IT Sector in India

In India, the software boom started in the late 1990s. The sector has increased its contribution to India's GDP from 1.2% in 1998 to 7.7% in 2017. According to NASSCOM, the sector aggregated revenues of US$ 160 billion in 2017, with export revenue standing at US$ 99 billion and domestic revenue at US$ 48 billion, growing by over 13%. The United States accounts for two-thirds of India's IT services exports.

Recent Developments

The Government is driving forward reforms in IT and electronics manufacturing sector through major initiatives like ‘Make in India ‘and by creating favourable policies to enable and investor friendly environment.

National Supercomputing Mission

  • In December 2018, Centre for Development of Advanced Computing (C-DAC), an organization within the MeitY (Ministry of Electronics & Information Technology, India) has signed a contract with French technology firm Atos to supply its BullSequana supercomputers for 3 years.
  • This contract is part of the NSM (National Supercomputing Mission), a 7-year plan of INR 4500 crores led by the Government of India which aims to create a network of over 70 high-performance supercomputing facilities for various academic and research institutions across India.(However, National Supercomputing Mission was approved by the government in 2015).

National Policy on Electronics 2018

  • The Ministry of Electronics and Information Technology (MeiTY) on October 10, 2018 released the draft of the National Policy on Electronics 2018. It aims for a turnover of USD 400 billion in domestic electronics manufacturing industry by 2025.
  • It is targeted to export 600 million mobile handsets valued at USD 110 billion.
  • The policy targets production of one billion mobile handsets by 2025, valued at USD 190 billion.
  • Around 20 greenfield and 3 brownfield electronic manufacturing cluster projects have been sanctioned.
  • It promotes a forward looking and stable tax regime, including advance intimation to the industry to plan investments in the form of Phased Manufacturing Programme (PMP) in various segments of electronics, with a sunset clause should be promoted.
  • It mentions that government would levy cess on identified electronic goods to be considered to generate resources for promotion of certain critical sub-sectors of electronics manufacturing such as semiconductor wafer fabrication and display fabrication units.

Impact of Digital India Initiative by 2019

  • Number of villages to be connected with broadband and universal phone connectivity-250,000.
  • Free Wi-Fi for Public/citizens and in Universities, Railway stations
  • By 2020, there would be zero imports
  • 17 Million jobs will be createdDigital Inclusion –Resources trained for IT, Telecom and electronics jobs
  • 400,000 Public internet access points will be established
  • Around 85 million jobs will be created indirectly
  • Wi-Fi in schools
  • Citizens are to be digitally empowered (Cloud, eGov & eServices)

IT Sector in India

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.

Challenges faced by the IT sector in India

  • The IT sector of India needs to discard its old model of service providing and operations.
  • The old model popularly known as the ADM (Application, Development and Maintenance) is obsolete.
  • It is imperative that the IT sector resorts to the new model of ‘outcome based billing’ and fixed contract based services
  • The maturity of the offshore models has created a demand among the customers for a close proximity of the service providers which may even involve setting up of near shore stations for support.
  • There is a stiff competition from China, Philippines and Eastern Europe which are also proving to be low cost and competitive countries. It is estimated that by 2020 they will be a 20% stakeholder in the global IT export scenario.
  • A shrinking talent pool in our country is also largely affecting the IT sector. The number of employable graduates in the business sector is as low as 10% to 15% while that of qualified and employable engineers is 26% only.
  • IT giants like IBM and Accenture have now opened up their own centers in India with the same target audience as that of the Indian IT Sector.
  • The proposed development of the tier 2 and 3 cities has not gone as planned so the entire IT sector is stagnated in the 9 major cities.
  • It is imperative that the IT sector of India should focus on the new emerging trends like Social media, Mobility, Analytics and Cloud (SMAC).
  • There is a need for a total revamping of the infrastructure of the IT sector which unfortunately is pending due to fund unavailability.
  • Fund shortage is also affecting the medium and small IT enterprises which need a basic financial injection for their start-up.

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