The rapid increase in revenues from this form of delivery is what gives rise to optimism about the role that IT services can play in growth. The strategy driven by that optimism implicitly sees growth in services as more likely to deliver employment, income and export revenue increases than that in the commodity producing sectors. This, to some extent, allows the government to ignore the fact that growth of employment in the commodity producing sectors has not merely decelerated sharply but is increasingly less responsive to increases in output - the jobless growth syndrome. Needless to say, growth in IT services employment is relevant only to those capable of finding employment in the organised sector and even in that sector, the share of IT services is still a small proportion. IT services generate optimism only because this is the only segment where employment is increasing significantly. The outsourcing dream is really confined to the bedrooms of India's numerically large but still minority middle class.
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Moreover, outsourcing dreams as well as the nightmares indicate how much the international marketplace rather than the growth of the domestic market has come to be accepted as the principal source of new employment by the Indian middle class. Migration, whether actual or digital, seems to be the limited and tenuous option that the current development strategy offers those who defend it most.
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An interesting article.
The author seems to confirm a belief I've had for sometime about the outsourcing phenomena: its outward direction produces temporary and diminishing benefit to the host country.
It's one thing to focus your national efforts on acquiring the ability to make sophisticated devices such as CPUs, cars and machine tools as Japan, S. Korea and China have done and quite another to sell your ability to answer technical support phone calls from confused PC users or write JAVA code for websites.
With the creation of an advanced industrial base you have both the ability to export goods and the foundation for a self-sustaining domestic market. If you succeed in dominating the *knowledge work* outsourcing services market you do create a nice middle class and line the pockets of an entrepreneurial class but, in the long run, what else have you got? And, how far can this class expand?
When this topic has come up before I've asked one question - over and again: doesn't the outward direction of the Indian IT services sector suggest that there's insufficient domestic demand for these sorts of things?
And, if that's so, doesn't this suggest further that what's being created is not a self propelled engine of modernization and *growth* but a series of service enclaves, such as Bangalore, tailored to the requirements of businesses outside of India and providing zero value-add for the development of the Indian economy as a whole?
DRM