An Inquiry into the Indian IT Industry

The advent of the IT industry in India has changed the country’s economy to a great extent. It has not only ended up generating ample employment opportunities but also went on to become one of the biggest contributors to India’s GDP. The following post takes a quick look at the same.

 

Advent of Information Technology in India

The Indian economy was liberalized after it faced the balance of payments crisis in 1991. Since then the economic landscape of the country has undergone several changes. The early 2000s witnessed the emergence of the Information Technology (IT) sector that completely transformed the economy. Gradually as the IT industry consolidated its position in the industry, it went on to play an important role in putting Indian in the global map. Over the last one and a half decades, the Indian BPO-IT sector has emerged as the country’s foremost growth factor, achieving momentous milestones in terms of employment generation, revenue growth and value creation. Apart from that the industry has become the global brand ambassador for India long back.

IT Industry

The BPO-IT sector of India along with the exports and domestic segment continue to expand in full force, and continues to experience extraordinary levels of multifarious activities both offshore and onshore. Companies continue to climb up the ladder of value-chain to offer high-end research and analytics amenities to their customers.

According to reports, the IT-BPO industry in the country has grown by at least 6.1 percent in 2010 and then by 19 percent in 2011. Now, industry experts opine that even in a volatile economy, companies are hitching for the need for information technology in order to come up with a competitive edge.

Some of the fundamental benefits that India has are ample talent troves and cost that are sustainable long-term. Moreover, India has a young demographic profile to which nearly 2 million post-graduates and graduates are added to the extreme talent base. Comparatively, the scenarios in other countries are comparatively different. Such a mix of human resources is rarely found.

 

An Insight into the Industry Landscape

 

In the last one decade, the IT/ITeS industry has contributed around 5.6% to the India’s Gross Domestic Product (GDP) with a compounded annual growth rate (CAGR) of nearly 24%. Thus, the industry has emerged at the key growth booster for India’s economy. It has also provided employment to nearly 2.5 million people thus retaining its position as one of the biggest wealth generating sector of the Indian economy. It has generated jobs in hardware, jobs in IT and other related segments. According to NASSCOM, the IT sector is expected to provide direct employment to at least 10 million people and indirect employment to nearly 20 million by 2020.

Broadly, the industry can be divided into four categories; IT Services, Engineering Services and Software Products, IT enabled services (ITeS- BPO) and Hardware. All these four segments combined together generated revenues worth $73.1 billion in 2009-10 from $69.4 billion in 2008-09—registering a growth of 5.3%.

 Industry Landscape

If we delve a little into the intricacies of the dynamics of the industry, we will find that the export revenues achieved the $50 billion in 2009–2010 accounting for more than 68% of the entire ITeS/IT segment revenues. In the last five years, the export revenues have increased at a CAGR of nearly 22%.  On the other hand, in the domestic market front, the hardware sector continues to be the biggest provider of the total revenue. The extraordinary contribution of the hardware highlights the fact that Indians still have long way to go when it comes to advanced stages of IT adoption.

However, when it comes to the Hardware market of India, it must be understood that the in the hardware segment, India has witnessed an outstanding success. The domestic market comprising laptops, desktops, printers, servers, networking peripherals, storage forms the principal segment of the domestic IT-BPO market. This segment is expected to yield revenues worth US$13 billion in the coming years.

Alternatively, the IT services segment has grown by nearly 8% in 2010. The growth has largely been driven by an augmented demand in Custom Application Development (CAD) and the System Integration space.

Other segments that are the ITeS-BPO and Software Product have grown by nearly 20% in the last two years. Some of the key drivers in the domain comprise sectors like Manufacturing and Telecom, and the emerging segments of Healthcare, Retail and Media.

The rate at which the industry is progressing, it can be said that it will continue to remain one of the biggest revenue generator. Of late, emerging trends like Platform BPO and Cloud Computing are all set to reshape the industry by generating new business opportunities. With such changes, the IT industry seems to have a bright future.

Sampurna Majumder is a professional writer and a passionate blogger. Currently she is writing content for several websites such as Naukri.com that cover latest trends related to jobs and work related issues in the world and India in general such as these as well as other fields. The above post focuses on the hardware jobs Industry and IT Industry in india..

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