Labour Market Deepening in the Indian Information Technology Industry: An Exploratory Analysis

Abstract

The Indian Information Technology (IT) sector has seen significant growth in terms of employment and revenue and is expected to provide quality employment to a large number of workers in the coming years. A more widespread participation of workers with different skill/education profiles, gender, regions etc. would facilitate deepening of the labour market and eventually reduce costs. The only data on the IT industry that has been analyzed so far is based on surveys conducted by the National Association of Software and Services Companies (NASSCOM). NASSCOM estimates are essentially based on data collected from its members. While the estimates are considered to be reasonably reliable, one is not sure of the coverage of IT firms by NASSCOM, particularly of small IT firms and hardware firms. Besides, the estimates may not adequately capture employment of IT workers in IT using sectors. It is, therefore, desirable to explore other data sets to analyze issues relating to the IT labour market in India. This paper is an attempt in this direction and hopes to provide a tentative understanding of the processes that have been important for the evolution of the IT labour market in India. It analyses NASSCOM and National Sample Survey (NSS) data to explore the processes that deepen the IT labour market in India. The analysis suggests that deepening is actually taking place but the pace can probably be enhanced. Transition to the off-shore model, growth of the ITES sector, competition and infrastructure led movement of IT activity to smaller cities and hiring of workers with diverse education backgrounds and of women workers has facilitated the deepening processes. These processes will need to be intensified in order to further deepen the market and enhance employment opportunities.