Issues in Financing of New Economy Firms in India

Table of Contents

1 Introduction

1.1Backgroud

1.2 Rational behind the Study

1.3 Objectives of the Study

1.4 Hypotheses

1.5 Study period and Data Sources

1.6 Methodology

1.7 Organization of the study

2 Literature Review

2.1 Introduction

2.2 Studies on development of software firms across the world and India.

2.3 Literature on Financing of Firms and Determinants of Capital Structure

2.4 Conclusions

3 An Analytical Review of Indian Software Industry

3.1 Introduction

3.2 Nature of New Economy Firms

3.3 Origin and Development of Indian Software Industry

3.4 Policies of Government for Promoting Software Industry

3.5 Role of Industry Organization NASSCOM

3.6 Distribution of Domestic IT Market

3.7 Overview of the Talent Pool Available In India

3.8 Conclusions

4 An Empirical Study of the Drivers of Software Industry Growth in India

4.1 Introduction

4.2 Drivers of Software Industry

4.3 Data Used for Analysis

4.4 Methodology and Model Used

4.5 Results and Discussion

4.6 Conclusions

5 Empirical Analysis of Growth of Software Industry during the Reforms Period

5.1 Introduction

5.2 Share of Software Services into Total Exports from India and Proportion of GDP

5.2.1 World of Software into Total Software Export

5.2.2 World Market for Computer Software and Services Export

5.2.3 Exporter Computer Services (Top 10 Firms)

5.3 Activity Wise Distribution of ITES/BPO Services

5.4 Trends in Software Growth of Software Industry in India

5.4.1 Indian Software Industry Growth Before and after Liberalization

5.4.2 Result Analysis and Discussions

5.4.3Testing Parameter Stability: Chow Test

5.5 Structural Changes in the Software Earning Regression

5.5.1 Unit Root Test

5.5.2 Phillip Perron Unit Root Test

5.5.3 Cointegration

5.5.4 Model Stability and Interpretation of the Results

5.6 Conclusions

6 Investigation of Employment and Export Earning Relationship in India

6.1 Introduction

6.2 Growth of IT-BPO Sector in India

6.2.1 Trends In IT-BPO Revenue and Employment

6.2.2 Indian Software Exports by Destination

6.3 Literature Review

6.4 Methodology and Data Analyisis

6.5 Conclusions

7 Trends and Issues in Financing of Software Firms in India

7.1 Introduction

7.2 Objectives, Data and Methodology

7.3 Background of the Study

7.3.1 International Studies

7.3.2 Domestic Studies

7.4 Trends in Financing of the Indian Software Firms

7.5 Financial Position of Indian Software Firms

7.5.1 Mean Comparison Test

7.6 Conclusions

8 Conclusions and Policy Suggestions

8.1 Introduction

8.2 Major Findings of the Study

8.2.1 An Analytical Review of Indian Software Industry

8.2.2 Role of Drivers of Software Industry

8.2.3 Empirical Testing of Impact of New Economic Reforms

8.2.4 Empirical Relationship Between Export and Employment in Software Industry

8.2.5 Issues in Financing of Software Firms

8.3 Policy Implications of the Study

8.4 Limitations of the Study

8.5 Scope for Further Study

Research Objectives and Focus

This study aims to investigate the contribution of Indian software firms to economic development, evaluate the impact of economic reforms on their growth, and identify the critical challenges these firms face regarding financing and operational infrastructure.

• Origin and development of the Indian software industry.
• Impact of economic reforms on industry growth and export earnings.
• Empirical relationship between IT-BPO export revenue and employment generation.
• Analysis of financing patterns and capital structure of Indian software firms.
• Policy recommendations for supporting the sustained growth of the software sector.

Excerpt from the Book

Summary of Chapters

1 Introduction: Provides the background and rationale for studying the Indian software industry, defining key research objectives and hypotheses.

2 Literature Review: Synthesizes academic literature on the development of software firms and corporate financing theories.

3 An Analytical Review of Indian Software Industry: Examines the origin, development, and current state of the software industry in India, including the role of government policy and NASSCOM.

4 An Empirical Study of the Drivers of Software Industry Growth in India: Uses econometric models to analyze macroeconomic and non-economic factors influencing industry growth.

5 Empirical Analysis of Growth of Software Industry during the Reforms Period: Assesses the impact of economic reforms on industry performance using structural change analysis.

6 Investigation of Employment and Export Earning Relationship in India: Explores the quantitative link between IT-BPO export revenues and employment intensity.

7 Trends and Issues in Financing of Software Firms in India: Investigates how new economy firms raise capital and the constraints they encounter in the domestic financial environment.

8 Conclusions and Policy Suggestions: Summarizes key findings and provides actionable policy recommendations to ensure future sector competitiveness.

Keywords

New Economy Firms, India, Software Industry, Dummy Variable Regression, Chow Test, Employment, Economic Reforms, Financing, Capital Structure, IT-BPO Sector, Export Revenue, Infrastructure, NASSCOM, Economic Growth, IT Infrastructure.

Frequently Asked Questions

What is the core focus of this research?

The research examines the development and financing of the Indian software industry since its inception, specifically focusing on the impact of economic reforms on its growth, export potential, and employment generation capacity.

What are the primary thematic areas covered in the work?

The study covers the origin of software firms in India, government promotional policies, econometric drivers of industry growth, the relationship between exports and employment, and the specific challenges faced in raising financial capital.

What is the primary research goal or central hypothesis?

The primary goal is to assess whether post-1991 economic reforms significantly impacted the growth potential of the Indian software industry and to determine which financial sources are most utilized by new technology-based firms.

What scientific methods are applied in this report?

The author employs a mix of descriptive analysis and econometric techniques, including ordinary least squares (OLS) regression, Chow tests for structural breaks, and logarithmic models to calculate Compounded Annual Growth Rates (CAGR).

What does the main body address regarding financial issues?

The main body investigates the capital structure of software firms, revealing a heavy reliance on internal finance and bank loans, while highlighting significant constraints in accessing alternative capital markets.

Which keywords best characterize this study?

Key terms include New Economy Firms, India, Software Industry, Dummy Variable Regression, Employment, Economic Reforms, and Financing.

How do infrastructure bottlenecks affect the industry?

The report notes that cities like Bangalore and Pune have reached saturation points; better urban planning and public-private partnerships are required to overcome constraints related to transport, power, and high-quality educational support.

What are the implications for human capital?

The study highlights a skills gap in fresh graduates and suggests that government and industry should collaborate on specialized "finishing schools" to better align engineering and management education with industry needs.