Inderscience Publishers

Software outsourcing and development policy implications: an Indian perspective

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Courtesy of Inderscience Publishers

The discussion on high technology has been concerned with advanced capitalist economies. Developing countries have been unable to alter radically their industrial structure due to numerous internal institutional and external technological barriers. Consequently, they have sought global participation through outsourcing activities. This is indeed a welcome break from previous orthodox "self-reliant" approaches. However, excessive dependence on outsourcing limits the synergy between vibrant domestic and foreign markets. Using the Indian experience, this paper argues that international outsourcing of software, while commercially lucrative, is discouraging firms from taking on more complex projects at home. It highlights the shortcomings of outsourcing from India and suggests that software development must be rooted in a high technology policy that is integrated with the broader strategy of development. The study illustrates not only the relative success of a developing country but also underscores the persistent unequalising structural mechanisms that developing countries must contend with to foster local development.

Keywords: cross-border outsourcing, software exports, economic development, India, producer-user interaction, IT policy

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