A conduit for knowledge? demonstrating the strength of technology improvements in Indian firms that buy outsourced information technology

Grace Kite ()
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Grace Kite: University of London

Journal of Evolutionary Economics, 2018, vol. 28, issue 2, No 2, 225-243

Abstract: Abstract The literature on the role of information technology outsourcing (ITO) and on knowledge intensive business services only rarely considers purchasers in developing countries and includes few wide-scale studies. This paper reduces that gap in that it quantifies the effect of ITO on total factor productivity using a sample of 10,100 firms in India. The results show that ITO purchasing brings strong returns and outperforms in-house IT. A comparison with studies from elsewhere reveals that Indian ITO also outperforms IT in a range of circumstances in developed countries. Taken together, these findings support the idea that ITO firms, just like other knowledge intensive business services, can act as a conduit for best practices and tacit knowledge, and that this role is very useful in a developing country context. The implication is that more ITO projects would be good for catching up in developing countries. In India, policy support for the ITO sector should be re-designed to incentivise domestic work.

Keywords: Information technology; Outsourcing; India; KIBS; Innovation; Catching up (search for similar items in EconPapers)
JEL-codes: O14 O31 O33 O53 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s00191-018-0550-z

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