Globalization and Relative Compensation in India’s Information Technology Sector

Abstract

This article evaluates the relationship between foreign earnings and wage share for a large number of information technology–sector firms in India over a recent six-year period. The results that are established, after accounting for the fact that exporting is an endogenous phenomenon, show that the foreign earnings and wage share relationship is positive and significant for Indian firms during the entire period of analysis. In general, there has been disquiet that the gains from growth are not shared with employees, and that other firm stakeholders appropriate these gains. The firms that are actively engaged in the global information technology economy have, in part, been cognizant of providing higher rewards to their key human capital resources, and the consequences of globalization have been positive for the employees of Indian information technology firms.