Indian IT Sector and the biggest transformation

Overview on sector
In the 1990s, the industry started off with an export of nearly $100 million with around 5,000 employees. This sector includes software development, consultancies, software management, online services and business process outsourcing (BPO). The Information Technology & Information Technology Enabled Services (IT-ITeS) sector is a field which is undergoing rapid evolution and is changing the shape of Indian business standards. India’s IT industry is expected to grow at a rate of 12 – 14% during 2016 – 2017 as per a report by India’s software industry body National Association of Software and Services Companies (NASSCOM). Now it is an industry that thrives globally and India’s IT exports are now around $70 billion with 2.8 million employees working in this sector. The article states that the IT sector is one of the top two industries in the country today. IT sector contributed to India’s GDP by 7.7% in the year 2016. In the Financial Year 2016, TCS stood as the market leader with about 10.4% contribution to India’s IT and ITeS sector revenue.

Favorable and Non-Favorable Conditions:

  • India has a low-cost advantage by being 5-6 times inexpensive than US.
  • Expanding economy to propel growth in local demand.
  • Strong growth in demand for exports.
  • Indian IT firms have delivery centers across the world.
  • Tax exemption of three years in a block of seven years to start-ups under ‘Start-up India’.
  • Cumulative FDI inflow in computer software and hardware is US$ 30.82 billion from April 2000 to March 2018.

Trend Analysis:



Global In-House Centres (GIC), also known as captive centres, are one of the major growth drivers of the IT-BPM sector in India. They also operate in engineering services and software product development. As of March 2018, there were over 1,140 GICs operating out of India. GICs in India today represent a US$ 23.1 billion industry. The impact of the segment goes beyond revenue and employment, as it helps in developing India as a R&D hub and create an innovation ecosystem in the country.

SWOT Analysis:

Highly skilled and competent manpower.
Cheap workforce than their Western counterparts. According to NASSCOM, the wages difference is as high as 70-80 percent when compared to other Western counterparts.
Dedicated workforce aiming at making a long-term career in lower response time with efficient and effective service.
Round-the clock benefit for Western companies due to the huge time difference.

Recent months have seen a rise in the level of attrition rates among IT workers who are quitting their jobs to pursue higher studies.
The cost of telecom and network infrastructure is much higher in India than in the US.

To capitalise and en-cash on the already established image of India being portrayed as the most favoured IT destination in the world.
Opportunities for Indian companies to work closely with western Governments and assure their concerns and issues.
India can be branded as a quality IT destination rather than a low-cost destination.

The anti-outsourcing legislation in some of the US states are planning against outsourcing.
Workers in British Telecom have protested against outsourcing of work to Indian BPO companies.
Other IT destinations such as China, Philippines and South Africa could have an edge on the cost factor.


IT services:
Market Size: US$ 86 billion.
Over 81% of revenue comes from during FY-18.
BFSI continues to be the major vertical of the IT sector.
IT services had around 51.7 per cent share in total Indian IT sector revenues in FY-18.

Business Process Management:
Market size: US$ 32 billion during FY-2018.
Around 87 per cent of revenue comes from the export market.
Market size of BPM industry to reach US$ 54 billion by FY-2025.
BPM segment had around 19.2% share in Indian IT sector revenues in FY-2018.

Software products and engineering services:
Market size: US$ 33 billion during FY-2018.
Over 83.9 per cent of revenue comes from exports.
The software products and engineering services segment grew 10.5 per cent in FY-2017.
It had around 19.8% share in Indian IT sector revenues in FY-2018.

Market size: US$ 15.4 billion in FY-2018.
The domestic market accounts for a significant share.
The segment had around 9.3% share in Indian IT sector revenues in FY-2018.

Foreign Investment:

Government Initiatives:

  1. The Digital India programme has been launched with an aim of transforming the country into a digitally empowered society and knowledge economy. The Digital India would ensure that Government services are available to citizens electronically.
  2. Meghraj is the name given to the initiative of Government of India for its new program which is going to take advantage of the Cloud Computing.
  3. Code Free for India – This initiative is started by International Center for Free and Open Source Software (ICFOSS) for free software development community to develop solutions to address local and global needs.
  4. e-Kranti comes up with vision of “Transforming e-Governance for Transforming Governance” and Mission is to ensure a Government wide transformation by delivering all Government services electronically to citizens through integrated and interoperable systems via multiple modes, while ensuring efficiency, transparency and reliability of such services at affordable costs.
  5. The internet of things (IoT) is the network of physical devices, vehicles, buildings and other items embedded with electronics, software, sensors, actuators, and network connectivity that enable these objects to collect and exchange data. It is also known as “the infrastructure of the information society.”

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