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The Internet's role in offshored services: A case study of India

Published:01 August 2007Publication History
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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.

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          cover image ACM Transactions on Internet Technology
          ACM Transactions on Internet Technology  Volume 7, Issue 3
          Special Issue on the Internet and Outsourcing
          August 2007
          97 pages
          ISSN:1533-5399
          EISSN:1557-6051
          DOI:10.1145/1275505
          Issue’s Table of Contents

          Copyright © 2007 ACM

          Publisher

          Association for Computing Machinery

          New York, NY, United States

          Publication History

          • Published: 1 August 2007
          Published in toit Volume 7, Issue 3

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