The service sector has emerged as the fastest growing sector across the world, especially
during the period 1990-2003 when it grew by 6% per annum. This phenomenon was
the result of the influx of Foreign Direct Investment (FDI) and of the decline in the
agriculture sector which was predominant amongst all sectors for quite a number of
years (Banga, 2005). According to the World Bank (2010), India is a low-middle-income
economy based on per capita income. However, during 2000-06, the Indian economy
entered a high-growth phase, averaging 7% per annum (Mohan, 2008). This was made
possible with the development of Indian service sector that merely contributed about
51% of Gross Domestic Product (GDP). One of the reasons for the sudden growth in
the services sector in India in the nineties was the liberalization policy in the regulatory
framework that gave rise to innovation and higher exports from the services sector
(Raman et al., 2010). From this perspective, the contribution of Information Technology
sector has been quite significant for the consistent growth of Indian economy. The
phenomenal growth of the Information Technology Software and Services (ITSS) and
Information Technology Enabled Service (ITES) – Business Process Outsourcing (BPO)
sector in India has had a perceptible multiplier effect on the Indian economy as a whole.
In addition to the direct positive impact on national income and employment generation,
the sector has spawned the mushrooming of several ancillary industries, triggering a
rise in direct-tax collections and propelling an increase in consumer spending, thanks
to the significantly higher disposable incomes (Singh, 2008, p. 242).
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