The Consequences of Globalisation: India's Software Industry and Cross-Border Labour Mobility

25 Pages Posted: 30 Jan 2008

See all articles by Simon Commander

Simon Commander

European Bank for Reconstruction and Development (EBRD)

Rupa Chanda

Indian Institute of Management, Bangalore

Mari Kangasniemi

University of Sussex

L. Alan Winters

University of Sussex; IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR)

Abstract

The Indian software industry is a prime example of globalisation. The industry has been characterised by large cross-border mobility of its skilled labour force. Using a unique survey of Indian software firms, our paper quantifies the extent and impact of mobility on firm behaviour and performance. Cross-border labour mobility in the paper refers to both temporary and permanent labour flows by Indian software professionals. The picture that emerges is of a highly mobile world in which temporary mobility has been an important characteristic of the industry. A significant number of workers have work experience abroad in a developed country. Moreover, the share of skilled workers with such experience has been positively associated with the incidence of skilled migration from the firm. This suggests network effects are at work. In terms of the impact on performance as measured by the change in turnover per worker and the change in the employment size of the firm the paper finds little evidence of a robust adverse effect. Further, the evidence suggests that there have been important external effects at work, as through changes in the willingness of workers to acquire skills, as well as through increased provision of educational services. These have further abated the risk of a brain drain. However, the software industry may be rather different from other industries. Our results need to be interpreted as the outcome of a particular case of skilled migration and not one necessarily representative of all types of skilled migration and source sectors.

Suggested Citation

Commander, Simon and Chanda, Rupa and Kangasniemi, Mari and Winters, L. Alan Alan, The Consequences of Globalisation: India's Software Industry and Cross-Border Labour Mobility. World Economy, Vol. 31, No. 2, pp. 187-211, February 2008, Available at SSRN: https://ssrn.com/abstract=1088537 or http://dx.doi.org/10.1111/j.1467-9701.2007.01071.x

Simon Commander

European Bank for Reconstruction and Development (EBRD)

One Exchange Square
London, EC2A 2EH
United Kingdom

Rupa Chanda

Indian Institute of Management, Bangalore ( email )

Bannerghatta Road
Bangalore, Karnataka
India

Mari Kangasniemi

University of Sussex ( email )

Sussex House
Falmer
Brighton, Sussex BNI 9RH
United Kingdom

L. Alan Alan Winters

University of Sussex ( email )

Sussex House
Falmer
Brighton, Sussex BNI 9RH
United Kingdom

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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