Firms in IT industry, banking and financial services which generally use a large amount of human and customer capital as compared to organizational capital often find it useful to measure and report their intangible assets. The article discusses the various tools available and how Indian firms are using them, while suggesting effective ways to use these tools in the valuation of intellectual capital.

The long-run sustainability of every firm depends on its ability to increase its real value. The absolute increase in the value is generally related to good and consistent financial performance or increase in the assets of the firm. Therefore, it is imperative to change the way the value creation is looked at, measured and reported by these firms and the role of the intangibles like Intellectual Capital (IC) in the companies overall performance has started gaining importance in this scenario.

Intellectual capital was defined and classified in several ways by several researchers since the concept gained importance. Edvinsson defined it as, "Knowledge that can be converted to value.""Intellectual capital is the term given to the combined intangible assets which enable the company to function", according to Brooking.

Intellectual capital was the term, which was most used in the early 1980s and gained prominence in the late 1990s. However, Karl-Erik Sveiby first proposed a classification for IC into three broad areas of intangibles, namely Human capital, Structural capital and Customer capital; a classification that was later modified and extended by replacing customer capital by relational capital by Dr. Nick Bontis. (Refer Figure 1)

Global CEO Magazine, IT Industry, Banking Services Sectors, Financial Services Sectors, Intellectual Capital, Airline Industry, Software Industry, Research and Development, R&D, Balanced Scorecard Method, Business Strategy, Economic Value Added, EVA, Infosys Technologies Limited, Intellectual Capital Management, Human resource Accounting.