Impact of Diversification on Performance of Top Indian ICT Outsourcing Firms: An Entropy Analysis

Abstract

Indian outsourcing industry undeterred by recent plummeting growth of global ICT market is experiencing robust growth. Indian ICT firms, by and large, follow success breed success formula by replicating the strategies adopted by the leaders in the market. Two top Indian ICT outsourcing firms have adopted diversification strategy to expand their presence in multiple industry verticals across geographies by offering a diversified range of services. This study, using an entropy analysis, measures the degree of diversification of the top two and most successful Indian outsourcing firm in five different dimensions. The second part of the study analyzes the overall impact of diversification on the performance of the firm. This study reveals that although overall diversification signifies a positive impact on the firm performance, each dimension leaves a different impact on the different firms’ performance.