Document Type

Article

Publication Date

1-2017

Abstract

The Indian IT sector has grown from small beginnings at the bottom of value creation to a major player in the IT services segment of the global information and communications technology (ICT) industry. It commands a 55 percent share in the global market for IT services. India’s IT sector value proposition in terms of low cost with large supply of high quality talent is compelling. As a result, India has become the premier choice not only for outsourcing IT services by the developed-world’s multinational corporations (MNCs) but also for locating their own global In-house centers (GICs), which simultaneously compete and partner with local firms. This gave rise to six additional clusters beyond the earliest, largest and robust cluster, Bangalore. The paper provides a review of relevant literature, develops a conceptual framework for evaluation of clusters, and presents data and analysis with respect to relative size, growth, specialization, MNC presence and connectivity to local firms through ex-patriots and returning Indians, and innovation. There are clear signs that the Indian IT sector has been moving towards a regime of providing high-end value added services. The paper concludes that the Indian IT sector’s value proposition in terms of lower cost combined with large supply of high quality talent remains the single most compelling reason for the rise and growth of multiple IT services export clusters. While the old adage “people follow jobs” still holds for large part of the labor force, there is little doubt that the sprawling IT clusters in India with more to come from Tier II and Tier III cities indicates that “jobs follow talent” may be more true in the sense local firms as well as the MNCs, through their GICs, are pushing the boundaries of location farther and farther to continue to leverage cost advantage and available pools of talent.

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