Industrial Upgrading in India's Information Technology Enabled Service Industry.

Abstract

This dissertation analyzes industrial upgrading, the process by which industries move to higher value products and services in India’s “offshore outsourcing” industry. The dissertation draws upon 101 semi-structured interviews with Indian managers, workers, trade association and government officials, collected during 14 months of field research in India, conducted between July 2006 and May 2009. The study examines how India obtained the knowledge and skills required to move up from low-level back office and call center work into knowledge intensive service delivery within the span of a decade. Four causal mechanisms are identified that enabled this upward move: 1) the role of trade associations 2) firm level knowledge transfer through migration and client interaction 3) firm level training programs and 4) firm level creation of cultural knowledge. Trade associations and firms emerged as the central actors driving industry development, with the state playing an increasingly supporting role. This institutional arrangement represents a departure from the Indian state’s traditional approach to development and the role of the state in other successful developmental models. A key reason why industry, rather than the state, assumed a leadership role in development is based upon the interactive nature of services themselves, which requires closer coordination between firms than manufacturing. The design of the dissertation centers upon the analysis of four firms that provide financial or medical services. Financial and medical services were selected based upon their different propensities to specialize within industries and expand in breadth across industries, thereby addressing the twin dimensions of industrial upgrading, scope and depth.