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Factor Markets - Indian It

In: Business and Management

Submitted By rjain9177
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Factor Markets in Indian IT Industry
The following case-let is an attempt to understand the applicability of the concepts of “Labor factor markets” in the context of the country’s Information Technology (IT) industry. The Indian IT industry started in the early 70’s, grew in the early 80’s and 90’s and boomed in the late 90’s. The boom started with the Y2K problems and brought with it the internet / web era where every organization in the world wanted to have a web footprint in the form of a website (e-commerce site in a business language) and this continued until the early 2005’s. Until early 2005, the industry had collected so much data through its e-commerce sites that organizations now wanted to analyze historical data, establish consumer trends and leverage that data to make strategic business decisions, thus introducing “Business Intelligence” to the world. With the industry moving at such a high pace, there was indeed a huge demand for large but low cost workforces with IT knowhow that could translate standard / custom requirements into software solutions / products. By now, we can understand that IT programmers are the factors of production of this industry. (Hereafter, the words IT Programmer/software developer might be used interchangeably). The revenue model of the industry was different from others in the fact that maximum revenue was generated from junior software developers and as people moved into higher managerial roles the revenue generation in terms of self-billing kept decreasing to 0 at senior manager level and higher. The Indian IT industry is a perfect example of an industry where salaries vary by leaps and bounds. On one hand we have large corporations which can hire talent on an industrial scale but pay meagerly (Monopsony) while there are few firms that lookout for very niche skills and pay exorbitant salaries to its people. There is yet

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