IT Industry in India
The IT services industry has remained a crown jewel in India’s success story, and a key growth catalyst in the nation’s economy. This industry grew to $181 billion in 2018–19, accounting for nearly 45% share of India’s total services exports and contributed around 7.7 per cent to the country’s GDP. India has become the digital capabilities hub of the world with around 75 per cent of global digital talent present in the country.
How the Indian IT Market can Serve Innovation
Gaining and maintaining competitive advantage in a knowledge intensive industry like IT means that enterprises need to focus on dynamic improvements and innovation. India is home to more than half a billion internet subscribers, making it one of the largest and fastest-growing markets for digital consumers. According to a Mckinsey Report, by 2025 widespread digital adoption has the potential to create significant value in all sectors of the economy — for example, E-commerce and digital supply chain have the potential to create $35billion worth value by 2025.
Additionally, India is ranked third in the global startup index. According to the Economic Survey the Indian startup ecosystem witnessed a funding of $7.5 billion in 2018 as compared to $4.3 billion in 2017. As per industry-wide distribution of recognized startups, IT Services accounted for around 15 percent, followed by Healthcare and Life Sciences at around nine percent, and education at eight percent. Start-ups like Byju’s, Swiggy, Oyo Rooms, PayTM, Zomato are all based on technology and they have transformed the face of their respective sectors dramatically.
Leading Indian IT firms like Infosys, Wipro, TCS and Tech Mahindra, are diversifying their offerings and showcasing leading ideas in blockchain, artificial intelligence to clients using innovation hubs, research and development centres, in order to create differentiated offerings.
Some of the major developments in the Indian IT and ITeS sector are as follows:
· In January 2020, Nippon Telegraph and Telephone, a Japanese tech announced its plans to invest a significant part of its US$ 7 billion global commitment for data centres business in India over the next four years.
· In February 2020, Tata Consultancy Services has bagged a contract worth Rs 10,650 crore (US$ 1.5 billion) from pharma company Walgreens Boots Alliance.
· Total export revenue of the industry is expected to grow 8.3 per cent year-on-year to US$ 136 billion in FY19.
· UK-based tech consultancy firm, Contino, has been acquired by Cognisant.
· In May 2019, Infosys acquired 75 per cent stake in ABN AMRO Bank’s subsidiary Stater for US$ 143.08 million
· In June 2019, Mindtree was acquired by L&T.
· 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 6.80 per cent y-o-y between July-September 2018.
· As of November 2019, there were 417 approved SEZs across the country where 274 are of IT & ITeS and143 are exporting SEZs.
· PE investments in the sector stood at US$ 3.6 billion in Q3 2019.
What Lies 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.