders within India, were followers of the global leadership provided by transnational firms. With the arrival of the Internet, there was a rise in the level of domain expertise. We show that the Internet facilitated the transfer of domain expertise for foreign firms more than it helped the acquisition of domain expertise by domestic firms. While the value-addition of the industry increased as a result, industry leadership began to pass to foreign firms. The strategic lesson for other countries trying to rapidly develop an export-oriented software industry is unambiguous: exclusive reliance on domestic entrepreneurship will usually result in the domestic industry falling behind its global competitors, while granting unrestricted entry to transnational firms will lead to the domestic firms losing industry leadership in most cases.
- Akella, R. and Dossani, R. 2001. A report on the software value chain: The Indian suppliers during the downturn. Working Paper, Asia-Pacific Research Center, Stanford University.Google Scholar
- Arora, A. and Athreye, S. 2002. The software industry and India's economics development. Inform. Econ. Policy 14, 2, 253--273.Google Scholar
Cross Ref
- Arora, A., Gambardella, A., and Torrisi, S. 2001. In the footsteps of Silicon Valley: Indian and Irish software in the international division of labor. Working Paper, Stanford Institute for Economic Policy Research.Google Scholar
- Athreye, S. 2002. The Indian software industry. Working Paper, The Open University.Google Scholar
- Athreye, S. 2003. The Indian software industry and its evolving service capability. Working Paper, The Open University.Google Scholar
- Balasubramanyan, V. and Balasubramanyan, A. 2000. The software cluster in Bangalore. In Regions, Globalization and the knowledge-based economy, Dunning Ed. Oxford University Press, Oxford, UK.Google Scholar
- Basabt, R. 2002. Knowledge Flows and Industrial Clusters: An analytical review of the literature. Working Paper, Indian Institute of Ahmadabad.Google Scholar
- Bresnahan, T., Gambardella, A., Saxenian, A., and Wallsten, S. 2001. Old economy inputs for new economy outcomes: Cluster formation in the new Silicon Valley. Working Paper No. 00-43, Stanford Institute of Economic Policy Research.Google Scholar
- Carlsson, B., Jacobsson, S., Holmen, M., and Rickne, A. 2002. Innovation systems: Analytical and methodological issues. Resear. Policy 31, 233--245.Google Scholar
Cross Ref
- Carr, N. 2003. IT Doesn't Matter. Harv. Bus. Rev. (May), 41--49.Google Scholar
- Caso, E. and Kohler, S. 1998. India: the next Silicon Valley? BT Alex Brown Research.Google Scholar
- Correa, C. 1996. Strategies for software exports from developing countries. World Develop. 24, 1, 171--82.Google Scholar
Cross Ref
- D'costa, A. 2000. Technology leapfrogging: The software challenge in India. In Knowledge for Inclusive Development, Conciecao et al. Eds. Quorum Books, Westport, CT.Google Scholar
- D'costa, A. 2002. Software outsourcing and development policy implications: An Indian perspective. Int. J. Techn. Manag. 24, 7/8, 705--23.Google Scholar
Cross Ref
- D'costa, A. 2004. Export growth and path dependence: The locking-in of innovations in the software industry. In India in the Global Software Industry: Innovation, Firm Strategies and Development, D'costa, A. and Sridharan, E. Eds. Palgrave Macmillan, New York, NY, 51--82.Google Scholar
- Dedrick, J. and Kraemer, K. 1993. Information Technology in India: The quest for self-reliance. Asian Surv. 33, 5.Google Scholar
Cross Ref
- Desai, A. 2003. The dynamics of the Indian information technology industry. Working Paper, London Business School.Google Scholar
- Dixit, A. 2005. Tensilica's India operations: The first seven months of embedded processor engineering offshore. Working Paper, Shorenstein Asia-Pacific Research Paper, Stanford University.Google Scholar
- Dossani, R. and Desai, A. 2006. Accessing risk capital in India. Working paper, Shorenstein Asia-Pacific Research Center, Stanford University.Google Scholar
- Dossani, R. and Kenney, M. 2002. Creating an environment for venture capital in India. World Develop. 30, 2, 227--253.Google Scholar
Cross Ref
- Economist. 2004. Innovative India. April 3, 65--66.Google Scholar
- Gerrefi, G., Humphrey, J., Kaplinsky, R., and Sturgeon, T. 2001. Introduction: Globalisation, value chains and development. IDS Bull. 32, 3, 1--8.Google Scholar
Cross Ref
- Gadrey, J. and Gallouj, F. 1998. The provider-customer interface in business and professional services. Services Indust. J. 18, 2, 1--15.Google Scholar
Cross Ref
- Ghemawat, P. 2000. The Indian software industry at the millennium. Harv. Bus. Scho. Case 9-700-036.Google Scholar
- Handler, M. 2002. Bust in Bangalore. San Francisco Chronicle, April 1.Google Scholar
- Heeks, R. 1996. India's Software Industry. Sage, New Delhi, India.Google Scholar
- Hobday, M. 1995. Innovation in East Asia: The Challenge to Japan. Edward Elgar, Cheltenham.Google Scholar
- Heitzman, J. 1999. Corporate strategy and planning in the science city: Bangalore as Silicon Valley. Economic and Political Weekly January 30.Google Scholar
- Humphrey, J. 2004. Upgrading in global value chains. Working Paper. 28, International Labor Organization, Geneva, Switzerland.Google Scholar
- IT Workforce. 1999. Assessing the demand for information technology workers. National Science Foundation, Washington, DC.Google Scholar
- Joshi, V. 1999. India's Economic Reforms 1991-2001. South Asia Books, New Delhi, India.Google Scholar
- Lateef A. 1997. Linking up with the global economy: A case study of Bangalore's software industry, www.ilo.org.Google Scholar
- Kelkar, V., Chaturvedi D., and Dar, M. 1991. India's Information economy: Role, size and scope. Economic and Political Weekly, September 14, 2153--2160.Google Scholar
- Khare, R. 2006. CEO of Broadcom India, Personal Interview 2/06/06.Google Scholar
- Kripalani, M. and Engardio, P. 2003. The rise of India. Business Week December 8, 66--76.Google Scholar
- Kumar, S. 2002. Head, ADM practice, TCS, Personal communication 11/29/02.Google Scholar
- Ministry of Finance. 2000. Budget Speech of Finance Minister Yashwant Sinha, Section 115, Ministry of Finance, Delhi, India.Google Scholar
- Ministry of Human Resource Development. 2001. Technical Education Quality Improvement Project of the Government of India. Ministry of HRD, New Delhi, India.Google Scholar
- Mowery, D. Ed. 1996. The International Computer Software Industry: A Comparative Study of Industry Evolution and Structure Oxford University Press, Oxford, UK. Google Scholar
Digital Library
- Murthy, P. 2000. Personal interview.Google Scholar
- Nair, J. 2002. Singapore is not Bangalore's destiny. Economic and Political Weekly April 29.Google Scholar
- Naqvi, R. 2003. Personal interview 10/1/03.Google Scholar
- NASSCOM. 2004. The IT industry in India, Nasscom, New Delhi, India.Google Scholar
- NASSCOM. 2002. The IT industry in India, Nasscom, New Delhi, India.Google Scholar
- NASSCOM. 2003. The IT industry in India, Nasscom, New Delhi, India.Google Scholar
- NASSCOM. 2004. The IT industry in India, Nasscom, New Delhi, India.Google Scholar
- NASSCOM. 2005. The IT industry in India, Nasscom, New Delhi, India.Google Scholar
- NASSCOM. 2006. The IT industry in India, Nasscom, New Delhi, India.Google Scholar
- Park, A. 2003. EDS: What went wrong. BusinessWeek April 7, 60--63.Google Scholar
- Patibandla, M. and Petersen, B. 2002. Role of transnational corporations in the evolution of a high-tech industry: The case of India's software industry. World Develop. 30, 9, 1561--1577.Google Scholar
Cross Ref
- Parthasarathi, A. and Joseph, K. 2002. Innovation under export orientation. In India in the Global Software Industry: Innovation, Firm Strategies and Development, D'costa, A. and Sridharan, E. Eds. Palgrave Macmillan, New York, NY, 83--111.Google Scholar
- Parthasarathy, B. 2000. Globalization and agglomeration in newly industrializing countries: the state and the information technology industry in Bangalore, India. Ph.D. thesis, University of California, Berkeley, CA.Google Scholar
- Parathasarathy, B. 2004. Globalizing information technology: The domestic policy context for India's software production and exports. Iterations: Interdis. J. Softw. Hist. 3.Google Scholar
- Parthasarathy, S. 2003. CEO of Aztec Software, Personal interview 3/2003.Google Scholar
- Porter, E. 2004. Indian techies lack creative ability, feel US firms. New York Times April 29.Google Scholar
- Porter, M. 1990. The Competitive Advantage of Nations. The Free Press, New York, NY.Google Scholar
- Porter, M. 1998. Clusters and the new economics of competition. Harv. Bus. Rev. Nov-Dec, 77--90.Google Scholar
- Ramadorai, S. 2002. CEO of TCS: Personal communication with author, 11/29/02.Google Scholar
- Rosenberg, N. and Mowery, D. 1978. The influence of market demand upon innovation: A critical review of recent empirical studies. Resear. Policy 8.Google Scholar
- Rubin, B. 1985. Economic liberalization and the Indian state. Third World Quar. 7, 4, 942--957.Google Scholar
Cross Ref
- Scholte, J. 2000. Globalization: A Critical Introduction. Palgrave Publishers, Basingstoke.Google Scholar
- Schware, R. 1992. Software Industry entry strategies for developing countries: A “walking on two legs” proposition. World Develop. 20, 2, 143--164.Google Scholar
Cross Ref
- Sen, S. and Frankel, F., Eds. 2005. India's Strategy of IT-led Growth. Center for the Advanced Study of India, Philadelphia, PA.Google Scholar
- Shah, R. 2005. Ketera India case study. Working Paper, Shorenstein Asia-Pacific Research Paper, Stanford University.Google Scholar
- Siwek, S. and Furchtgott-Roth, H. 1993. International Trade in Computer Software. Quorum Books, Westport, CT. Google Scholar
Digital Library
- Sridharan, E. 1996. The Political Economy of Industrial Promotion: Indian, Brazilian and Korean Electronics in Comparative Perspective, 1969-94. Praeger, Westport, CT.Google Scholar
- Sridharan, E. 2004. Evolving towards innovation? The recent evolution and future trajectory of the Indian software industry. In India in the Global Software Industry: Innovation, Firm Strategies and Development, D'costa, A. and Sridharan, E. Eds. Palgrave Macmillan, New York, NY, 27--50.Google Scholar
- Statistical Outline of India. 2001-02. Tata Economic Consultancy Service, Mumbai, India.Google Scholar
- Steinmuller, W. 1996. The U.S. software industry: An analysis and interpretive history. In The International Computer Software Industry: A Comparative Study of Industry Evolution and Structure, Mowery, D. Ed. Oxford University Press, Oxford, UK.Google Scholar
- Teubal, M. 2002. The Indian software industry from an Israeli perspective: A systems/evolutionary and policy view. In India in the Global Software Industry: Innovation, Firm Strategies and Development, D'costa, A. and Sridharan, E. Eds. Palgrave Macmillan, New York, NY, 112--138.Google Scholar
- Torrisi, S. 2002. Software clusters in emerging regions. Working Paper, University of Camerino.Google Scholar
- Tschang, T., Amsden, A., and Sadagopan, S. 2003. Measuring technological upgrading in the Indian software industry: a framework of R&D capabilities and business models. Working Paper, Asian Development Bank Institute.Google Scholar
- Viswanathan, V. 2001. Wipro's offsprings. Business World 12 November, 38--45.Google Scholar
- Whitman, J. 1990. Key factors for software success. Mimeo, Oakland Group, Cambridge, MA.Google Scholar
- Wortsel, L. H. and Wortzel, H. V. 1981. Export marketing strategies for NIC and LDC-based firms. Columbia J. World Bus. Spring, 51--60.Google Scholar
- Yourdon, E. 1992. Decline and Fall of the American Programmer. Prentice Hall, Englewood Cliffs, NJ. Google Scholar
Digital Library
Index Terms
The Internet's role in offshored services: A case study of India
Recommendations
Role of bilateral institution in influencing collaboration: case study of CEFIPRA--a bilateral S&T institution established by India and France
International collaboration has become a strategic policy initiative for building scientific competency in different countries. This is driven by increasing realisation that no country possess all the wherewithal to address complexities of scientific ...
The Strategic Role of Indigenous Innovation for Global Competition The Case Study of Mobile Phone and Telecom-Equipment Industry in China
DBTA '09: Proceedings of the 2009 First International Workshop on Database Technology and ApplicationsThe indigenous innovation can enhance technology ability and ensure firm's sustainable development. We establish a conceptual model based on the relationship among globalization, market factors, technical factors and indigenous innovation. We use the ...
Has globalization strengthened South Korea's national research system? National and international dynamics of the Triple Helix of scientific co-authorship relationships in South Korea
We trace the structural patterns of co-authorship between Korean researchers at three institutional types (university, government, and industry) and their international partners in terms of the mutual information generated in these relations. Data were ...






Comments