A new development in service exports is the explosive growth of business services including professional services. In India, the IT industry forms the major share of foreign exchange earnings. This paper analyzes the performance of individual or standalone firms and business group affiliated firms in the IT industry and tries to give insight into what propels service exports in India.

Over a period of time, India has established itself as a preferred global sourcing base in these segments and they are expected to continue to fuel growth in the future. The Indian ITES and Business Process Outsourcing (BPO) have shown their virtue mainly in terms of cost advantage and fundamentally-powered value proposition in the international market.

Therfore, it is interesting to understand the factors affecting the exports in the service sector. Also it is worth noting whether all the firms, i.e., both individual and business group affiliated in the service industry perform similarly in terms of exports. Hence, the theme of the study is justified.

Export performance is always a key indicator and factor for emerging as a powerful economy in the global market (Riain, 2006). The results of the earlier study conducted by Poh (1987) show that there is a strong positive correlation between growth sectors and export performance.

Export performance can be measured with the use of export intensity (exports divided by sales), export growth or financial profitability of export operations (Ogunmokun and Simone, 2004).

A study has been conducted on IT firms of India (Siddharthan and Nollen, 2004) to find out the impact of firm size and capital intensity on export performance of firms and compare their performance based on whether they are affiliates of multinational enterprises or they are domestic or foreign licensee firms. The researchers have considered the factors like technology import, import of capital goods and raw materials, size, capital output, Foreign Direct Investment (FDI), etc., as factors affecting exports. Also Bhaduri and Ray (2004) have considered technological capability, import of raw materials, intermediate inputs, firm size, ownership and age as factors affecting export function, while analyzing the pharmaceutical and electrical/electronics firms of India. Also Kakani et al. (2001) have used international diversification as factor influencing firm performance which is a clear indicator of firms exposure to international markets which is utilized to integrate operations across national markets, achieve enhanced benefits of innovation and economies of scale. Firms can be independent/standalone or can be under business groups. Khanna and Palepu (2000) state that the business group firms outperform the standalone firms.

Management Research Journal, Indian IT Industry, Retail Banking, Financial Services Industries, Internet Banking, Word-of-mouth Advertising, Banking Industry, Customer Satisfaction, Information Technology Enabled Services, Business Process Outsourcing, BPO, Global Markets, Foreign Direct Investments, FDIs, International Markets, Multiple Regression Analysis, International Markets.