What is the role of information technology (IT) industry in the economic development of India?

Information technology is of recent origin, but it is spreading fast in India. However, India has a long way to go before it can catch up with the developed countries.

In the information technology (IT) sector, outsourcing has acquired an international dimension. US firms find it more profitable to contract IT software and services in developing countries like India and China. The costs for these services in developing countries are much less than in the developed world. A recent study by McKinsey has estimated that every dollar spent on off-shoring (outsourcing) implies a cost reduction of 58 cents to US business. Thus, US firms and those in the European Union regularly carry out contracts with IT firms in India.

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