In the last few years expenditure on information technology by organisations in developing countries such as India has risen substantially. During 1998-99 Indian organisations collectively spens US$5 billion on hardware, software, training and maintenance (projected from the annual expenditure of 1997-98 in Dataquest, 1998). This represents nearly 1.5 per cent of India's GDP. The annual rate of growth in this expenditure is 30-40 per cent. This means that India will soon catch up with its neighbours in East Asia, where IT expenditure is around 2 per cent. Organisations are spending more on IT because of the rapid rate of obsolescence of hardware, increasing geographic scope of IT applications within large organisations, and pressures to improve competitiveness in economies which are liberalising at a fast pace. Even as IT expenditures rise, research studies show that the economic impact of IT on organisations in North America and Europe has at best been ambivalent. Even though IT has changed the way different types of work (clerical, engineering, manufacturing and managerial) gets done, in terms of concrete benefits measured as return on investment, few organisations believe these returns to be significant (Scott Morton, 1991, p. 331). It has been reported that much of the £10 billion invested by UK companies on IT each year is giving no real payback (Jason, 1991).