"Body Shopping". The Indian Software Industry follows 3 strategies fro growth"
- export of labour, i.e. onsite services
- export of services, i.e. offshore work
- export of products, i.e. package export
India emphasizes on export of labour.
Reasons why India does not invest into more revenue generating areas is the following barriers: access to finance, access to new technology, credibility, marketing and marketing costs, level of available skills and training, managerial attitudes, weak domestic market, import tariff barriers.
Dependence on US for exports: exports to the US take up about two-thirds of Indian services, leaving the country vulnerable to fluctuations in US demand ( the 2001/2 slowdown reflected the events of 11 Sept)
Classic global gap between demand and supply for software labor leaves India pushing at an open door and selling its labor cheap
Lack of investment funds. Software multinationals can spend 40-50% of annual revenue on package sales and marketing and 10-15% on research and development for packages.
For a single large firm this can represent billions of US dollars: more than the entire output of all Indian software producers. (vicious circle: India relies on services -cannot generate the needed resources to invest in software development; if it found the money to invest - poor domestic demand and would they be competitive on the international level?))
India lacks the recognition and reputation for its services due to being a developing country. In a relatively brand-loyal market this means high sales would not be expected
India needs to achieve distinction for its quality services by acquiring an international quality certification (as of 1999 170 software companies have acquired it)
Brain Drain and Onsite Working
- Onsite working increases the opportunities for a "brain drain" of talent. From the 1960s onward, India has been losing...