This paper outlines a new and important role for the software and information technology services sector in India's economic development. It argues that this sector brings world-class IT and western expertise on how to use it, which leads to rapid improvements in Indian firms' ability to compete in world markets. This depends on the transfer of tacit knowledge that developed country firms have accumulated through years of experimentation and experience; knowledge that these firms generally do not want to share. Acting as an indirect route for this knowledge to reach Indian firms, the software and IT services sector should be both treasured and nurtured.
