The Indian Software Industry and its Prospects

44 Pages Posted: 21 Feb 2007

See all articles by Ashish Arora

Ashish Arora

Duke University - Fuqua School of Business; National Bureau of Economics Research; Duke Innovation & Entrepreneurship Initiative

Date Written: December 2006


India's emergence as a major exporter of software services in less than a decade and a half has excited debate about the causes of its success and ignited hopes for similar success in other industries. The subsequent growth of exports of other business services appears to validate the belief of some observers (including myself) that India's software success would have broader benefits for the Indian economy. Despite this, there is a perennial undercurrent of concern about the prospects of the Indian software industry. Wages for software professionals have risen year over year and employee attrition remains a persistent problem. Indian exports continue to be mostly services with a modest technology content and there is little evidence of successful product development. In this paper, I shall briefly describe its growth and evolution. Next, I shall identify the major factors that contributed to its success, and some possible ones that were not important. The prospects of the industry are next and in this context I shall summarize the available evidence on the extent to which India and Indian firms are participating in software innovation. This will lead to an assessment of whether the industry has and can provide higher value added products and services. Finally, I shall comment on the direct and indirect impacts on the Indian economy.

Keywords: software, exports, india, outsoucing, offshoring

JEL Classification: F1, L6, 03, 05

Suggested Citation

Arora, Ashish, The Indian Software Industry and its Prospects (December 2006). Available at SSRN: or

Ashish Arora (Contact Author)

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

National Bureau of Economics Research

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Duke Innovation & Entrepreneurship Initiative ( email )

215 Morris St., Suite 300
Durham, NC 27701
United States

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