This paper considers the recent boom in IT-driven offshoring in India and examines the potential for this to become a major source of economic growth in the future. Currently there is much optimism about the benefits that the new trend can bring to India and other similarly placed countries, as growth in services is seen as more likely to deliver employment, income and export revenue increases than growth in the commodity producing sectors. But such optimism may be misplaced given the relatively small share of this sector in total output and employment, as well as the difficulties of sustaining growth in the area. Most importantly, focus on this potential should not allow the government to ignore jobless growth in other sectors.

December 20, 2007.