Efficiency Measurement in the Indian IT Industry using Data Envelopment Analysis

Authors

  • Mihir Dash
  • Priyanka Yadav
  • M. Bala Kumar
  • Kanika Jhalani
  • Pritam Mondal
  • Srujan Babu
  • S. Sahana
  • Nithin M.

DOI:

https://doi.org/10.37591/rrjost.v7i3.1672

Abstract

Abstract
India is the world’s largest sourcing destination for the information technology (IT) industry. The industry has increased its contribution to India’s GDP from 1.2% in 1998 to about 9.5% in 2015. India is now one of the biggest IT hubs of the world, and all the major global players in the IT industry are present in the country. The industry employs about ten million Indians and has contributed significantly to India’s social and economic transformation. The industry has not only transformed India’s image on the global platform, but it has also fuelled economic growth by energizing the higher education sector especially in engineering and computer science. India’s cost competitiveness in providing IT services, providing cost savings of 60–70% as compared to the source countries, continues to be its unique selling proposition in the global sourcing market. There is intense competitive rivalry in the Indian IT industry due to relatively undifferentiated services amongst the larger IT companies in the domestic market and low switching costs between companies. Further, the threat of entry is moderate/high, as it is relatively easy to set up a small IT company, and the capital required to set up the company is relatively low; however, due to the dominance of large players in the domestic market, small and medium players are generally unable to secure large deals. A major challenge for IT companies is that of achieving operational efficiency. Operational efficiency is necessary for IT companies to maintain their competitive advantage. This study proposes a model for efficiency measurement in the Indian IT industry using Data Envelopment Analysis. The inputs considered include operational expenditure, capital expenditure, number of employees/employee expenditure, research & development expenditure, and expenditure in forex, while the outputs considered include total revenue and revenue in forex.
Keywords: Efficiency measurement, data envelopment analysis, Indian IT industry

Downloads

Published

2019-02-08

Issue

Vol. 7 No. 3 (2018)

Section

Research Article

License

Declaration and Copyright Transfer Form

(to be completed by authors)

I/ We, the undersigned author(s) of the submitted manuscript, hereby declare, that the above manuscript which is submitted for publication in the STM Journals(s), is not published already in part or whole (except in the form of abstract) in any journal or magazine for private or public circulation, and, is not under consideration of publication elsewhere.

  • I/We will not withdraw the manuscript after 1 week of submission as I have read the Author Guidelines and will adhere to the guidelines.
  • I/We Author(s ) have niether given nor will give this manuscript elsewhere for publishing after submitting in STM Journal(s).
  • I/ We have read the original version of the manuscript and am/ are responsible for the thought contents embodied in it. The work dealt in the manuscript is my/ our own, and my/ our individual contribution to this work is significant enough to qualify for authorship.
  •  I/We also agree to the authorship of the article in the following order:

Author’s name                                    

 

1. ________________

2. ________________

3. ________________

4. ________________

 

We  Author(s) tick this box and would request you to consider it as our signature as we agree to the terms of this Copyright Notice, which will apply to this submission if and when it is published by this journal.