Productivity Change in Indian Information Technology-enabled Services (ITeS) Sector: A Malmquist Index Approach

By : Prosenjit Das

Page No: 383-393

Abstract
This study aims to evaluate the productivity change and its determinants in the Indian ITeS sector during 2004-05 to 2014-15. For this purpose, firm-level data is collected from the Centre for Monitoring Indian Economy (CMIE) Prowess database. The findings of productivity analysis reveal that, on an average, the ITeS industry has experienced improvement in total factor productivity by 3.1% during the entire study period. The decomposition analysis of productivity reveals that innovation is the major contributor to the growth of total factor productivity. The regression results show that export and human capital have positive impact on productivity whereas the US subprime crisis has negative impact on productivity. The policy implications of this study suggest that the firm-level managerial efficiency should be improved for further enhancement of productivity. In other words, policy should be devised in order to encourage the private limited firms for a holistic development of this industry. Moreover, the stakeholders of Indian ITeS industry should reduce dependence on the US and UK for export revenue and needs to explore new markets to keep pace with the ever changing technical and business environment.

Author :
Prosenjit Das : Economic Officer, Directorate of Economics & Statistics, Department of Agriculture, Cooperation & Farmers Welfare, Ministry of Agriculture & Farmers Welfare, Govt. of India, New Delhi.