The report goes on to state that the value of many of the world’s most successful companies resides almost entirely in their KBC. In many OECD countries, business investment in knowledge-based capital (KBC) has increased faster than investment in physical capital (machinery, equipment, buildings). An Organisation for Economic Co-operation and Development (OECD) report titled New Sources of Growth: Knowledge-Based Capital released in May 2013, talks of the higher growth that results from business investment in non-physical assets such as research and development, data, software and patents. Vitally, it is a country’s performance in knowledge-based industries that will determine its place in the global economy in the coming decades. This competition fosters tremendous innovation and creativity which is the hallmark of the knowledge industry. Globally, the digital economy’s market leaders, Apple, Google, Microsoft, are companies that use very different business models. ![]() In the new era of lower growth, as Indian companies adjust to a completely different cost structure, the lack of differentiation between the biggest Indian IT services firms shows up in the similarity of their business models. ![]() Slowing demand and the collapse of the rouble as well as the decline in many east European currencies against the dollar means that the Indian software professional’s earnings capacity is severely dented. ![]() This last is vital to the supply of a large pool of trained programmers and coders. The wage advantages that stem from the lower cost of Indian software developers and gives the cost arbitrage to companies in the country is also complemented by the relatively higher salaries that this industry has offered professionals. Any serious slowdown also threatens the vital second leg of the paradigm on which the IT services success story has been built. As growth slows, its ability to act as a lever for services growth will also be seriously impacted. ![]() That this contribution comes on the back of a mere 10 million people employed directly or indirectly, makes it a vital driver for the economy. Currently, the IT industry accounts for 7% of gross domestic product (GDP) according to industry body NASSCOM, up from 1.2% in 1998.
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