Though the IT boom has established India as a major player in BPO with huge foreign exchange earning during the last one decade, whether this has brought in any durable and long lasting benefits is a matter of conjecture. The economic upturn contributed by higher wages to those engaged by the IT industry had a spread effect and the entire manufacturing and service sectors had to face the salary "inflation" entailing a significantly higher outgo on account of human resources employed by them. During the last 5 years salary range for employed people showed almost 100-200% increase which is indeed a burden on the small scale industries and contributed to some inflationary pressure on the price front. From the perspectives of many experts, the indigenous innovation potential has been severely hampered by the BPO system.
"There are historical reasons that starting a business in India is difficult. During British rule, imperial interests dictated economic activity; after independence in 1947, central planning stifled entrepreneurship through burdensome licensing and direct state ownership of companies and banks. Businesses found that currying favor with policy makers was more important than innovating. And import restrictions made it hard to acquire machinery, parts or technology. Inventors came up with ingenious ways to overcome obstacles and scarcity — a talent Indians used the Hindi word "jugaad" (pronounced jewgard) to describe. But the products that resulted from such improvisation were often inferior to those available outside India".
It is indisputable that "Made in India" label does not inspire any confidence contributing to the mindset of the consumer that "foreign" is always good! One of the main reasons for the industrial products in India being castigated for their poor quality is insufficient research on materials and the prevalent lack of priority for R & D in different sectors. Even the existing R & D inputs, mostly under public funding, are wasted on irrelevant priorities with no commercial potential. Unless the S & T priorities are reworked keeping in view their long term application and utilization potential, the present "no-win" situation is likely to be perpetuated.