Institutions Innovations and the Labour Market: The case of IT sector in India

1. Institutions Innovations and the Labour Market: The case of IT sector in India Nadhanael. G.V ICSSR- PhD Scholar Centre for Development Studies Trivandrum, Kerala, India

2. Outline • The context • The problem • The Questions • The Approach • Empirical Approach and data sources nadhanael@cds.ac.in

3. The context As economies continue to move towards “knowledge-based societies”, the role of knowledge workers and information workers becomes increasingly crucial (OECD, 2001). nadhanael@cds.ac.in

4. The context • ICT Revolution and Role of ICT as a GPT and a Sector • Rapidly growing IT sector in India • GDP Contribution 0.72 per cent in 1997-98 to 2.38 percent in 2002 - 03. • Share of Exports have increased from 4.9 per cent to above 20 per cent (Saith and Vijayabaskar 2001). • Huge Potential is expected in terms of employment generation ( 6 million jobs to be generated by 2008) (NASSCOM-McKinsey Study 2002) nadhanael@cds.ac.in

5. What has been studied… • Focuses Mainly on • Structure of the Industry (Heeks 1996) • Growth and Export Performance (Athreye 2002, D’Costa 2004) • Competitiveness and Innovative Capacity (Joseph and Abraham 2005, Mani 2005, Parthasarathy 2004). • Industry academia interaction (D’ Costa 2006) • Labour Market Implications nadhanael@cds.ac.in

6. Missing Link…. • ‘How’ did India Achieve competitiveness is not explored • Changing role of Agents along with the growth of the industry is not analyzed • Literature in silent on the emergence of new institutions and innovations in labour market nadhanael@cds.ac.in

7. Why this should receive focus • Future growth prospects depends upon learning from the present situation • Other countries look at India as an example to emulate nadhanael@cds.ac.in

8. Role of Skilled Workers • Skill of the workforce is the major source of competitive advantage in IT • Value addition is largely done by Labour • The single major factor led to the growth of IT sector in India is the availability of skilled manpower (ILO 2001) • Learning and innovation at the workplace contribute to the competitiveness of the firm (Lundvall et al 2006) nadhanael@cds.ac.in

9. The Questions 1. How did India develop a skill base • The role of • Agents: State and Private • Institutions • Interaction This is essentially an analysis of Skill formation mechanism within the National Innovation System and its contribution to IT competitiveness nadhanael@cds.ac.in

10. The Questions 2. How the role of Different Institutions catering to skill supply change along the growth of the industry nadhanael@cds.ac.in

11. The Questions 3. What are the emerging institutions and innovations in the labour market with regard to supply and management of skills. How does firm’s strategy work under conditions of Imperfect labour market nadhanael@cds.ac.in

12. Thank you nadhanael@cds.ac.in

13. Empirical Approach • Analysis of state policy towards education • Initiatives for higher and technical education • Initiatives for Building up computer manpower • Changing role of public and private sector on education nadhanael@cds.ac.in

14. Empirical Approach • Data • Budgeted analysis of government expenditure • IAMR data base • NTIMS and AIU surveys nadhanael@cds.ac.in

15. Empirical Approach • Analysis of structure of labour supply • NSSO Unit Level data • Probit analysis for 3 period of time corresponding to 3 different phases of growth of the sector nadhanael@cds.ac.in

16. Imperfect labour market • Increasing unemployment of engineering graduates • Skill shortage for the industry (Athreye 2006) • Increasing and exogenously determined wages • High level of attrition nadhanael@cds.ac.in

17. Empirical Approach • Innovations in labour market happens at three stages • Recruitment : Industry academia interaction • Contract • Work design • Case Study approach with firms being selected from different type of IT products • Scheduled interviews with HR personal • Sample survey among the workers nadhanael@cds.ac.in

18. Innovation systems broadly defined not only include product market and process innovations but also include a wide spectrum of managerial and organizational innovations at the enterprise level, labour market innovations and social and institutional innovations at the national level Freeman (1987). nadhanael@cds.ac.in