Performance of Knowledge-Intensive Business Services (KIBS) in India

Purpose The growing importance of knowledge and innovation in the present era motivated the author to study knowledge-intensive business services (KIBS) in general and the case of India in particular. The objective of this paper is to track in brief the strength of India's economy, which if harnessed properly can lead to its transition to a knowledge economy. More specifically, the paper tries to address two important questions: 1) What constitutes knowledge-intensive services (KIS) and KIBS? And 2) How has KIBS been performing in India? Methodology The paper makes use of secondary sources of data including various reports, books and journals, and statistical tools. An attempt has been made in this paper to review those studies which try to define KIS and KIBS. The data analysis of KIBS in the case of India has been done for the periods 02-2001 and 12-2011 for which information was available from various reports by the Central Statistical Organization, National Accounts Statistics. Findings and implications The paper concludes that no unanimously accepted definition of KIBS has been given so far. In India's context, "business services include services like computer-related services, R&D, accounting services and legal services and renting of machinery in order of importance (shares) as per India's National Accounts". An analysis of performance of KIBS in India shows that among KIBS there are two T-KIBs (with a technology base), namely IT and ITeS, and that R&D services occupy the first and second position in India's GDP, originating from business services (KIBS). R&D services registered the highest average annual growth rate followed by computer-related services, renting of machinery, legal services and accounting and auditing services during the seven-year period from 05-2004 to 12-2011. However, the compound annual growth rate (CAGR) was highest in the case of R&D services followed by renting of machinery, computer-related services, legal and accountancy and auditing services. KIBS registered a CAGR of % 13.04, which was higher compared to overall GDP growth rate (at % 7.36), and also compared to the CAGR of the real estate and ownership of dwellings and business services segment as a whole (% 7.62). Therefore, there is a need to tap the potential of all these KIBS i.e. KI high-tech services (KIHTS) and KI marketing services (KIMS) taken in the study through policy initiatives. There is also a need to deal with emerging issues and challenges in KIBS, especially in KITHS Originality/value Although there is empirical research on the KIS and KIBS of European Economies, KIBS in India has not received much research attention. This paper will therefore mainly focus on the performance of KIBS in India.