Firms organize heterogeneous resources developed to create capabilities sustaining the provision of services or the production of output, and they engage in research and development (R&D) activities. R&D is an extremely human capital-intensive effort and the intangible assets are embodied in human capital. Firms engaging in R&D activities also devote attention to human capital issues and may be progressive in human relations and compensation policies. Such progressive firms would have a higher wage share, signalling financial commitment to people assets. That is the expectation. Paradoxically, R&D spending is discretionary, held low in priorities, and is the first expenditure cut in a downturn. Not much is known of this relationship in spite of it being an important relationship in contemporary theories of economic growth and corporate development. This article examines the links between the R&D spending of Indian information technology and software sector firms and their wage share. The extent of a firm's wage share measures the share of a firm's product accruing to its human capital pool. When a firm's wage share is larger, the quantum of value generated by its activities used to reward employees is larger. The relationship between R&D spending and wage share captures an important aspect of the behaviour, related to wealth sharing, of innovative versus not so innovative firms. The information technology and software sector is critical in India's growth. Its presence has had domestic consequences in terms of employment and exports. The dynamic R&D spending and wage share relationship is examined for a large panel of firms in the Indian information technology and software industry from the period 2000-01 to 2005-06. Whether India technology and software firms' employees benefit from their own firms' practices is an important issue in engendering the future performance of the information technology and software sector. The results show that the firm R&D spending and wage share relationship is negative and significant. A short-term cost minimizing approach, where firms compete by balancing expenditures, so that an increase in one type of expenditure by firms is counterbalanced by a decline in another type of expenditure, rather than a long-term oriented dynamic capabilities enhancement approach, best describes Indian information technology and software firms' behaviour. The negative relationship noted in this analysis does not augur well for Indian firms' efforts to develop into globally competitive firms, as rewards to human capital are not forthcoming for activities related to R&D efforts.