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The Impact of Information Technology Outsourcing on Productivity and Output: New Evidence from India

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  • Grace Kite

    () (Department of Economics, SOAS, University of London, UK)

Abstract

Neither the literature on outsourcing nor the literature on the impact of information technology (IT) have previously quantified the effects of IT outsourcing. This is a particularly important omission in India, which has an IT outsourcing industry that is well placed to bring world-class applications of the technology to domestic customers. This paper provides econometric evidence which shows that there is a strong positive impact of IT outsourcing on output and productivity in India. It also demonstrates that in aggregate, IT outsourcing makes a substantial contribution to Indian economic growth.

Suggested Citation

  • Grace Kite, 2012. "The Impact of Information Technology Outsourcing on Productivity and Output: New Evidence from India," Working Papers 173, Department of Economics, SOAS, University of London, UK.
  • Handle: RePEc:soa:wpaper:173
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    File URL: http://www.soas.ac.uk/economics/research/workingpapers/file76347.pdf
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    References listed on IDEAS

    as
    1. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 2002. "Information Technology, Workplace Organization, and the Demand for Skilled Labor: Firm-Level Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 117(1), pages 339-376.
    2. Motohashi, Kazuyuki, 2008. "IT, enterprise reform, and productivity in Chinese manufacturing firms," Journal of Asian Economics, Elsevier, vol. 19(4), pages 325-333, August.
    3. Stephen D. Oliner & Daniel E. Sichel, 1994. "Computers and Output Growth Revisited: How Big Is the Puzzle?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(2), pages 273-334.
    4. Marc Prud'homme & Dimitri Sanga & Kam Yu, 2005. "A computer software price index using scanner data," Canadian Journal of Economics, Canadian Economics Association, vol. 38(3), pages 999-1017, August.
    5. World Bank, 2006. "2006 Information and Communications for Development : Global Trends and Policies," World Bank Publications, The World Bank, number 6967, July.
    6. Karsten Bjerring Olsen, 2006. "Productivity Impacts of Offshoring and Outsourcing: A Review," OECD Science, Technology and Industry Working Papers 2006/1, OECD Publishing.
    7. Mary Amiti & Shang-Jin Wei, 2006. "Service Offshoring and Productivity: Evidence from the United States," NBER Working Papers 11926, National Bureau of Economic Research, Inc.
    8. Simon Commander & Rupert Harrison & Naercio Menezes-Filho, 2011. "ICT and Productivity in Developing Countries: New Firm-Level Evidence from Brazil and India," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 528-541, May.
    9. S. Narayan, 2009. "India," Chapters,in: The Political Economy of Trade Reform in Emerging Markets, chapter 7 Edward Elgar Publishing.
    10. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
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    More about this item

    Keywords

    Information Technology; Outsourcing; India;

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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