Academic journal article Communications of the IIMA

Rural Development through Village Knowledge Centers in India

Academic journal article Communications of the IIMA

Rural Development through Village Knowledge Centers in India

Article excerpt


Urban India

India is currently a U.S. $1 trillion economy (The Economist, 2008a). It is one of the few countries experiencing economic growth despite the current global economic downturn. From 2003 to 2008, India's GDP has registered a 9% average annual growth (The Economist, 2008b). While the growth rate is expected to diminish to 6% - 7% during 2008-2009, many analysts predict that India's growth is likely to continue into the future with an average annual rate of 6.3% from 2008 to 2030. Much of India's growth has been led by the service and manufacturing sectors, which is expected to grow at 10.7% and 9.4% growth, respectively in 2008-2009 according to India's Finance Minister, P. Chidambaram, as stated in his 2008-2009 union budget address (Chidambaram, 2008). The contribution of various sectors to the GDP is as follows: services 60%, manufacturing about 22% and agriculture about 18%. The services sector is dominated by IT and IT-enabled services industries.

India's IT sector has contributed heavily to the India Growth Story. The IT industry employs nearly 2 million people, according to Nasscom, India's software industry trade association (Nasscom, 2008). According to a Nasscom-McKinsey Report (McKinsey, 2005), the IT-ITeS sector is estimated to have helped create an additional 3 million job opportunities through indirect and induced employment in telecommunications, power, construction, facility management, transportation, catering and other services. Nasscom's "Indian IT industry fact sheet" predicts that the Indian IT-BPO industry will grow by 33% and reach U.S. $ 64 billion in FY 2008 (Nasscom, 2008). Of this, IT exports are expected to cross U.S. $ 40.8 billion in FY 2008, an increase of 28 percent over FY 2007. In fact, every sub-sector of India's IT industry has experienced accelerated growth rates since 2004, as attested by the graph in Figure 1. The variety and share of IT service offerings are provided in Figure 2. Analysts and researchers have attributed India's IT-sector growth to factors such as the availability of a vast, well educated, English-speaking IT workforce, cost advantage, globalization and opening-up of the Indian economy starting from 1984 onwards. The economic liberalization policies set in motion in 1984 have enabled the gradual increase in foreign direct investments (FDIs), brought new technology, and have facilitated IT services at lower costs to Indian consumers. Entry of the private sector in key areas such as telecommunications, coupled with private and public sector investments have enabled development of critical IT infrastructure. Today, the results of more than ten years of sustained growth are becoming visible. Indian cities are bustling with commerce, and middleclass Indians are experiencing rise in wages in all sectors. The wage increases have generally occurred in urban areas, especially in the IT and services industries. With rapid income growth, the vast Indian middle class (numbering approximately 400 million) is becoming one of the fastest, and largest growing consumer societies and marketplaces coveted by much of the developed world's marketers. Indian cities are experiencing a construction boom with new western-style skyscrapers, shopping malls, entertainment complexes and upscale restaurants--all thronging with eager shoppers and patrons. The mobile telephone is ubiquitous even among the lowest of wage earners. In fact, as Edward Luce points out, there is an air of optimism and confidence in today's India which did not exist even a decade ago (Luce, 2007).


Figure 2: Spread of ITeS service offerings (adapted from Nasscom,

Series 1

Other unaccounted                  (0.2%)
Software testing                   (1.7%)
Application management            (15.4%)
Other outsourcing                 (10.4%)
IS outsourcing                    (14.3%)
Software deployment & support      (6. … 
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