The Political Economy of IT-driven Outsourcing

Abstract

Since the late 1990s India has recorded dramatic increases in the aggregate earnings of its software and IT-enabled services (ITES) sectors, so much so that software and ITES are often quoted as the source of a new dynamism characterising the Indian economy. This experience has also been used to argue that the revolution in information technology offers developing countries new opportunities in a dynamic industry. In particular, with export revenues accounting for an overwhelming share of India’s aggregate revenues in this area, the Indian experience is also seen as indicative of a new opportunity for services-based, export-led growth in developing countries. The emergence of that opportunity is attributed to two outcomes of the revolution in information and communications technologies (ICTs): first, an acceleration in the process of outsourcing of IT and ITES by corporations in the developed countries; and second, an increase in the extent of offshoring of these outsourced activities to countries like India. As a result of these developments, the ICT revolution is expected to alter the global distribution of incomes at the margin and redress existing international inequalities. Not surprisingly, the outsourcing phenomenon has attracted an excess of attention.KeywordsPolitical EconomyWage CostExport RevenueService ExportService BudgetThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.