The paper "Structure of the Indian IT Industry" is a perfect example of a business case study. The current economic crisis which started in the US is unique in many senses. In no previous crisis, the countries of the world were so deeply interconnected with each other as today. As a result, the effects of the crisis were not visible not only in the US but also in all the countries of the world. The crisis which started in the US then affected the EU and the rest of the world.
This is evident from the dropping GDP, rising unemployment and lower investment in the economies worldwide. Although recent times have witnessed a ray of hope as a result of the Government bailouts the actual impact of the crisis has not been confirmed yet. Even developing countries such as Brazil, Russia, China, and India were not isolated from the effects. Certain core sectors in these countries faced major impacts as a result of the crisis. For example, the textile, gems and the IT industry which were predominantly export-oriented have seen a major effect in India. India’ s IT industry has been the major driver for the country’ s economy since the process of liberalization initiated in the early 1990s.
The majority of this progress is on account of the off-shoring where large companies in the US outsourced the key business processes and software development activity to India. This was beneficial as India was a market with abundant cheap labour. Because of this dependency of the Indian IT industry on foreign clients, it was majorly affected by the crisis. The crisis along with certain other reasons led to many risks (Bedi, 2004) in the operating environment of the Indian IT companies. The uncertainty regarding the legislation and rules regarding SEZs and STPIs led to Legal and regulatory risk. The uncertainty of the outcome of the General Elections led to political risk The overall gloomy macro-economic outlook both in India as well as outside led to direct environmental risk through exchange rates, investment, IT spends etc. All these factors make it an interesting case to analyze the impact of the crisis on the Indian IT industry.
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