This change from domestic to transnational ownership [...] is a concern for the long-term development of the industry, as well as for India more broadly.

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Second, a captive-dominated industry primarily exporting ITES is far less embedded in the economy and therefore less developmental as well as more unstable. [...] TNCs are likely to see their captives in India - no matter how large - as peripheral to their core, higher-end service operations. They would thus not think twice about closing or downsizing their operations in India and moving them to another destination (off-offshoring) [...] The risk of off-offshoring is increased by TNCs primarily being engaged in ITES exports. As ITES requires labour with fewer skills and less training, there are far more destinations for TNCs to recruit to. With software services, the pool is far more limited. [...]

Third, the shift from local firms to TNCs has a number of deleterious effects on the wider Indian economy. Due to the repatriation of profits by TNCs, there will be considerable leakage from the economy of the foreign exchange generated by the industry. In addition, due to the intra-firm migration practised by the Giants, such an industry will exacerbate the brain drain, leaving an acute shortage of highly skilled persons in India. And finally, the Indian state and Indian firms will be forced to rely on Giants rather than local firms for their large IT projects. This will significantly raise the costs of such projects, possibly to prohibitive levels, and thereby further impede the diffusion and adoption of IT across the country.