Blog

Growing IT & ITeS Industry in India

Introduction

The global sourcing market in India continues to grow at a higher pace compared to the IT-BPM industry. India is the leading sourcing destination across the world, accounting for approximately 55 per cent market share of the US$ 185-190 billion global services sourcing business in 2017-18. Indian IT & ITeS companies have set up over 1,000 global delivery centres in about 80 countries across the world.

India has become the digital capabilities hub of the world with around 75 per cent of global digital talent present in the country.

Market Size

India’s IT & ITeS industry grew to US$ 167 billion in 2017-18. Exports from the industry increased to US$ 126 billion in FY18 while domestic revenues (including hardware) advanced to US$ 41 billion.

Spending on Information Technology in India is expected to grow over 9 per cent to reach US$ 87.1 billion in 2018.*

Revenue from digital segment is expected to comprise 38 per cent of the forecasted US$ 350 billion industry revenue by 2025.

Investments/ Developments

Indian IT’s core competencies and strengths have attracted significant investments from major countries. The computer software and hardware sector in India attracted cumulative Foreign Direct Investment (FDI) inflows worth US$ 32.23 billion between April 2000 to June 2018, according to data released by the Department of Industrial Policy and Promotion (DIPP).

Leading Indian IT firms like Infosys, Wipro, TCS and Tech Mahindra, are diversifying their offerings and showcasing leading ideas in blockchain, artificial intelligence to clients using innovation hubs, research and development centres, in order to create differentiated offerings.

Some of the major developments in the Indian IT and ITeS sector are as follows:

  • Nasscom has launched an online platform which is aimed at up-skilling over 2 million technology professionals and skilling another 2 million potential employees and students.
  • Revenue growth in the BFSI vertical stood at 10.3 per cent y-o-y in the first quarter of 2018-19.
  • As of March 2018, there were over 1,140 GICs operating out of India.
  • Private Equity (PE)/Venture Capital (VC) investments in India’s IT & ITeS sector reached US$ 7.6 billion during April-December 2017.

Government Initiatives

Some of the major initiatives taken by the government to promote IT and ITeS sector in India are as follows:

  • The government has identified Information Technology as one of 12 champion service sectors for which an action plan is being developed. Also, the government has set up a Rs 5,000 crore (US$ 745.82 million) fund for realising the potential of these champion service sectors.
  • As a part of Union Budget 2018-19, NITI Aayog is going to set up a national level programme that will enable efforts in AI^ and will help in leveraging AI^ technology for development works in the country.

Achievements

Following are the achievements of the government during 2017-18:

  • About 200 Indian IT firms are present in around 80 countries.
  • IT exports from India are expected to reach highest ever mark of US$ 126 billion in 2017-18.
  • Highest ever revenue was generated by Indian IT firms at US$ 167 billion in 2017-18.

Road Ahead

India is the topmost offshoring destination for IT companies across the world. Having proven its capabilities in delivering both on-shore and off-shore services to global clients, emerging technologies now offer an entire new gamut of opportunities for top IT firms in India. Export revenue of the industry is expected to grow 7-9 per cent year-on-year to US$ 135-137 billion in FY19. The industry is expected to grow to US$ 350 billion by 2025 and BPM is expected to account for US$ 50-55 billion out of the total revenue.

Exchange Rate Used: INR 1 = US$ 0.0149 as of Q1 FY19

References: Media Reports, Press Information Bureau (PIB), Department of Industrial Policy and Promotion (DIPP) statistics, Department of Information and Technology, Union Budget 2017-18

Notes: * – As per Gartner, ^ – Artificial Intelligence

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