The paper overviews the role of human resource in economic development of karnataka. India is a global leader with 55 per cent of market share in the IT-BPM (Information Technology-Business Process Management) sourcing service industry worldwide. Karnataka’s unique advantages have been a focal point, driving and catalysing growth in the IT, ITEs, (Information Technology Enabled Services) BPM service sectors. Uzawa developed an endogenous growth model based on investment in human capital which was used by Lucas. Lucas assumes that investment on education leads to the production of human capital which is the important determinant in the growth process. The study is based on secondary data the data collected from Karnataka at a Glance, Human Development Report, Karnataka (2005); The Karnataka State Integrated Health Policy, Department of Health and Family Welfare (GoK); Saikshanic Anki Anshagala Pakshinota, Karnataka. Simple statistical tools such as percentage, ratio used for causal relation and trend analysis of human capital formation. The study focuses on the role of education specifically higher education and technical education and labour force in human capital formation. It overviews the economic reforms and globalization effect on employment generation in Karnataka and Karnataka’s potential in human capital formation and economic development.