Indian IT Industry contributes immensely to US Economy

Indian IT Industry
Information Technology in India is an industry consisting of two major
components: IT services and business process outsourcing. The sector has
increased its contribution to India's GDP from 1.2% in 1998 to 7.7% in 2017.

India's IT industry is expected to grow at a rate of 12 - 14% during 2016 - 2017

as per a report by India's software industry body National Association of
Software and Services Companies This clearly shows that information
technology is a sector which will likely be one of the emerging markets in the
days to come as India's economy requires more hardware, software and other IT
services. In a NASSCOM-McKinsey report, India's position in the global
offshore IT industry is based on five factors - abundant talent, creation of urban
infrastructure, operational excellence, conducive business environment and
finally, continued growth in the domestic IT sector.

IT Industry in India 2017

 IT BPM industry revenues (excluding hardware) for the Financial Year

2016-17 is estimated to be at US$ 154 billion.

 IT sector contributed to India's GDP by 7.7% in the year 2016.

 In the Financial Year 2016, TCS stood as the market leader with about
10.4% contribution to India's IT sector revenue.

 The IT market is quite competitive with the top 5 IT firms contributing

over 25% to the total IT revenue.

The IT industry is heavily influenced by factors like the global market and
sustenance of its rate of growth. The recession in the United States also
impacted the IT community in India negatively. This segment is promising and
has vast potential, but there are concerns regarding the demand-supply gap,
which is widening. Some challenges which the industry is facing are inadequate
infrastructure, tax issues and limited preferential access for local firms.
History of Indian IT Sector
 It started in 1974, when the mainframe manufacturing company,
Burroughs, asked its India sales agent, Tata Consultancy Services (TCS),
to provide programmers for the installation of system software for an
American client.

 Like any other industry, Indian IT too faced challenges, such as absence
of a local market, and unfavourable government policy regarding private
enterprises.

 In those days, the industry mostly comprised of Bombay-based

conglomerates whose chief purpose was to supply programmers to
internationals IT firms overseas.

 The 1970s Indian IT faced the most struggle. Remember, that back then,
the economy hadn’t been opened up and was state-controlled.

 The state was hostile to the software industry, and showed it in the form
of high import tariffs; 135% on hardware and 100% on software.

 Software was not recognised as an industry; that meant exporters were

not eligible to seek finance from banks.

 It would be 1984 when this industry finally saw some favourable

changes, when Rajiv Gandhi became Prime Minister and brought about a
change in the government’s attitude towards the IT sector.

 His New Computer Policy offered a package of reduced import tariffs on

hardware and software.

Growth of Indian IT Sector

 Over the years, the Indian software industry has matured from providing
cost-effective back office support to driving the digital transformation
agenda ahead in global companies. 

 Increasingly, leaders of more than a thousand global enterprises across

the U.S., Europe, and other locations have realized India's potential and
have set up their own IT or R&D centres to take advantage of the vibrant
Indian software ecosystem.
  The current wave of Indian software entrepreneurs is focusing on
building platforms and products for Indian and global markets.
 This has led to the creation of more than 7,000 tech start-up’s in India.
India is already home to 18 unicorns (start-ups valued in excess of US$1
billion), and another 10 are expected to be added by the end of 2020.

 The Indian software industry has accelerated the adoption of digital

technologies in the country. The industry has played a crucial role in
providing digital identities to over one billion people in the country.

 The next generation of Indian software companies is helping millions of

small and medium businesses (SMBs) and individual workers such as cab
drivers and delivery personnel move into the formal economy.

Growth of the Software Industry in India

 For the two decades in this period, the software sector was largely
comprised of firms looking to provide software services to global clients.

 The focus was on exports, and most companies viewed themselves as

software exporters. The companies started solving Y2K issues for their
customers and further extended their offerings to help companies manage
their legacy portfolio of applications and infrastructure.
 Indian companies were able to leverage this infrastructure to deliver
software development-related services to global enterprises remotely.
 Realizing the potential and the availability of talent, some multinational
corporations established their own offshore development centres in India
 With experience in dealing with complex IT systems and confidence in
working with international customers, several companies became
multinationals with offices and centres across countries.
 They offered a wider range of services like executing large and complex
projects involving integration, complete end-to-end solutions including
management of IT infrastructure, running the services.

Impact of IT Industry on India

 In terms of revenue and foreign exchange, this sector has transformed
India's finances, and is effectively financing a large share of imports. 
 No other industry segment has generated as many jobs for the middle
class. The sector directly employs over four million people and indirectly
supports an additional 12 million jobs. 
  The industry was also a major trigger for the government to push for an
increase in output of engineering colleges to over 700,000 graduates a
year
 Companies have also set up processes to hire, train, and engage thousands
of employees. In fact, Indian IT services companies spend over US$1.6
billion a year on employee training.
 Within a span of about a decade, Indian IT companies have taken several
services being provided to citizens and corporations and moved them
online.
 Most of these systems have been developed by indigenous IT companies,
and many are also maintained and managed by them.

IT sector Contributes in the US Economy

This narrative has been going on for a while now that Indian IT workers come
to the US and that they take away jobs, that in general they simply displace
American workers and that these are low-paid, not even necessarily high-skilled
people who are actually taking away jobs from better paid and skilled American
workers," NASSCOM president R Chandrashekhar told PTI.

Chandrashekhar was here this week leading a delegation of IT industry body to

engage with members of the new US administration on issues like clampdown
on work visas and flow of skilled manpower between the two nations.

The visit of the Nasscom delegation came in the wake of the ongoing debate in
the US and reported moves by the Trump Administration to bring out an
executive order to curtail the use of H-1B visas, widely used by Indian IT
majors.

Close to half a million jobs have been supported in the US as of 2015. The
number of jobs have also been growing at 10 per cent per year as against a two
per cent growth in the rest of the job market The biggest contribution to jobs, of
course, is what the industry provides in terms of services to US corporates, 75
per cent of the Fortune 500 companies, which enable them to be more
productive, more efficient, and more globally competitive, and thereby helps
them to be the job creation engine in the US

By 2018, the projection is that the number will touch 3.4 million, and half of
them will be computer and IT related areas, he observed, adding that the
unemployment rate among STEM workers for computer and IT related skills is
around two per cent.
Conclusion

The above topic’s summarization would be that the Indian IT sector has
immensely helped the US economy in so many ways as the Indian IT sector
grows by the day it will continue to strengthen the infrastructure of both the
nations. The biggest contribution to jobs, of course, is what the industry
provides in terms of services to US corporates, 75 per cent of the Fortune 500
companies, which enable them to be more productive, more efficient, and more
globally competitive, and thereby helps them to be the job creation engine in the
US.