Ravinder Kumar Zutshi of Long Island University From: 2005 ISPIM Innovation Conference (Porto) Arguments are made for and against global outsourcing. Locational advantages allow firms to reduce their cost structure and improve their competitive position thus adding to consumer value. Others argue that this value is merely transfer of incomes from the workers to consumers but overall social welfare suffers. Transfer of marginal jobs to low wage countries leads to dependant capitalism low labor productivity being sustained by low wages. Technology absorption is critical to increase in social welfare. In knowledge intensive industries innovation focus is critical to sustaining cost reduction in the long term. In recent years IT and IT enabled services are being off-shored, leading to loss of white collar jobs in the developed countries. Many scholars in the developed countries about the hollowing out of the economies and conclude that free trade may not be to the advantage of the developed world. This paper reviews the growth of IT and IT enabled services in India. Indian IT industry is populated by local as well as foreign firms. The paper reviews the competitive positioning of the local and the foreign firms. It aims to collect in-depth data from US SMEs outsourcing or off-shoring to India. An extensive instrument was developed and has been pilot tested. Using this instrument we have conducted in-depth study of two firms which are reported in this paper. A full version of this document is not available for purchase or download.