Role of foreign MNCs in technological activities of India’s IT services industry: an analysis from patent granted data

ABSTRACT

India has now become one of the biggest sourcing countries for engineers and scientists. More than 25 per cent of all worldwide patent sourcing by the US companies has at least one inventor from India or China. This paper is a fresh attempt to discuss different aspects of measuring technological activities of Indian IT services industry with the help of detailed patent granted data, particularly first name inventor (FNI). The Indian IT industry has experienced several transformations. After the economic reforms of 1991, the presence of foreign MNCs in this industry started rising. Presently, the industry is dominated by foreign MNCs in terms of patent applications, the patent granted, and software exports. The study found that more than 50 per cent of patents granted to IT companies by the USPTO has at least one First Name Inventor from India. Results also show that the industry has become the world’s largest sourcing destination for foreign MNCs. Today, almost all big foreign MNCs from all over the world, including IBM, Apple, Qualcomm, Samsung and Nokia have established their subsidiary in India. Bangalore has become the most desired destinations for foreign MNCs.

KEYWORDS:

• Foreign MNCs
• technological activities
• first Name inventor
• patent granted
• IT services industry

Acknowledgement

I am extremely grateful to my PhD supervisor, Prof. Sunil Mani for his guidance and suggestions. I would like to thank Aparna Sharma (IIT Indore) for helping in data section part and Krishnapriya V. S. (CDS Trivandrum) for reviewing very first draft of this article. I also thank two anonymous referees for their valuable comments and feedback.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 India’s IT services industry is one of the few achieving sectors in terms of a globally competitive industry, generated large scale of job opportunities, encouraged innovation. Other achieving sectors include Indian pharmaceutical and motor vehicles.

2 We have defined MNCs based on three parameters. First, a firm whose overseas equity share is 10 per cent or more (This threshold is suggested and used by IMF and was adopted by RBI, effective 1992). Second, the company should come under the private (foreign) ownership group. Third, a company whose foreign association is denoted in the Prowess with ownership group ‘(F)’ (Anand, 2020, p. 25).

Additional information

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Anurag Anand

Anurag Anand works in the Centre for Development Studies, Trivandrum, India.