Comparing Chinese and the Indian Software MNCs: Domestic and Export Market Strategies and their Interplay

Jorge Niosi & F. Ted Tschang


China and India are emerging as major new entrants in the international software industry. Both are rapidly learning through outsourcing with multinational enterprises from advanced nations. Yet, their paths to this dynamic sector are very different. Chinese software firms have focused on their domestic market by working with foreign MNCs, while they move cautiously abroad. Indian firms, despite already being large, continue to expand overseas as well as to climb the value chain. We show that a macro perspective on the global movement of work can be gained by utilizing concepts from different approaches to the MNC. At the same time, the innovation systems perspective is necessary to explain the foundations of the industry. The paper provides hypotheses and performs an initial validation of them. It concludes that the internationalization and learning processes are somewhat different in the Chinese and Indian MNCs, and provides explanations for the different patterns.

Key words: Outsourcing, software industry, industrial development, multinational enterprise

JEL Classification: P45, O14, O32, L23

UNU-MERIT Working Papers ISSN 1871-9872