Information Technology has been defined as “the study, design, development, implementation, support or management of computer-based information systems, particularly software applications and computer hardware” by the Information Technology Association of America (IITA). Information Technology has been one of the fastest growing industries in the last three decades. With a growth rate of 5.6%, information technology sector is now more than a $1.6 trillion (Nasscom) industry from what was merely an industry of few millions in 1980s. Today almost all electronic devices have a chip programmed to run the device efficiently. Information technology does not just support the internet and computers; it has grown to almost every sector today, from computers to mobile phones, from banking to automobiles, from education systems to Business process, information technology is involved in improving the system performance everywhere.
Information technology played an important role in improving process and performance of businesses. Globalisation had an important role in kicking off the demand for information technology. But this was not the only reason for high demand of software products and services, strong technological advances were being pursued in all sectors. Heeks and Nicholson (2004) identified that
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According to them the developed economies had significant growth in the sector since the 1970 after which the world saw rise of three countries, Israel, Ireland and India, who were then called the ‘first followers' in the industry and later came to be known as world leaders (Heeks and Nicholson, 2004).
Outsourcing has been an important mode of business in information technology industry and most developed countries today outsource, from low level work to business process, to developing countries where the cost of labour is low. Internet and the fast growing communication network made outsourcing quite easy. In the new information economy, the shift of main inputs from land labour and capital to knowledge and information has presented both opportunities and challenges to developing countries (Kambhampati, 2002). India gained the first mover advantage by utilizing this opportunity earlier in 1970s and is now a world leader in IT services. However, there were also certain challenges involved with these opportunities. There were certain initial requirements in IT like high-speed datacom links through which firms communicate with their clients, and the basic infrastructure in buildings and telephone lines. The software industry being a service industry is both labour- and skill-intensive. Though the skills in this industry are relatively easy to acquire in some areas, such as data-entry, the initial requirements of a reasonably well-educated labour force remain (Kambhampati, 2002).
India being one of the first ‘follower' nations has now become a world leader in providing IT services with the highest turnover of $61 billion in IT services sector. Many Reports suggested that India did not have the infrastructure to support IT related services but still it has made great success in this industry. Is the growth and development of the Indian IT industry similar to many other emerging economies and comparable to the East Asian Late Comer Model is a rather important question. We can use this model to identify if Indian IT industry has followed a similar pattern based on which its current and future strategies can be examined. .
East Asian Late Comer Model
Since the 1980s, East Asian countries like Hong Kong, China, Taiwan, and Korea etc. experienced fast economic growth and remarkable industrial development. Such growth was a result of major economic policy measures like import substitution, export promotion, incentives for foreign and domestic investments. As a consequence, countries that emphasised on low cost labour gradually moved towards High Tech industries (Chang Woon Nam, 2006). In his paper, Chang Woon Nam has critically analysed Asian countries at different levels of industrialisation and identified certain pattern that the countries have followed. This pattern of economic and industrial growth is also known as the East Asian Late Comer Model.
According to the Model, there are different stages (or levels) of industrial development in a country. At the first stage, industry is based on natural resources and mostly labour driven (Chang Woon Nam, 2006). Countries offer their advantage of low cost labour to attract foreign business. At this stage they are involved in producing low-tech products and components as subcontractors for foreign firms. They gain knowledge and skills for production using shop floor experience and learning by doing (Bennett and Vaidya, 2005).
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At the second stage, industry is based on capital and imported technology driven (Chang Woon Nam, 2006). Once the country gets sufficient shop floor experience they use imported technology and make capital investments to enhance their production capabilities. They are not just sub contractors now and have the ability to produce their own goods with a large amount of technology borrowed from developed countries (Bennett and Vaidya, 2005). There is little or no innovation at this stage, however firms invest in understanding the technology and start developing their capabilities at a smaller scale.
At the third stage, Firms are more R&D driven (Chang Woon Nam, 2006), and they invest considerably into research and development and are able to produce most of the products with little technology imported from developed nations. Firms at this level are able to design their product, performance features and process technology (Bennett and Vaidya, 2005).
At the fourth or the final stage, industry becomes innovation driven (Chang Woon Nam, 2006). Industry at this level is very innovative and has intensive R&D to support product development. Technology import from developed countries is negligible and firms are able to innovate new products and processes to differentiate from other countries (Bennett and Vaidya, 2005).
It is important to note that developing the capabilities through learning was also backed by good technical field-related education and capabilities of individuals in those countries. These not only include the technical skills but also entrepreneur, team effort and organisational capabilities. It was a combination of these aspects that could help Asian countries develop into what they are.
Korean Semi Conductor and Automobile Industries
Korea had an excellent economic growth in the last four decades especially in the semiconductor and automobile industry. The early economic growth was supported by the special industrial policies formed by the Korean government. Not only that, the government provided infrastructure and financial incentives to promote certain sectors. The Korean government emphasized on local production of consumption goods rather than import. In fact, post 1964 policies were pursued for promotion of export. Government also established institutions like Korea Trade and Investment Corporation and The Korea International Trade Association to support export. Korea initially had the comparative advantage of low cost labour which attracted the initial business from foreign clients. Although Korea had some experience in the light industry such as textile; it had relatively unskilled labour to support heavy and technology based industries (Mah, 2007).
In the semi-conductor industry government set targets for export production and R&D. The Korean companies learnt by replicating the Japanese model. After certain period of time they developed the capabilities of adding certain Korea-specific elements to their products. Another important factor in the development of the semi conductor industry was the unique entrepreneur leadership skills that the owners possessed. They also used strategic alliances as an important source of technology transfer; examples are Samsung-Texas Instruments, LG-Hitachi. Development of the industry attracted many well educated and experienced Koreans based in U.S to retain home (Cho et al, 1998).
It was once predicted that South Korea's automakers would never had survived the global shakeout of 1990's. Hyundai, however, was determined to become a leading automaker of the world. Hyundai entered the industry in 1987 as a latecomer and today has more than forty-five subsidiaries around the world. Being a latecomer Hyundai started as an assembling plant for ford compact car. Later Hyundai received “package” technology from ford such as blue prints, technical specifications and production manuals. Hyundai also sent its engineers for training at ford sites. Hyundai used exceptional organisational skills to set up a difficult target of manufacturing a car on its own. The government pushed Hyundai to develop its own car rather than pursuing assembling operations of foreign cars. The initial production of Korean cars was supported by technologies imported from other countries. Hyundai's next target was not just to meet the domestic demand but also compete globally. It therefore needed some differentiation in its product compared to the western countries. Hyundai, thus, made investments into Research and Development in order to improve its technological capabilities and add some innovative idea to its product. In 1994 and 1995, Hyundai had developed Accent and Avante respectively both designed and developed completely by Hyundai (Kim, 1998).
Chinese Heavy Metal and High-Tech Industry
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China has had huge industrial and economic development since the initiation of the “open door” policy in December 1978. China is known to export a number of products to a number of countries around the world. China, like many other Asian countries has the low cost labour advantage. As a result a fast growth in export of low technology labour intensive products was observed. Chinese government later set up policies to shift from low technology labour intensive work to advanced technology work. They encouraged Foreign Direct Investment especially in the form of joint ventures, so as to increase technology transfer from developed countries. The government also set up SEZ's (Special Economic Zones) that provided favourable conditions for foreign firms. After attracting considerable FDI, policy amendments were made to ensure that capabilities development is pursued by firms. In the high-tech industry, China has shown excellent performance in telecommunications equipment and automatic data processing equipment.
Automobile Steel and Machine Tool sectors
In the 1980's, municipal authorities supported the existing enterprises. While the demand was growing, the markets were kept protected, so as to avoid any competition from outside. In the automobile sector, foreign joint ventures have been the most important source of know how and Chinese companies are looking to develop their technical capabilities through this. The automotive industry of China is still at low level of the late industrialization model. The two well-known automobile firms, Beijing Benz and Tianjin FAW Xiali are still highly dependent on foreign technologies and have minimal innovating capabilities at this stage. Tianjin FAW Xiali is looking forward to a joint venture with Toyota to further enhance its capabilities (Vaidya et al, 2007).
The steel sector is a very fast growing sector in China. China has seen good exports in this sector. The sector has the suppliers as main source of technology. TPCO has already attained capabilities comparable to international standards. Sho is also engaged in setting up a large industrial estate with more advanced facilities and equipments. What the Chinese steel manufacturers lack is that they still have to depend on foreign suppliers for high tech equipments and are thus looking to engage in collaboration with foreign partners (Vaidya et al, 2007).
In the machine tool sector, know how could be gained from number of sources like equipment suppliers, licensed production, joint ventures and co-production. Beijing No 1 is engaged in joint ventures as well as co-production to improve its know how. It also acquired Coburg, a German Company. Considering the reputation of Germans in manufacturing, it was evident that Beijing No 1 could make use of its German subsidiaries know how to improve its production capabilities. The machine tool industry can be said to be between level 2 and level 3 of the East Asian Model. They have their own production facilities with equipment mainly purchased from foreign suppliers. Some firms, however, are able to design the products on their own indicating that a small set has achieved level 3 of the latecomer industrial development model (Vaidya et al, 2007).
China thus is one of the good examples of the East Asian latecomers. In a paper by Vaidya n Benette (2007), there is a clear demonstration of shift of industrial export from low technology industries like textile industry to high tech and other heavy metal industries like telecommunications industry and steel industries. However, these are all manufacturing sectors and the Indian IT industry is a service sector and the developments in the service sector might be a little different from the manufacturing sector as we shall see in the next section.
Indian IT industry
The IT industry in India has seen a major boom in the last two decades and made considerable contribution towards its economic growth. A huge number of firms located at Bangalore, Chennai, Hyderabad, Kolkatta, New Delhi and Pune have been providing software services. Indian IT firms are known for their impeccable quality consciousness and huge cost advantage in comparison to the western countries contributing to the favourable factor endowments. (Kambhampati, 2002) Having entered the industry in the 1970s and early 1980s India had gained the first mover advantage, when competition was limited, Indian companies could break the ‘comfort barrier' with their clients and today, most people know they can get high quality technical people from India. Although the domestic market for IT was quite small, the exports could grow, as the number of available skilled English-speaking labours was quite high. The industry being a technology driven one, most business was attracted through outsourcing of the work. Formation of IT clusters at Bangalore, Delhi, Chennai and Hyderabad provided competitiveness and also support to IT industry (Thatchenkery et al., 2005).
Indian firms have long utilised the cost and the profit advantage, but they still lack the capability to innovate complex and high technology software products. The Indian IT firms could be compared to the third level of the East Asian model as the Indian IT firms have done well to shift from onsite to offshore working and from low level coding work to next level of designing and project management rather than importing all high end applications from developed nations (Arora & Gambardella 2004).
The sector began in Mumbai in 1968, when Tata Consultancy Services (TCS), the oldest firm in this industry in India was set up. It then grew relatively steadily until the mid-1980s when it began to take off (Kambhampati, 2002). Talent was attracted into software exports in India due to the permanence, status, returns and other rewards this segment offers (Tessler et al., 2003) and, by contrast, because of the fewer or weaker remuneration and opportunities offered to labour in other industries, including domestic-orientated software work (Arora & Gambardella, 2004; Heeks and Nicholson, 2004).
Initially, Indian firms sent their staff at onsite location later they were involved in exports and through client linkages, staffs in Indian software export firms have accumulated a big knowledge base: about overseas IT markets, business standards and practices, and precise customer needs and values (Kapur & McHale 2002; Lema & Hesbjerg 2003).
In its early years, India's domestic technological foundation was not very strong and thus was clearly not a success factor. Hence the reliance on short term contracting work on clients location as a way of ‘short-circuiting' that weakness. After 1991, government investments grew and liberalization increased the participation of private finances and overseas investments in the technological infrastructure (Heeks and Nicholson, 2004).
In 1992/93 India's software exports were US$225 million and US$3010 million in 1998/99, approximately half the value of agricultural exports (US$6205 million) and one-third that of textiles (US$8457 million). The industry provided 160 000 jobs for software professionals alone in 1996 and this increased to 380 000 by the year 2000 (Kambhampati, 2002).
In a paper published in 1999, Lall summarised that the structure of India's manufactured exports is not suited to ‘sustained rapid growth'. ‘It is static, dominated by simple and undifferentiated products where the main competitive advantage lies in cheap labour, low levels of skill and simple technologies. Even within this specialization, India is concentrated in slow-growing products. The structure is not just prone to sloth; it is highly vulnerable to competitors' (Lall, 1999: 1780). However, technological advancements and improvement in infrastructure helped in working from offshore locations as better communication systems and advanced technologies enabled delivery of the project directly on the client system from offshore locations.
The international competitiveness of the Indian software industry has been developed in two stages; first, via long-term investment by the state in technical education and technology like setting up of IITs (Indian Institute of Technology) and encouraging computer engineering. Subsequently, an incipient software industry with recognizably high export potential has been targeted via fiscal incentives and the provision of export-enabling infrastructure (Balakrishnan, 2006; Parthasarthy and Joseph, 2002).
In year, Indian software industry was merely a service industry with very minimal innovative and product development efforts, thus it had to concentrate on the client vendor relationship to maintain its business. New entrants from countries like China, Russia and The Philippines although low cost locations were still behind in service quality, which the Indian software firms used to their advantage. By 2002, India had about 42 firms at CMM level 5 where as China was still at level 3 of CMM quality certification. Other certifications like PCMM and Six Sigma also started becoming popular in India and Indian firms were already working towards achieving those as soon as possible. (Nwankwo et al., 1997) Today the clients are more aware of the value for money and quality of service provided to them, also what is important in a service industry is to be linked with popular clients, this in turn help attracting more business (Thatchenkery et al., 2005).
In 2003, the top Indian software exporters were Infosys, Tata consultancy services, Wipro, Satyam and HCL accounting of nearly 35 percent of the total software exports. From the Indian perspective the top software exporters acted as brand ambassadors for the whole IT industry in India. These firms soon moved close to their clients in US, UK, Australia etc., to improve their client relationship and develop more business. By this time most of the Fortune 500 companies had their IT requirements outsourced to India; India was now growing and the market maturing fast (Thatchenkery et al., 2005).
Government Acts and Policies
The Indian government provided great support to the Indian IT industry since the beginning. Indian government had realized that the sector had excellent potential and could be developed if considerable investments were made. Indian government encouraged foreign associations by offering tax breaks and other financial and non-financial incentives to multinational investors in software exports (Tessler et al. 2003) as a result almost all major IT firms and many other leading multinationals have set up their software subsidiaries in India. Government had helped deliver infrastructure to the clusters, as mentioned in the previous section, assuming that clusters enables rapid exchange of information and knowledge, like best practices and market opportunities. Government also improved the linkages by offering legislation acts to meet global standards. For example, India has passed increasingly strong anti-piracy/copyright legislation for software in 1984, 1994 and 2000 (Heeks and Nicholson, 2004).
In 1997, the Indian government, after getting good returns of over $ 1 billion from the software sector, was determined in developing this sector into a major industry and set up the National Taskforce on Information Technology and Software Development whose aim was to ‘formulate the draft of a national informatics policy'. The Taskforce was to produce action plans on software and hardware sector and initially made 108 recommendations (Kambhampati, 2002). The ICT sector had several problems, including inadequate quality and skills of graduates, rising salaries and weak infrastructure, which results in frequent power shortages, low level of PC use and internet penetration, low level of domestic technology development, limited bandwidth, inadequate availability of venture capital and limited domestic market for knowledge based technology and products (Parthasarthy and Joseph, 2002). Recognizing the significance of infrastructure and human resources in the development of the software industry, the taskforce aimed to improve computer literacy by encouraging use of computers and adding IT to education. They also initiated high-speed datacom links in this industry to meet their needs in the first instance.
The Indian government also made number of policies to develop the software industry in India, especially exports. In 1981, government introduced the Software Export Policy which allowed the firms to import hardware to write software. It also provided the facility to import ‘loaned' computers for software exporters. The Software policy act of 1986 further liberalised the import of hardware and also removed import duties on hardware for software exporters. Apart from this the government also introduced Income Tax Exemption Act in 1993 according to which software exports were exempted from tax; this was a significant support to the IT industry and encouraged huge number of new entrants into the business (Arora et al). The growth of Indian IT industry was observed to be nearly 50 percent per year. Although it can be argued that the Porter's diamond cannot be applied in the case of demand conditions, it should be noted that the reforms taken by government provided a much-needed boost to the industry and thus the huge growth.
Such acts and support encouraged many foreign and domestic investors to start up software companies in India. Saxenian's (2002) study found that half of Silicon Valley's India-born residents had business connections in India while one-quarter had invested in an Indian start-up (Heeks and Nicholson, 2004). India, as mentioned earlier did not have the adequate infrastructure and human resource to support the IT sector; however, due to the environment created by the government, India looked very attractive for investment. Government provided the facilities to develop the capabilities required to succeed in the IT sector and is perhaps the major reason why the Indian IT sector could shoot off.
India's strengths lie in the quality of education system it has. High quality maths and science education has produced a large number of scientists and engineers with good technical knowledge. A number of institutions provided skilled graduates, especially in Bangalore and Chennai supporting the software sector in those regions to a large extent, making recruitment easier and faster. Institutes like the IITs lead in providing technical education and many other universities have been constantly investing in improving the education system and developing the capabilities of students during the learning phase itself. It is also important to note that India also has a large number of good business schools that provide high quality management education. As the industry has grown we have also seen good corporate governance and organisational capabilities behind the success of many Indian IT firms. India is also ranked quite high in terms of cluster development, foreign technology sanctions and Government prioritization of ICT (Parthasarthy and Joseph, 2002; Mathur, 2007).
Current Market Scenario
The Indian IT industry has grown a lot over the since the 1980s. Back then the industry was mainly involved in onsite operations, however as the industry grew and the skills of the labour started to improved, more offshore operations begun. Heeks and Nicholson (2004) observed that
Heeks and Nicholson (2004), like other researchers, indicated that in 1980s most of the earnings were gained by short term contractual work done at client locations, also known as ‘bodyshopping', which was generally low tech coding work and after 2003 major part of the work was done offshore that is at the firm itself rather than working directly at the client location.
Today India leads the IT industry globally, a recent Mckinsey study showed that India has been the leading offshore destination during this period, and now accounts for 65 per cent of the global industry in offshore IT and 46 per cent of the global Business Process Offshoring (BPO) industry. It also highlights the key success factors of the Indian IT industry (Mckinsey, 2005).
The industry has the same main market, the USA, and made use of good client - vendor relationship to continue its growth. Parthasarthy and Joseph (2002) argued that the Indian IT industry is not only an outsourcing base but a great market with significant domestic consumption with the annual growth rate between twenty to twenty two percent in information technology services and about fifty five percent in IT enabled services (ITES), such as call centres and BPOs (Business Process Outsourcing) (Mathur, 2007). This, however, was not the case when the industry started its exports but slowly the domestic sector also started to grow although the domestic market is still smaller than the export market and within the commercial sector, automation of operations in banks and use of Enterprise Resource Planning (ERP) and other IT solutions to improve productivity is being pursued (Parthasarthy and Joseph, 2002). Almost all banks have been networked around the country and though large firms are leading the way, the small and medium-sized enterprises (SMEs) and home sector are growing fast (Kambhampati, 2002). This kind of trend shows that Indian IT firms are now slowly learning the methods of product designing and improving their organisational skills.
Arora and Athreye (2002) argue that software companies have come to represent models of good corporate governance that other enterprises can and increasingly emulate. This creates productivity spillovers to other sectors. Among the practices the authors cite are: (i) increased investment in staff training; (ii) incentive pay linked to corporate performance;(iii) flat hierarchies and team organization, designed to encourage knowledge sharing (iv)IT sector in promoting entrepreneurship. Such practices clearly indicate the organisational capabilities that the Indian firms have been developing over the time. In fact many IT companies like Infosys, TCS, Wipro, and Cognizant have reuse repository that stores a large database of high standard programs which may have possible reuse in future (Arora and Athreye, 2002).
Today, a majority of the companies in India have already aligned their internal processes and practices to international standards such as ISO, CMM (Capability Maturity Model for Software), Six Sigma, etc., which has helped establish India as a credible sourcing destination. As of December 2005, over 400 Indian companies had acquired quality certifications with 82 companies certified at SEI CMM (Software Engineering Institute Capability Maturity Model) Level 5 - higher than any other country in the world.
The Indian BPOs (ITES) are also moving up the value chain by managing high end data for airline information, insurance, and banking sector, enterprise resource planning, among others (Parthasarthy and Joseph, 2002; Mathur, 2007). Some of the companies are already able to manage considerably higher value added segments such as mission- critical applications, development and support, product design, HR Management, knowledge process outsourcing for pharmaceutical companies and other large complex projects. Indian firms have gradually displayed their technological and project management capabilities by effectively finishing turnkey projects (Mathur, 2007; Nasscom McKinsey Report).
In the coming years, developments in the IT sector will progressively require more educated engineers, efficient telecommunication services, continuous power supply and venture capital needs. There has also been increase in the wages of the employees in the sector and the possibility of this trend to continue in the times to come is quite high. This may affect India's cost advantage in relation to other follower nations like China, Russia, Philippines, and Mexico, in the IT business of software exports of products and services. Current HR trends within the IT-ITES industry suggest that the industry will require more than 8 million IT professionals and 2.2 million ITES-BPO professionals by 2011(Nasscom Strategic Review, 2009); the Indian IT industry has to take adequate steps to develop talent, particularly among college students so as to involve in high level work and innovative new products(Mathur, 2007).
The Indian IT industry is already on the course of the innovation. A number of companies in India have decided to take the path of innovation using various techniques. Customers are looking forward to enhance the services being provided by the companies and other methods of innovation to reduce costs and to satisfy the customers it is of great importance for the companies to achieve some level of innovation in their company. There have been a number of new product development strategies, Customer Response Initiatives, Marketing, building brands etc to improve innovation by the Indian companies. Nasscom together with IT industry has taken the initiative and is working on improving the innovation of IT industry for the past few years. Along with these organizations, employees of the companies in India also have freedom to give new ideas of innovation. Other than these, Companies also encourage the employees towards out of box thinking and other learning processes to develop new skills and work towards innovation. Till date only Tier 1 players are facing the pressures of innovation from their clients while Tier 2 and Tier 3 companies are lagging behind in the growth through innovation. Nasscom has suggested the Innovation ecosystem in which there are stakeholders like firms and entrepreneurs, investors, government bodies, and education and research institutions. According to them poor performance of any of the above stakeholders will leave the ecosystem unfavourable for further growth. To make sure innovation has its growth continued there should be various initiatives to be taken in the future. One of them started by Nasscom is the Innovation Awards. Nasscom innovation award allows companies to show the level of innovation being practiced in the companies and to encourage innovation across IT industry. Other than this government should also support innovation by helping small or medium sized companies in their funding for efficient R&D practices. There should be patents and copyright policies for the Innovative ideas. There is still a lot of scope in future growth of IT industry through Innovation.
Resource Based View and Core Competences
Resource based view can be used to find out the overall strategic capability. To understand the strategic capability it is important to understand the different kinds of resources. According to Johnson et al, resources can be differentiated into tangible and intangible resources. The tangible resource consists of the physical assets of an organization such as machines, buildings, labour, capital etc. The intangible assets on the other hand are the non-physical assets like information, reputation and knowledge. Resources can be identified as:
Physical Resources - These can be the plant, plant capacity, natural resources and location.
Financial Resources - These can be like capital, debtors, suppliers of money, cash etc.
Human Resources - These include both numbers and mix of the people in the firm or the industry. Human resource also represents the intangible resource like the skills, knowledge and experience.
Intellectual Capital - This is an intangible resource and includes patents, brands and customer databases.
The resources can be further categorised to serve different strategic capabilities:
Threshold resources - These are the resources that are needed to meet the minimum requirements to survive in the industry.
Threshold competences - These are the processes and activities that need to be applied to the resources to serve the minimum requirements of the industry.
Unique resources - These are the resources that serve as competitive advantage over the competitors and are difficult to imitate or obtain.
Core competences - These are the activities that serve as competitive advantage over the competitors and are difficult to imitate or obtain.
Determining the sustainable competitive advantage
To check if the core competences are sustainable we need to check the robustness of the competences. Identifying the complexity, the culture and history, and casual ambiguity of the competences can help determine its robustness. It is important to have at least one sustainable competitive advantage to compete in an industry. In case of the Indian IT industry it will be important to have more than one sustainable advantage in whole industry so as to compete on the global scale as will be discussed later.
The Indian IT industry has clearly been a late industrialising sector and a number of factors have been discussed that has helped it reach where it stands today. No doubt the growing industry has helped it grow very large but there were other efforts behind this growth too. The East Asian Model discussed above gives good insight of how developing countries could learn technologies and develop capabilities to compete in the global scale. The literature gives various indications to compare the Indian IT industry with other East Asian countries like Korea and China, in fact with the model itself, despite the fact that the Indian IT industry is a service industry and Korea and China have developed in the manufacturing industry. Lastly, the resource based view is discussed which is used to identify the strategic capability of an industry or a firm. This can be used to develop future strategies for the Indian IT industry as will be discussed in the next chapter.