IT & ITeS Industry in India

Last Updated: August 2013 Introduction The IT&ITeS industry in India has today become a growth engine for the economy, contributing substantially to increases in the GDP, urban employment and exports, to achieve the vision of a powerful and resilient India. Indian firms, across all other sectors, largely depend on the IT & ITeS service providers to make their business processes efficient and streamlined. Indian manufacturing sector has the highest IT spending followed by automotive, chemicals and consumer products industries. Nasscom expects the IT services sector in India to grow by 13-14 per cent in 2013-14 and to touch US$ 225 billion by 2020. Market Size Indias total IT industrys (including hardware) share in the global market stands at 7 per cent; in the IT segment the share is 4 per cent while in the ITeS space the share is 2 per cent. The industry is dominated by large integrated players consisting of both Indian and international service providers. During the year, the share of Indian providers went up to 65 per cent-70 per cent due to the emerging trend of monetisation of captives. India's IT and BPO sector exports are expected to grow by 12-14 per cent in FY14 to touch US$ 84 billion - US$ 87 billion, according to Nasscom. IT spending in India is projected to reach US$ 71.5 billion in 2013, an increase of 7.7 per cent as compared to US$ 66.4 billion projected for 2012, as per a report by Gartner. The enterprise software market in India is expected to reach US$ 3.92 billion in 2013, registering a growth of 13.9 per cent over 2012 revenue of US$ 3.45 billion, according to Gartner. Investments Indian IT's core competencies and strengths have placed it on the international canvas, attracting investments from major countries. Between April 2000 and June 2013, the computer software and hardware sector attracted cumulative foreign direct investment (FDI) of Rs 53,757.60 crore (US$ 7.97 billion), according to data released by the Department of Industrial Policy and Promotion (DIPP). More recently, online retailing, cloud computing and e-commerce are the major driving forces behind the rapidly increasing growth in the IT industry. Online shopping has increased with the emergence of internet retailing and e-commerce. Some of the major investments in Indian IT and ITeS sector:

Baring Private Equity Partners Asia plans to buy IT services firm Hexaware Technologies in a deal estimated at about US$ 400 million Cognizant has been selected by the Saudi Electricity Company (SEC) to develop a comprehensive billing and revenue management solution based on SAP utilities enterprise software to meet the functional, technical, and operational requirements of SEC's rapid growth Prisma Global has acquired majority stake in German technology venture Prisma Gmbh for about Rs 27 crore (US$ 4.00 million). The company will now own the Intellectual Property (IP) of technologies developed by the German firm Wipro Ltd have secured a large IT outsourcing contract worth US$ 500 million from the US-based financial services company Citigroup. Wipro will be responsible for application development and maintenance, as well as providing infrastructure management services, for Citi's global operations Tech Mahindra has signed a five-year agreement with UBS Fund Services (Luxembourg) (UBS FSL) for its new platform, Tech Mahindra Managed Data Services (MDS), designed to support asset managers, wealth managers, investment banks, custodians and administrators. The companys Brazilian subsidiary

Complex IT has also signed two deals to deliver enterprise solutions for oil and gas, and banking sector + Read More

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

Government Initiatives As a part of the National Electronics Policy, the Government of India is planning to set-up 15 new laboratories under public-private-partnership (PPP) model for hardware and software testing. The labs will facilitate registration and testing of IT products before they are launched in the market. FDI upto 100 per cent under the automatic route is allowed in Data processing, software development and computer consultancy services; software supply services; business and management consultancy services, market research services, technical testing & analysis services. In the 12 Five Year Plan (2012-17), the Department of Information Technology proposes to strengthen and extend the existing core infrastructure projects to provide more horizontal connectivity, build redundancy connectivity, undertake energy audits of State Data Centers (SDCs) etc. The core infrastructure including fibre optic based connectivity will be leveraged and additional 150,000 Common Service Centres (CSCs) will be setup to create the right Governance and service delivery ecosystem at the Panchayats. Some of the major initiatives taken by the Government to promote IT and ITeS sector in India are:
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The Government of India has fast tracked the process of setting up of centres of National Institute of Electronics and Information Technology (NIELIT) in Northeast India The Government of Brazil has liberalised the issue of short term work visas, a move which will make it easier for Indian IT professionals to take up assignments in Brazil India and Vietnam have signed two memorandums of understanding (MoU) for partnership in the field of information, communications and technology (ICT) The Cabinet has recently approved the National Policy on Information Technology 2012. The policy aims to increase revenues of IT and ITES industry from US$ 100 billion to US$ 300 billion by 2020 and expand exports from US$ 69 billion to US$ 200 billion by 2020 The Government of India plans to set up 15 new laboratories for testing hardware and software products under public-private partnership (PPP) model

Road Ahead As IT is increasingly gaining traction in small and medium business activities, the sector offers impressive growth opportunities and is estimated at approximately US$ 230 billionUS$ 250 billion by 2020. In a bid to reduce cost, governments across the world are exploring outsourcing and global sourcing options. Technologies, such as telemedicine, mHealth, remote monitoring solutions and clinical information systems, would continue to boost demand for IT service across the globe. IT sophistication in the utilities segment and the need for standardisation of the process are expected to drive demand. Digitisation of content and increased connectivity is leading to a rise in IT adoption by media. Emerging technologies present an entire new gamut of opportunities for IT firms in India. Social, mobility, analytics and cloud (SMAC) provide US$ 1 trillion opportunity. Cloud represents the largest opportunity under SMAC, increasing at a CAGR of approximately 30 per cent to around US$ 650 billion US$ 700 billion by 2020. Social media is the second most lucrative segment for IT firms, offering a US$ 250 billion market opportunity by 2020. Exchange Rate Used: INR 1 = US$ 0.0148 as on August 29, 2013
References: Media Reports, Press Releases, Department of Industrial Policy and Promotion (DIPP) statistics, Department of Information and Technology

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Indias growth in the last decade and its impact on technology growth and its leadership

Posted by Vikas Bakshi on February 21 2013

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India is the fifth best country in the world for dynamic growing businesses, according to the Grant Thornton Global Dynamism Index. In addition, Deloitte predicts India will be the second largest manufacturing country in the next five years, followed by Brazil as the third ranked country. Indias growth potential story is therefore a strong one. Indias Growth Potential Story India is one of the leading offshore destinations in delivering engineering research and development (ER&D) services with a market share of 22 per cent. The market in India is expected to grow to US$ 42 billion by 2020, as per a Zinnov study titled, 'Engineering R&D: Advantage India' The information technology (IT) and business process outsourcing (BPO) sector of India is expected to register a growth of 11 per cent and revenue of US$ 75 billion-US$ 77 billion during 2012-13, according to National Association of Software and Services Companies (Nasscom) The public cloud services market in India is projected to grow to US$ 326.2 million, registering 32.4 per cent growth in 2012, highlighted a report by Gartner. In addition, India has become a key contributor in global research and of growth in the Asia-Pacific (APAC) region, playing host to one-third of top 1,000 R&D spenders in the world, according to a Zinnov study titled 'Global R&D Benchmarking Study'. The Rise of Technology Sector in India The technology sector in India has a major impact on the Indian economy. The industry has grown from US$4 billion in 1998 to more than US$80 billion in 2011, employing directly and indirectly more than 10 million people. Riding on the services outsourcing wave, domestic and international companies have leveraged Indias value proposition to enhance their competitiveness in the global market. Key government initiatives, such as setting up of tax free zones, Software Technology Parks of India (STPI) and Special Economic Zones (SEZ), have given strong impetus to the export of IT services. The technology sector in India received US$6.197 billion through FDI in 2011, an increase of 46% from the previous year. The investment has created 153 projects with an estimated 41,607 jobs in the industry. Five principle sectors in the IT industry, namely online businesses, IT services, IT-enabled services and software and hardware merchandise received most of the investments. Compelling cost advantage coupled with available skilled force has driven this spectacular growth. Although many low-cost delivery destinations, such as China, Philippines and Vietnam, are emerging, Indias leadership position cannot be challenged. Its benefit of long term cost compet itiveness, supply of highly trained engineers and its expertise in processes and quality will continue to foster its growth. Growth Enablers: Policy Thrust - Information Technology

To increase revenues of IT and ITeS (Information Technology Enabled Services) Industry from US$ 100 billion currently to US$ 300 billion by 2020 & expand exports from US$ 69 billion currently to US$ 200 billion by 2020. Promote innovation and R&D in cutting edge technologies and develop applications and solutions in location based services, mobile value added services, cloud computing, social media and utility models To create a pool of 10 million additional skilled manpower in the Information Communication Technology (ICT) sector. I believe that Indias growth in the IT and ITeS sector has triggered a chain of growth in all sectors of the Industry thereby triggering not only outsourcing of projects from clients across the globe, but it has also instigated sectors in India to adapt newer technology trends to become more competitive in the market place and you see now a host of Indian companies going global with their offerings in the market place. The technology revolution for the last 15 years has triggered a huge growth and a massive educated and technology focused workforce which is leading India to become one of the top economies of the world by 2020.

http://www.telstraglobal.com/blog/entry/india-s-growth-in-the-last-decade-and-its-impact-ontechnology-growth-and-its-leadership

India IT sector to touch Rs 1.75 lakh cr by 2016: BCG-CII

India's information technology (IT) industry is expected to touch the Rs 1.75 lakh crore mark by 2016, helped by rise in IT services and software segments. "The domestic IT industry is expected to grow at 12 per cent over next 4 years, reaching a size of Rs 1.75 lakh crore by 2016, driven primarily by the services and software segments," a Boston Consulting Group (BSG)-CII report added. According to the report on IT enablement of Indian business, the domestic IT sector was worth Rs 99,700 crore in 2011 with IT services contributing the largest share at Rs 49,400 crore followed by hardware (Rs 32,500 crore) and software services (Rs 17,800 crore). The report pegs IT services sector to grow at 14 per cent and touch Rs 96,600 crore by 2016, followed by hardware - pegged to grow at 6 per cent to Rs 44,400 crore and the software products segment - expected to grow at 14 per cent to Rs 34,400 crore by 2016. While presenting the report, Microsoft Corporation India Chairman Bhaskar Pramanik said Indian IT industry is expected to touch $100 billion in FY13, which is approximately 7.5 per cent of the gross domestic product (GDP). "While it will continue to accelerate growth from the global market, there is an opportunity for the IT sector to work closely with the government to kick-start the economy," Pramanik, who is also the Chairman of CII National Committee on IT, ITeS and e-Commerce, said.

Speaking to reporters on the sidelines of the event, Pramanik said the challenges that IT sector will face are those related to looking for growth solutions, which are fast, have a shorter time frame and are financially viable. On spending, he said more than 50 per cent of the firms have indicated that they will step up their IT spending. Infosys Co-founder and President Designate CII S Gopalakrishnan stressed on adoption of IT as a transformation tool to help India leapfrog into higher growth trajectory

http://businesstoday.intoday.in/story/india-it-sector-to-touch-rs-1.75-lakh-cr-by-2016-bcgcii/1/193397.html

The Indian software industry has grown from a mere US $ 150 million in 1991-92 to a staggering US $ 5.7 billion (including over $4 billion worth of software exports) in 1999-2000. No other Indian industry has performed so well against the global competition. The annual growth rate of Indias software exports has been consistently over 50 percent since 1991. As per the projections made by the National Association of Software and Services Companies (NASSCOM) for 2000-2001 (April 1, 2000 - March 31, 2001), Indias software exports would be around $ 6.3 billion, in addition to $ 2.5 billion in domestic sale. Indian Software Industry 1995-2000 (US $ million)

1995-96 Domestic software Market 490 Software Exports Indian Software Industry 734 1224

1996-97 670 1085 1755

1997-98 920 1750 2670

1998-99 1250 2650 3900

1999-2000 1700 4000 5700

2000-01* 2450 6300 8750

(* Source: NASSCOM Report) Today, India exports software and services to nearly 95 countries around the world. The share of North America (U.S. & Canada) in Indias software exports is about 61 per cent. In 1999-2000, more than a third of Fortune 500 companies outsourced their software requirements to India. NASSCOMs survey during 1999-2000 indicates a reversal in the mode of services offered by India. In 1991-92, offshore services accounted 5 per cent and on-site services 95 % of the total exports. However, during 1999-2000 offshore services contributed over 40 percent of the total exports. The NASSCOM - McKinsey report on India's IT industry According to a NASSCOM-McKinsey report, annual revenue projections for Indias IT industry in 2008 are US $ 87 billion and market openings are emerging across four broad sectors, IT services,

software products, IT enabled services, and e-businesses thus creating a number of opportunities for Indian companies. In addition to the export market, all of these segments have a domestic market component as well. Other key findings of this report are: Software & Services will contribute over 7.5 % of the overall GDP growth of India IT Exports will account for 35% of the total exports from India Potential for 2.2 million jobs in IT by 2008 IT industry will attract Foreign Direct Investment (FDI) of U.S. $ 4-5 billion Market capitalization of IT shares will be around U.S. $ 225 billion

Projected Revenues - 2008 ($ US billion)

India Based India Centric IT Services Software Products IT-enabled Service E-business Total 23 8 15 4 50 7* 2 2 1 12 Sub total (International) 30 10 17 5 62 Domestic 8.5 9.5** 2 5 25 Total 38.5 19.5 19 10 87 1998 2.1 0.6 0.4 0.2 3.3

Exports of $50 billion in 2008

* Legacy/client server, ERP and package work and Internet all have different proportions of work outside India where revenues are not export revenues. ** Resale of imported products included.

Promotion of IT - governmental incentives: With the formation of a new ministry for IT, Government of India (GOI) has taken a major step towards promoting the domestic industry and achieving the full potential of the Indian IT entrepreneurs. Constraints have been comprehensively identified and steps taken to overcome them and also to provide incentives. Thus for example, venture capital has been the main source of finance for software industry around the world. However, majority of the software units in India is in the small and medium enterprise sector and there is a critical shortage of venture capital kind of support. In order to alleviate this situation and to promote Indian IT industry, the Government of India has set up a National Task Force on IT and Software Development to examine the feasibility of strengthening the industry. The Task Force has already submitted its recommendations, which are under active consideration. Norms for the operations of venture capital funds have also been liberalized to boost the industry. The Government of India is also actively providing fiscal incentives and liberalizing norms for FDI and raising capital abroad. Recently, an IT committee was set up by the Ministry of Information Technology, Government of India, comprising Non Resident Indian (NRI) professionals from the United States to seek expertise and advice and also to step up U.S. investments in India's IT sector. The committee is chaired by Minister of Information Technology, Government of India, and the members include Secretary, Ministry of Information Technology and a large number of important Indian American IT entrepreneurs. The group will: Monitor global IT developments and refine Indian IT policy to meet global requirements. Specifically, this will help angel investors, venture creators and incubation; Promote the growth of human resource development in the IT sector with the aim of creating quality-based education;

Promote R&D in the sector by identifying thrust areas and drawing up a blueprint for action.

Indias most prized resource in in todays knowledge economy is its readily available technical work force. India has the second largest English-speaking scientific professionals in the world, second only to the U.S. It is estimated that India has over 4 million technical workers, over 1,832 educational institutions and polytechnics, which train more than 67,785 computer software professionals every year. Government of India is stepping up the number and quality of training facilities in the country to capitalize on this extraordinary human resource. It is the knowledge industry that will help take the Indian economy to a sustained higher rate of growth and the policy makers are fully aware of this.

MphasiS is a $1 billion global service provider, delivering technology based solutions to clients across the world. With currently over 37,000 employees, MphasiS services clients in Banking and Capital Markets, Insurance, Manufacturing, Communications, Media & Entertainment, Healthcare & Life Sciences, Transportation & Logistics, Retail & Consumer Packaged Goods, Energy & Utilities and Governments around the world. Our competency lies in our ability to offer integrated service offerings in Applications, Infrastructure Services and Business Process Outsourcing capabilities.

News Reports: Virtual India At Your Service - Interactive Week - August 28, 2001 A new kind of software company for India - New York Times - March 26, 2001 Ericsson to set up software platform in India - ZDNet India - March 23, 2001 Intel group company sets up $3.5m development centre - ZDNet India - March 22, 2001 Nasscom signs MoU with US infotech body - ZDNet India - March 14, 2001 Sun doubles Indian investment to $ 50 million - ZDNet India - March 12, 2001 Network Solutions plans Indian arm - ZDNet India - March 07, 2001 AOL to Open Netscape Office In India's Tech Center - Washington Post, March 06, 2001 High-Tech Passage to India - March 05, 2001 Cisco to hike India investment to $200 million - January 18, 2001 Passage to India - Forbes, October 30, 2000 India to be the fastest growing IT market in 2001 - CNET, September 11, 2000 South Asian Entrepreneurs and Mentors Form a Tie That Binds - Los Angeles Times, July 03, 2000

https://www.indianembassy.org/indiainfo/india_it.htm