chapter  6
Innovation in the Indian IT industry: a dynamic capabilities view
ByPAVAN SONI
Pages 10

Introduction The Indian information technology (IT) industry, including information technology-enabled services (ITES) and business process outsourcing (BPO), has contributed signi cantly to India’s foreign reserve, employment generation, and to the country’s reputation in the global landscape. Garnering more than a 55 percent share of the global IT offshoring and BPO market, the industry has provided international rms with a cost-effective and valuable base of technology talent and has helped them scale in turn. In 2011 ( scal year), the sector was predicted to grow to $88.1 billion, with the IT software and services sector (excluding hardware) accounting for $76.1 billion of revenues. During this period, direct employment was expected to reach nearly 2.5 million, an addition of 240,000 employees, while indirect job creation was estimated at 8.3 million, making it one of India’s largest employers. As a proportion of India’s GDP, the industry’s contribution has surged from 1.2 percent, in FY1998, to an estimated 6.4 percent in FY2011. The industry’s share of total Indian exports (merchandise and services) increased from less than 4 percent, in FY1998, to 26 percent in FY2011 (NASSCOM 2011). That’s how signi cant this relatively young industry has been.