The IT Sector in India - Dissertation Example

Since ample literature was available on the subjects of FDI, India’s macro and microenvironments, India’s software industry, and the role of government in the sector, no further data were collected. After a review of the existing literature, the analysis was done through Porter’s Diamond Model which revealed that the determinants in the case of India were all in favour of strengthening India’s position. The study further revealed that the mode of entry is dependent on the level of control required and the level of control is connected to the resource commitment.

WOS offers the maximum control but the firms have to be prepared for maximum risk and commitment. Since IT involves intellectual property and high technology firms naturally are keen to have maximum control. Only larger firms are able to commit resources as they are able to draw resources from different institutions and public offerings. Joint Ventures have certain hazards and the trade-off against low investment can be high. The reforms have opened great avenues to attract FDI and firms would be able to maximize control if they entered as WOS.

India scores high on people and works environment including the English language capability. Taking into consideration factors like the locational advantage of India, the removal of barriers by the government, the low-labour cost, the competition in the industry, WOS has been considered the best mode of entry by foreign IT firms that plan to enter India in the near future.Indian software firms have established themselves as major foreign exchange-earners as the IT /ITES (IT) industry has significantly contributed to the GDP growth in India.

The IT sector has also led to employment generation and has created a ripple effect in the general economic environment in the national and international economic space (Nasscom-Deloitte, 2008).