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  01 MAIN
   
   
  02 TRADE & ECONOMY
   
   
  03 INVESTMENT UPDATE
   
   
  04 NEWSMAKERS
   
   
  05 INFOTECH
   
   
  06 CULTURE
   
   
  07 TRAVEL
   
   
  08 CALENDAR
   

   
  HIGHLIGHTS
   
 

FDI: Inflow's impressive growth
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  INTACH: Preserving Culture
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  Hampi Festival held
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  05. INFOTECH
 
  Study On “ICT Adoption and Productivity In Developing Countries: Brazil & India” Released
 
  NASSCOM in collaboration with IIM, Ahmedabad, University of Sao Paolo and the London Business School today released a study “ICT Adoption and Productivity in Developing Countries: Brazil & India”. The study investigates the determinants of ICT adoption and its impact on firm’ performance in the SMB segment in India and Brazil based on research across a thousand manufacturing firms in the two countries. It is a part of NASSCOM’s larger initiative to create a conducive IT ecosystem that enables Indian SMB’s to leverage the power of IT and become globally competitive.
 
 

     

Mr. Ramadorai, CEO, TCS and Chairperson, NASSCOM Domestic IT Market Committee said, “A robust domestic IT market is very important for the future growth of Indian IT. While the domestic IT market has been growing at a CAGR of 20 % recently, there remains tremendous latent demand which needs to be tapped. In India, there is a wide variability in IT adoption across verticals, regions & market segments ranging from sophisticated IT users to first time adopters. As a result, a ‘one size fit all’ approach may not work and the IT industry together with technology users needs to collaborate and identify pain-areas and create solutions to address them.”

“NASSCOM is very committed to the growth of the domestic IT market. We have constituted a committee with representatives from the IT industry, user industries and academic institutions to identify mechanisms and develop actionable plans for accelerating the growth of the domestic IT market.”

“Innovation will be critical not only in creating user specific products & solutions but also in developing new business models to deliver these solutions to end-users at affordable prices,” he added.

Rajdeep Sahrawat, Vice President, NASSCOM, said “Under NASSCOM’ focus on developing the domestic IT market, we have adopted a cluster development model where we will be collaborating with industry clusters to firstly identify the IT adoption challenges in the cluster and secondly prepare recommendations & action plans to address the user

  concerns. As part of this strategy, we are currently working with the auto component manufacturing industry. Going forward in 2007, we will be targeting other clusters including textiles, leather, agriculture, retail etc which have low IT adoption.”

Scope of the Study The study targets manufacturing firms in six key verticals:

• Auto-components
• Soaps and detergents
• Electrical components
• Machine tools
• Wearing apparels
• Plastic products

These verticals were picked not only because they provide significant variation in their production processes – and hence in their likely adoption of ICT – but also because they comprise a significant component of output and employment in manufacturing in both countries. In India, the six verticals account for nearly 17% of total manufacturing employment and over 20% of value added. In Brazil, these shares were around 30% and 32% respectively. India, firms were sampled in nine states. In Brazil, firms were sampled in seven regions.

Key findings of the Study The study provides an insight into the extent of ICT adoption at the firm level, examine the characteristics of firms adopting ICT and the consequences of adoption for performance.

Some key findings are:

• Brazilian firms have on average adopted more ICT than their Indian
  counterparts and use that ICT more intensively.

• Size of the firm not important for the share of production workers using
ICT-controlled machinery in Brazil, but the coefficient is both very significant and large in India. Larger Indian firms use more ICT intensive production processes relative to smaller Indian firms.

• In Brazil, older firms have higher ICT per worker and per unit of sales. In India age of the firm doesn’t matter

• Foreign ownership tend to be associated with higher adoption

• There are very high returns on ICT adoption. The high returns persist even after including skills, occupation, management practices and other controls.

• Reduction in organizational hierarchies is associated with higher returns to ICT in Brazil, and is directly positively related to productivity growth in India. The evidence also suggests that this positive effect only kicks in above a certain threshold level of adoption. Low intensity users of ICT – still a major share of firms in both Brazil and India - receive little or no positive impact.

• Institutional features of a region or state impact both ICT adoption decisions and returns to ICT adoption. A combination of weak institutions and infrastructure result in lower adoption and lower returns, particularly in India. However, organizations in India located in states with better institutions and infrastructure have returns to ICT that are close to those obtained by Brazilian firms.

• Firms in power disrupted States invest less in ICT

 

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