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Indian IT and ICT Industry: A Performance Analysis Using Data Envelopment Analysis and Malmquist Index

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  • Mathur Somesh

    (Research and Information System for Non-Aligned and Other Developing Countries)

Abstract

The present study gives an account of IT and ICT infrastructure in India and points out the reasons for the boom in the IT exports and outsourcing business today and in times to come. The article analyzes the performances of the Indian IT industry by working out the technical efficiency of the software and telecommunication firms using the mathematical model of the Data Envelopment Analysis (DEA). The DEA is a non linear programming way of calculating technical efficiency of the decision making units. The study also examines the impact of various determinants on technical efficiency of software firms and net exports across the IT firms and further examines the determinants for new technology adoption by telecommunication industries, because the success of the software firms in terms of its exports is intertwined with the performance of telecommunication industry. The study uses a Malmquist index to estimate total factor productivity (TFP) change for the common set of software firms existing between 1996 and 2006 using a prowess data base. The total factor productivity is decomposed into efficiency change (catching up phenomena) and technical change (innovations) for the common set of software firms existing between 1996 and 2006 in India. At the end the study works out the performance of the Indian ICT sector in comparison with countries which are front runners using the DEA and global information technology report 2006 data base. The study will quantify the changes needed in the relatively good Indian ICT environment and ICT readiness to increase its ICT usage among individuals, business and government. The article confirms the improvements in productivity, efficiency, and technical change of the Indian Software industry from 1996 to 2006.

Suggested Citation

  • Mathur Somesh, 2007. "Indian IT and ICT Industry: A Performance Analysis Using Data Envelopment Analysis and Malmquist Index," Global Economy Journal, De Gruyter, vol. 7(2), pages 1-42, June.
    • Handle: RePEc:bpj:glecon:v:7:y:2007:i:2:n:3
    DOI: 10.2202/1524-5861.1259
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    References listed on IDEAS

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    1. Somesh K. Mathur, 2005. "Economic Growth and Conditional Convergence: Its Speed For Selected Regions For 1961-2001," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 40(2), pages 185-208, December.
    2. Somesh Kumar Mathur, 2005. "Absolute and Conditional Convergence: Its Speed for Selected Countries for 1961--2001," Macroeconomics 0510023, University Library of Munich, Germany.
    3. Schware, Robert, 1992. "Software industry entry strategies for developing countries: A "walking on two legs" proposition," World Development, Elsevier, vol. 20(2), pages 143-164, February.
    4. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
    5. Daniel Stavarek, 2005. "Efficiency of Banks in Regions at Different Stage of European Integration Process," Finance 0502020, University Library of Munich, Germany.
    6. John Ruggiero, 2001. "Determining The Base Cost Of Education: An Analysis Of Ohio School Districts," Contemporary Economic Policy, Western Economic Association International, vol. 19(3), pages 268-279, July.
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    Cited by:

    1. Sumit Majumdar & Davina Vora & Ashok Nag, 2012. "Legal form of the firm and overseas market choice in India’s software and IT industry," Asia Pacific Journal of Management, Springer, vol. 29(3), pages 659-687, September.
    2. Qiao Guangshun, 2023. "Survival of the Fittest: The Long-run Productivity Analysis of the Listed Information Technology Companies in the US Stock Market," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 17(1), pages 1-11, January.
    3. Fazıl Gökgöz & Mustafa Taylan Güvercin, 2018. "Investigating the total factor productivity changes in the top ICT companies worldwide," Electronic Commerce Research, Springer, vol. 18(4), pages 791-811, December.
    4. Tulika Bhattacharya & Meenakshi Rajeev & Indrajit Bairagya, 2018. "Are high-linked sectors more productive in India? An analysis under an input–output framework," Indian Economic Review, Springer, vol. 53(1), pages 333-367, December.
    5. Somesh K. Mathur, 2009. "Financial Analysis of the ICT Industry," Journal of Infrastructure Development, India Development Foundation, vol. 1(1), pages 17-43, June.

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