Abstract The Indias technology-based economic development even in the face of a global recession has caught the attention

of policymakers, academicians and industry experts. The growth of Indian software industry has been impressive since its entry in the economy. While future prospects for growth are unanimously reckoned to be high in every forum, one question is commonly posed: is this growth sustainable? From self-doubt and bureaucratic apathy, they have grown in revenues, stature and acquiring companies in India and abroad. However, FY2009-10 was a watershed year for Indian software product companies. Many saw for the first time a negative growth in new licenses revenues and what sustained them was services and AMC. Overall revenues in FY09-10 were $ 1.64 Billion, about 13% lesser than revenues FY2008-09. Roll outs were postponed, renegotiations were on, new orders stop coming, any year most CEOs would prefer to forget and move on. Support to Indian economy have come from the software exports sector that has built a global reputation for quality software, has grown an average of 30-40% in the 1990s and growing at the rate of 30% (NASSCOM, Annual Report 2011). It has successfully withstood the recessionary pressure in the recent years. While the growth trends experienced by this sector and its contributions to Indias economic development have been phenomenal, the questions have begun to arise on its sustainability. This thesis will explores those concerns in detail and examines the threats to the industrys competitive advantages. This study intends to carefully examine the recent economic, industry and technology-related trends that challenge earlier assumptions of demand and also purports to expand certain supply side constraints overlooked in earlier studies. It is hoped that this study will enrich the policy debate concerning Indias information technology related issues and prospects.

Though large numbers of researchers have identified the problems and prospects relating to software industry in India, not much has been done in this area during recent times. The global turmoil of economy due to mishaps in major and emerging growth drivers of world economy, has given a set-back to all developing and emerging economy including India. The Major market for India software lies in export where developed countries are major customer segments. Their economic downfall has tremendously threatened the growth prospects of these countries and generated new problems issues and challenges. Most previous researches on the Indian Software Industry have focused on study of past performance. Factors for success of IT industry had been discussed in various studies. Few researchers had also studied prospects of Indian software industry but most of those studies were made before 2008 when this industry was growing at the rate of 30% per annum. Further, most of the earlier studies have attempted to explore the prospects of this industry in qualitative terms and the researcher could not come across any major work quantifying the prospects of Indian software industry. Very little studies targeted contribution of Indian software industry on various indicators of economic development of India. Although, percentage share of software industry in overall GDP is very less, still impact of growth in software industry had worked as catalyzer in economic development of India. As the literature remains answerless to many questions, this gap in literature and real problems and prospects of software industry demands an ex post de-facto study that targets bridging the mentioned gap by underlining the problems of Indian software industry and identifying prospects of this industry in light of current economic scenario. This study will also cover gap in measuring contribution of Indian software industry on key indicators of economic development in empirical terms. The rationale behind this study is to bridge this gap by identifying and exploring the recent problems and challenges on the growth

path of software industry and explore the avenues for continued and sustainable development of software industry in India. Simultaneously, this work is also aimed at exploring the contribution that this industry has made to Indian economic development. The present study has an exploratory phase in which a thorough

examination of the literature is made regarding the studies done in similar areas. In this phase problems area for software industry and key indicators of economic development were identified. In addition to this, experience survey was done during the problem development stage by way of interviewing and discussing the issues concerning the area of study with about ten software professionals, who had specific experiences in advancement of software companies. The study was conducted primarily to examine Indian software industry with respect to problems hampering growth of the industry, prospects for future growth and its contribution in Indian economic development. This research work is based on primary as well as secondary data. Secondary data has been drawn from reliable websites of governmental organizations and Prowess, a database generated by Centre for Monitoring Indian Economy (CMIE). Primary data was collected through a self-designed instrument from 80 respondents representing top management of software companies. The respondent organizations were drawn on proportional representation basis using judgemental non-random sampling. Collected data has been analysed using statistical techniques including Regression Analysis, Linear time series modeler and mean and mode analysis. The empirical analysis related to problems of software industry in India suggests that for sustaining the growth of this industry, improvements are required in the area of finance arrangement, margin management, etc. credibility of Indian software firms in global market and quality of labour. On the other hand, the existing literature explored a whole list of probable issues that may hamper the future growth of Indian Software Industry.

One of the major findings of this research work is that there exist significant growth prospects for Indian software industry. It was found that the rate of growth calculated from the historic time series dataset covering time period of 11 years is 1.5 billion dollar per annum, which can be interpreted as that an amount of $1.5 billion of revenue of Indian software industry would be increasing

annually on an average over the future years. To have a greater insight, similar projections were conducted for the two components of Indian software revenue, i.e., software export revenue, and software domestic revenue. The models projected the growth in software revenue and its two components, but growth rate will not be as high as it was in the past. To confirm the environmental support for the development of software industry in India, Regional Technology-Based Economic Development model proposed by Savoie (2009) was applied. The model presented by Savoie (2009) for Regional Technology-Based Economic Development Rated Indian economy as an Adolescent Economy with a score of 35.81. As prescribed by Savoie (2009), various environmental conditions in India are suited for growth of Indian software industry. One of the key objectives of this research work was to explore whether or not Indian software industry contributed to economic development of India. Indian software industry was represented by its revenue, capital investment and employee growth rate. Likewise, economic development of India was represented by its key indicators including GDP, Forex Reserves, Exports, Per Capita GDP, FDI and Employee Growth Rate. The result obtained by analysis of related data for this evidenced mixed outcome. It suggests that certain aspects of Indian economic development, represented by some of its key indicators, have been directly contributed by software industry but certain others have less or no contribution from Indian software industry. ----------------------------------------

Chapter Scheme Chapter 1 relates to conceptual framework and rationale of the study. The structure and composition of software industry is discussed with a view to identify its historical background and growth process. Background gave a brief idea of about the study. Rationale of the study is elaborated in this chapter to give a view on the need and necessity of the study. The chapter concludes with probable contribution of this research work. Chapter 2 discusses global scenario to ascertain global market of IT industry and its relevance to Indian IT industry. Indian Software industry and its characteristics are discussed to understand nature of this industry. Economic development in India is discussed in this chapter so that its relation can be identified with software industry. Various factors responsible for the performance of software industry are identified on the basis of previous studies. Chapter 3 covers an extensive review of existing literature. In this chapter, the available literature related to various factors affecting Indian software industry is reviewed. The review has been done in the light of basic objectives of the study. Efforts have been made to briefly describe the available studies with respect to their importance to the present study in terms of problems and prospects of software industry and its contribution to Indian economic development. The chapter conclude with identification of literature gap followed by research questions and research objectives. The chapter 4 relates to design and methodology of the study. This chapter begin with identification of the independent and dependent variables and generation of hypothesis. After a brief description of the study, design and sample, the tools for data collection and analysis have been presented. The study had 'randomized block' design. The initial sample of 80 software companies out of total 720 companies was selected on the basis of Independent and Non-random sampling

from different cities of India such as Mumbai, Banglore, Delhi, Gurgaon, Pune and Hyderabad. The problems of software industry are identified on the basis of survey and existing literature Various models of regression are used to forecast future growth pattern of software Industry. Similarly, contribution of Indian software industry to economic growth has been analyzes using secondary data and applying relevant regression models. Chapter 5 relates to data presentation and analysis. The results of the analysis have been put forth, based on multi-stage statistical analysis in the light of related research problems. The data collected through primary and secondary sources were scrutinized and SPSS (Statistical Package for Social Sciences) was used for analysis. The analysis of data was carried out by using Regression and correlation analysis. The testing of null hypotheses has been discussed simultaneously. The summary of results is also presented for clarity at the end of each set of the results. The grand summary of the results were presented at the end of the chapter. The chapter 6 focuses on discussion on findings and recommendations. The results were discussed in the light of basic hypotheses of the study and reported findings of other related researches to draw some significant observations. The chapter has discussed the importance of findings while relating them to the existing knowledge of the subject. The recommendations highlight the critical issues

generated from analysis of the study and utility of generated knowledge and its application for different purposes. Towards its close, the chapter details out limitations of the research work and scope for future researchers. The chapter ends with conclusion. -------------

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