Multinational Firms and the Evolution of the Indian Software Industry

The Indian software industry appears to provide a startling confirmation of the benefits of multinational investment in a fledging industrial sector. The main question explored in this paper is how and why this happened. We find that multinational firms had an important catalyzing effect on the industry's evolution, even though foreign firms established by expatriate Indians probably exerted more competitive pressure. We do not accept a popular view, which ascribes this benign influence to the development of human capital. We argue is was tight labour markets due to foreign competition, which induced domestic firms to both acquire unique organizational capabilities and to improve the value-adding strategies of multinational firms.

The Indian software industry and its evolving service capability

This paper examines the growth of dynamic capabilities among firms in the Indian software industry by looking in some detail at the changing constraints, opportunities and competition facing incumbent firms. It emphasizes the important role played by tight labour market conditions in inducing investment in process capability and the role of entrepreneurial experimentation in evolving a business model (outsourced software) that was best suited to limited resource advantages of Indian software firms

Multinational firms and the evolution of the Indian software industry

For more about the East-West Center, see http://www.eastwestcenter.org/The Indian software industry appears to provide a startling confirmation of the benefits of multinational investment in a fledgling industrial sector. The main question explored in this paper is how and why this happened. We find that multinational firms had an important catalysing effect on the industry's evolution, even though foreign firms established by expatriate Indians probably exerted more competitive pressure. We do not accept a popular view, which ascribes this benign influence to the development of human capital. We argue it was tight labour markets due to foreign competition, which induced domestic firms to both acquire unique organisational capabilities and to improve the value-adding strategies of multinational firms