Padmashree Annasanheb Jadhav Bhartiya Samaj Unnati Mandal’s

B.N.N. College, Bhiwandi.

(Arts, Science& Commerce) Dist Thane – 421 305

SELF FUNDED COURSES

PROJECT WORK

SEMESTER VI
UNIVERSITY OF MUMBAI

PROJECT REPORT

1
 ON
CONTRIBUTION OF IT SECTORS IN INDIAN INDUSTRY

SUBMITTED BY

GUPTA SANDEEP GAJILAL

THE AWAED OF THE DEGREE OF

BACHELOR OF ACCOUNTING & FINANCE : SEM. VI

EXAMINATION NO: -

ACADEMIC YEAR 2019-2020

GUIDED BY

Mrs. POOJA DESHMUKH

PADMASHREE ANNASAHEB JADHAV BHARATIYA SAMAJ UNNATI MANDAL‘S

B.N.N. COLLEGE, BHIWANDI

DIST. THNAE 421 305

2
 DECLARATION

MR. GUPTA SANDEEP GAJILAL. Exam No. Student of

B.N.N. College, Bhiwandi of T.Y.B.com (ACCOUNTING & FINANCE)

Semester 6, hereby declare that I have completed project“CONTRIBUTION OF IT

SECTOR IN INDIAN INDUSTRY” is a record of independent research work carried by
me during the academic year 2019-2020 under the guidance of Prof.POOJA DESHMUKH.”
The information submitted is true and original to the best of my knowledge.

DATE: PLACE: BHIWANDI (T.Y.B.F.M)

SELF-FUNDED COURSES
“A” NAAC Accredited
“BEST COLLEGE AWARD 2018-2019”
Estd. June 1960

3
 CERTIFICATE
This is to certify that GUPTA SANDEEP GAJILAL, Exam No: - of

T.Y.B. Com (ACCOUNTING & FINANCE), B.N.N. College, Semester VI (Academic Year

2019-

2020) has successfully completed the project entitled “Contribution Of IT Sectors In Indian Industry. ―and submitted
the Project Report in partial fulfillment of the requirement for the award of the Degree of Bachelor of Commerce
(Contribution Of IT Sectors In Indian Industry), of University of Mumbai.

Mrs. Pooja Deshmukh Dr. kalpana patankar Dr. ASHOK .D. WAGH
(Project Guide) jain/ (Principal)
Dr. Vikas Ubale
(Co-ordinator)

Examiner:-
Date: - College seal

Acknowledgment
To list who all have helped me is difficult because they are so numerous and depth is So enormous.
I would like to acknowledge the following as being idealistic channels and fresh dimensions in the
completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do this
project.

4
 I would like to thank my Principal, Dr. Ashok D. Wagh for providing the necessary facilities
required for completion of this project.
I take this opportunity to thank our Coordinator Dr. Kalpana Patankar-Jain & Dr. Vikas W. Ubale
her & his moral support and guidance.
I would also like to express my sincere gratitude towards my project guide

Prof. Pooja Deshmukh whose guidance and care made the project successful.
I would like to thank my College Library, for having provided various references books and
magazines related to my project.
Lastly, I would like to thank each and every person who directly or indirectly helped me in the completion of
the project especially My Parents and Peers who supported me

INDEX
CHAPTERS NAME OF THE TOPIC PAGE NO.

1 INTRODUCTION

2 LITERATURE REVIEW

3 RESEARCH METHODOLOGY

4 DATA ANALYSIS, INTERPRETATION AND

PRESENTATION

5 CONCLUSION

➢ BIBLIOGRAPHY

5
Contribution Of IT Sector In Indian Industry
Introduction
Information Technology in India is an industry consisting of two major components: IT services and business
process outsourcing (BPO). 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 state accounts
for two-thirds of India's IT services exports.

The industry has contributed considerably to the economy in terms of GDP, employments and foreign exchange
earnings. IT industry is also responsible for increasing the competence and productivity of almost all sectors of
the economy like services at banks, post offices, railways, airports etc

The IT-BPM sector in India stood at US$177 billion in 2019 witnessing a growth of 6.1 per cent year-on-year and
is estimated that the size of the industry will grow to US$ 350 billion by 2025. India's IT & ITeS industry grew
to US$ 181 billion in 2018-19. ... IT industry employees 4.1 million people as of FY19.

Information technology, or IT, describes any technology that powers or enables the storage, processing and
information flow within an organization. Anything involved with computers, software, networks, intranets, Web
sites, servers, databases and telecommunications falls under the IT umbrella.

India's rapidly growing urbanization has contributed to the growth of the organized retailing in the country. The
retail industry is the backbone of growth of the economy with over 20% contribution towards the national GDP.
The Indian retail sector is ranked among the top five global retail markets.

The major industries in the Indian Economy are Iron & Steel, Textiles, Jute, Sugar, Cement, Paper,
Petrochemical, Automobile, Information Technology (IT), and Banking & Insurance.

6
Bangalore is the IT Capital of India and a global information technology hub in the country. The city is known as
the Silicon Valley of India with large number of software companies in India and many top Indian firms like
Infosys, Wipro, Mindtree are headquartered in Bangalore.

The Current Market Size of Information Technology Industry in India. With a 6.1% growth in the year
2019, India's IT-BPM sector stood at $177 Billion and approximating growth at this rate, the industry will develop
to $ 350 Billion by the year 2025.

Bangalore(officially known as Bengaluru) tops India's tech city chart. The city has a population of over 8 Million.
Indian technological organisations ISRO, Infosys, Wipro and HAL are headquartered in the city. A
demographically diverse city, Bangalore is the second fastest-growing major metro

Information Technology (IT) is a knowledge based industry. It can be defined as the utilization

of hardware, services and infrastructure to create, store, exchange and leverage information in its

various forms to accomplish any number of business objective. IT industry embraces production,

manipulation, storage and dissemination of information. IT sector has a remarkable potential for

accelerating economic growth of the nation. It has the potential to improve the productivity of

almost all sectors of economic development. Information technology has made our governance

efficient. It enhances access to information, provides access to government services, protects

consumers, makes skill development and training more effective, progresses delivery health
services, and promotes transparency. The role of IT industry in enhancing the economic

development of the country has been acknowledged by the government of India.

7
There are five principal components of IT industry - (i) Online business (ecommerce) (ii) IT

services, (iii) ITES (IT Enabled Services) e.g. BPO (iv)Software Products (v) Hardware. All

these components are progressing well and are responsible for ongoing growth curve of India’s

economy with a steady rise in revenues as witnessed in the past few years.

IT / ITES industry in India has seen an unparalleled growth since the last decade. Various

initiatives of Government of India and the State Governments like, liberalization of external

trade, elimination of duties on imports of information technology products, setting up of Export

Oriented Units (EOU), Software Technology Parks (STP), relaxation of controls on both inward

and outward investments and foreign exchange, and Special Economic Zones (SEZ), have helped

IT industry to gain dominant position in world’s IT scenario. So we can say that the IT industry

has matured over the years and has proved to be a major contributor to the global economic

growth. It has helped India to emerge as a global force in today’s ever-increasing competitive

and demanding environment.

This chapter examines how the IT industry evolved over the years and its predominant role in

boosting Indian economy, its contribution to the GDP of India, IT exports and employment
8
opportunities.

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.
The contribution of India's IT industry to economic progress has been quite significant. The rapidly expanding
socio-economic infrastructure has proved to be of great use in supporting the growth of Indian information
technology industry.

The flourishing Indian economy has helped the IT sector to maintain its competitiveness in the global market. The
IT and IT enabled services industry in India has recorded a growth rate of 22.4% in the last fiscal year. The total
revenue from this sector was valued at 2.46 trillion Indian rupees in the fiscal year 2007. Out of this figure, the
domestic IT market in India accounted for 900 billion rupees. So, the IT sector in India has played a major role in
drawing foreign funds into the domestic market.

The growth and prosperity of India's IT industry depends on some crucial factors. These factors are as
follows:

India is home to a large number of IT professionals, who have the necessary skill and expertise to meet the
demands and expectations of the global IT industry.

The cost of skilled Indian workforce is reasonably low compared to the developed nations. This makes the
Indian IT services highly cost efficient and this is also the reason as to why the IT enabled services like business
process outsourcing and knowledge process outsourcing have expanded significantly in the Indian job market.

9
 India has a huge pool of English-speaking IT professionals. This is why the English-speaking countries like
the US and the UK depend on the Indian IT industry for outsourcing their business processes.

The emergence of Indian information technology sector has brought about sea changes in the Indian job market.
The IT sector of India offers a host of opportunities of employment. With IT biggies like Infosys, Cognizant,
Wipro, Tata Consultancy Services, Accenture and several other IT firms operating in some of the major Indian

cities, there is no dearth of job opportunities for the Indian software professionals. The IT enabled sector of India
absorbs a large number of graduates from general stream in the BPO and KPO firms. All these have solved the
unemployment problem of India to a great extent. The average purchasing power of the common people of India
has improved substantially. The consumption spending has recorded an all-time high. The aggregate demand has
increased as a result. All these have improved the gross production of goods and services in the Indian economy.
So in conclusion it can be said that the growth of India's IT industry has been instrumental in facilitating the
economic progress of India.

The Information Technology & Information Technology Enabled Services (IT-ITeS) sector is a field which
is undergoing rapid evolution and is changing the shape of Indian business standards. This sector includes software
development, consultancies, software management, online services and business process outsourcing (BPO).

According to an article in the Times of India, India's liberalization was possible due to its IT industry. In the
1990s, the industry started off with an export of nearly $100 million with around 5,000 employees. Now it is an
industry that thrives globally and India's IT exports are now around $70 billion with 2.8 million employees
working in this sector. The article states that the IT sector is one of the top two industries in the country today.

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 (NASSCOM.) 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

10
infrastructure, operational excellence, conducive business environment and finally, continued growth in the In
2008

The IT-BPM industry stood at $177 bn in 2019 and is expected to grow to $350 bn by 2025. The IT-BPM industry
is the largest contributor to the total exports of the country, with 43% of the IT-BPM services being exportedhe
sector is headed towards achieving $1 tn digital economy by 2022. The country has become the global digital
capabilities hub with around 75% of global digital talent present in the country.

11
 Objectives

Objectives of the Department of Information Technology & Communication, Government of India

In order to actualize the vision and mission, the Government's thrust is to make Information Technology the
vehicle for productive growth in the State. Productive growth can be classified into three categories:-
1. I.T. for all round developmental growth (I.T. as an aid for Development)
2. Improved performance in governance and administration
3. Developmental activities leading to I.T. related growth (Development of I.T. Sector)

I.T. for economic and all round developmental growth:

In order to make I.T. an engine for the growth and economic development in the State, the Government will strive
to
o Use I.T. to effectively manage the implementation of development programmes in the State.
o Make use of I.T. to enhance the performance and effectiveness of the development programmes in the State
o Use I.T. as a tool for bridging the digital divide and bringing economic prosperity to all sections of the society

I.T. in Governance and Administration:

Providing good governance and efficient administration in the fast growing and competitive world is a challenge. Information Technology infrastructure
and tools would be utilised in overcoming the challenge by:
o Making Government services accessible to the common man in his locality, through common service delivery outlets and ensuring efficiency,
transparency and reliability of such services at affordable costs
o Addressing and managing security issues, cyber crimes, formulation of I.T. related rules and procedures and other matters relating to effective
implementation of this policy.
o Evolving an effective model for process re-engineering which will guide and drive the future development of e-Governance projects and applications.
o Ensuring that a robust e-Governance back-end is established including establishing integrated e-Government systems.
o Establishing a data hub and a data Centre for facilitating data exchange between Departments in a structured manner.

12
 Development of I.T. Sector

Creation of an environment conducive to I.T. related activities

The State Government would make an effort to create the right environment and atmosphere conducive for promoting the I.T. Industry in the State by
way of the following:-
o Provide special incentives to the entrepreneurs and investors and to remove bottlenecks and problem encountered by them.
o Establishing basic infrastructure for the development of I.T. industry in the State through its own resources or with the help of the Government of India,
financial institutions and other I.T. Organisations.
o Promoting the growth of e-commerce and software export
o Facilitate the establishment of I.T. Enabled Service Delivery Centres in the State

Human Resource Development:

In order to provide quality manpower for the growth of the I.T. industry in the State
o The Government will encourage setting up of I.T. institutions of repute in the State.
o The Government would take steps to ensure that organisations/ institutions imparting education meet technical
and quality standards.

The IT industry in India is a key part of the country’s economy. In 2017, information technology and its various
subsectors represented almost eight percent of the nation’s overall GDP. In financial year 2019, this industry in
India generated an annual revenue close to 180 billion U.S. dollars, a significant increase from the generated
revenue ten years ago. A majority of this revenue was generated in exports while domestic revenue totaled to less
than 50 billion U.S. dollars for the mentioned period.

As the industry in the south Asian continued to flourish, end-user spending on the market also increased, albeit
slowly. IT end-user spending in the country stood at around 67 billion U.S. dollars in 2013 but has decreased
considerably and is estimated to reach a value of around 17 billion U.S. dollars in 2020. About a third of this
spending in 2019 was estimated to be in the devices market, with telecommunications services accounting for
another

13
 Some of the biggest IT service providers in India include IBM and HP, as well as Indian-based companies,
Wipro and Tata Consultancy Services (TCS). Overall, in 2017, the industry provided direct employment to
almost four million people and indirect employment to more than ten million. Of these employees, over
420,000 worked for TCS and more than 228,000 worked at Infosyswhich is based in Bangalore.
TCS revenue reached almost 1.5 trillion Indian rupees in 2019, making it the largest India-based IT services
company that year. This ranks it as one of the world’s largest IT services providers.

SOFTWARE

•
Packaged software spending

5.3bn USD

•
Infrastructure software market

2.4bn USD

• Analytic applications software market

31.6m USD

•
Growth of business intelligence software revenues

14.58%

14
 SERVICES

Size of the public cloud services market

1.9bn USD

IT EMPLOYMENT
o
Direct employment from the IT industry

3.9m
LEmployees at Tata Consultancy Services

424,285
Infosys employees

228k

15
 Scope

Information Technology has lots of scope. Actually the scope of IT and CSE is almost same, and I hope you know
about the trend going on for CSE presently. It would not be wrong to say that IT is the CSE for people with low
ranks in JEE. Coming to the scope it has, you have all the options available which are for a CSE student enlisted
below:-

• Software Development

• Web Design & Development

• Database Management

• Artificial Intelligence

• Hacking

• Mobile App Development

IT people have scope to get placed or do research in all these fields, there are several other fields as well but these
are the major ones.

After Completing IT a good Opportunity is waiting for you.you can go for

1) You can try for GATE and if you got high score then you can make a entry into ISRO,DRDO etc.

2) New India Assurance Company Limited for the post of Post Administrative Officer (Scale I).

3) Bharat Sanchar Nigam Limited for the Post of Associate Server Maintainer.

4) Cabinet Secretarial Govt Of India Jobs for the

Post of Deputy Field Officer.

5) Also you can try for Railway, Bank jobs etc.

But as no. of vacancies in govt sectors are very limited so prepare very well for those jobs.
16
1.Private Software company:-

1.TCS.

2.CTS.

3.WIPRO.
4.ACCENTURE.
5.IBM.
6.INFOSYS.
7.MAHINDRA SATYAM.
8.CAPGEMINI.
9.IGATE PATNI COMPUTERS.
2.Government Software company:-

1:BHEL (Bharat Heavy Electricals Limited)

2:ONGC(Oil and Natural Gas Corporation)

3:GAIL(Gas Authority India Ltd )

4:HAL (Hindustan Aeronautics Limited)

5:SAIL(Steel Authority of India)

3.Higher Education:-

1.You can take admisionin M.Tech

2.Also you can go for MBA.

Information Technology encompasses a wide range of activities like Office Automation, Telecommunication and
Computing, therefore provides a larger area of job avenues for those who have acquired the right qualifications
for it.

Career opportunities

On the successful completion of the program, one can look at the following profiles:
17
Software Engineer / Programmer

Developer (.NET / JAVA / C++ etc...)

Network Administrator

Database Administrator

Network Programmer

Tester

System Analyst

Business Analyst

System Engineer

Hardware Engineer

Support Specialist

18
IT students have a lot of scope for their future. Since the technologies and IT sectors are increasing day by day,
the need of employers is also increasing. But just reaching IT field for the sake of a degree and a job won’t give
success. Because in coming future the IT industries do not adopt employers having degrees for a short-term course,
they need really talented and well experienced employers to do their job.

No doubt that IT fields are in its developing path. There will never be any degrading in its opportunities. IT may
be the best field for those searching for self-employments. If you are able to get success in your IT courses, then
I can guarantee that your dreams will never die. The scope of IT field will continue increasing even on next
decades.

The scope of IT is different for each company. If a company is technology focused then the scope of IT is probably
the strategic driver for the organization. If the company has a product or service they sell then IT is used more for
back office operations like Accounting, Human Resources, Production and Operations. The scope of IT is more
for support and the IT budget is much lower.

If your question is not about businesses focus of IT but what is IT then here is my answer: IT (Information
Technology) is the field where technology or computers are used. Computers require engineering to develop the
hardware and operating systems to run. Then the computers need to connect to a network where the computers
are connected to their customers or other computers. These networks can be in the cloud/Internet or connected to
other computers inside a private network like the government. Their are too many jobs in technology to mention
in my answer but as we rely more and more in technology the number of jobs are ever expanding.

Now the world had become impossible to move without Information on doubt that IT fields are in its developing
path.we’ll get well paying job right from the start. IT students have a lot of scope for their coming future.

IT also help a professional to get job opportunities in many foreign companies or top companies in usa .i.e Tata
Consultancy Services (TCS), Wipro Technologies, Cognizant, Yahoo!, Google, Tech Mahindra, Infosys
Technologie. We have lots of Avantages of IT.

19
Opportunities to get following job posts in IT

There are many Advantage in IT sector. On following post we can get job opportunities:

• Web Developer and Designer

• Data Security Officer

• IT Analyst

• Data Analyst

• Database Manager

• Digital Marketing

• Information Technology Engineer

ITJobsList or Jobrino provides best opportunity for Fresher, Recent Graduation and have more than 10k+
technical jobs available.

20
 History of IT Sector in India

India's IT Services industry was born in Mumbai in 1967 with the establishment of the Tata Group in partnership
with Burroughs. The first software export zone, SEEPZ – the precursor to the modern-day IT park – was
established in Mumbai in 1973. More than 80 percent of the country's software exports were from SEEPZ in the
1980s.

The Indian economy underwent major economic reforms in 1991, leading to a new era of globalization and
international economic integration, and annual economic growth of over 6% from 1993–2002. The new
administration under Sri Atal Bihari Vajpayee (Posthumus) (who was Prime Minister from 1998–2004) placed
the development of Information Technology among its top five priorities and formed the Indian National Task
Force on Information Technology and Software Development.

Wolcott & Goodman (2003) report on the role of the Indian National Task Force on Information Technology and
Software Development:

Within 90 days of its establishment, the Task Force produced an extensive background report on the state of
technology in India and an IT Action Plan with 108 recommendations. The Task Force could act quickly because
it built upon the experience and frustrations of state governments, central government agencies, universities, and
the software industry. Much of what it proposed was also consistent with the thinking and recommendanotions of
international bodies like the World Trade Organization (WTO), International Telecommunications Union (ITU),
and World Bank. In addition, the Task Force incorporated the experiences of Singapore and other nations, which
implemented similar programs. It was less a task of invention than of sparking action on a consensus that had
already evolved within the networking community and government.

21
Regulated VSAT links became visible in 1994. Desai (2006) describes the steps taken to relax
regulations on linking in 1991:
In 1991 the Department of Electronics broke this impasse, creating a corporation called Software Technology
Parks of India (STPI) that, being owned by the government, could provide VSAT communications without
breaching its monopoly. STPI set up software technology parks in different cities, each of which provided satellite
links to be used by firms; the local link was a wireless radio link. In 1993 the government began to allow individual
companies their own dedicated links, which allowed work done in India to be transmitted abroad directly. Indian
firms soon convinced their American customers that a satellite link was as reliable as a team of programmers
working in the clients’ office.

Videsh Sanchar Nigam Limited (VSNL) introduced Gateway Electronic Mail Service in 1991, the 64 kbit/s leased
line service in 1992, and commercial Internet access on a visible scale in 1992. Election results were displayed
via National Informatics Centre's NICNET.

"The New Telecommunications Policy, 1999" (NTP 1999) helped further liberalise India's telecommunications
sector. The Information Technology Act, 2000 created legal procedures for electronic transactions and e-
commerce.

A joint EU-India group of scholars was formed on 23 November 2001 to further promote joint research and
development. On 25 June 2002, India and the European Union agreed to bilateral cooperation in the field of
science and technology. India holds observer status at CERN, while a joint India-EU Software Education and
Development Center will be located in Bangalore.

22
In the contemporary world economy India is the largest exporter of IT. Exports dominate the Indian IT industry
and constitute about 79% of the industry's total revenue. However, the domestic market is also significant, with
robust revenue growth. The industry’s share of total Indian exports (merchandise plus services) increased from
less than 4% in FY1998 to about 25% in FY2012. The technologically-inclined services sector in India accounts
for 40% of the country's GDP and 30% of export earnings as of 2006, while employing only 25% of its workforce,
according to Sharma (2006). According to Gartner, the "Top Five Indian IT Services Providers" are Tata
Consultancy Services, Infosys, Wipro, and HCL Technologies.

With fundamental structural changes visible everywhere in the IT services due to Cloud computing, proliferation
of Social media, Big data, Analytics all leading to digital services and digital economy, many of the leading
companies in India's IT sector reported lower headcounts in their financial results.
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.

Israel Based SOSA Intends to Set Up Tech Innovation Hubs in India

As Rafiq Dossani, Senior Research Scholar at the Asia-Pacific Research Center at Stanford University, says in
his paper, ‘Origins and Growth of the Software Industry in India’, “Unlike the offshored software outsourcing
industries of Ireland and Israel, in which multinationals started the industry, in India, local conglomerates began
the industry by sending programmers to clients’ sites

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.

23
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
(NCP-1984) offered a package of reduced import tariffs on hardware and software. A reduction of up to 60% was
seen.

Also, software exports finally got the recognition of as a “delicensed industry”. This meant that exporters had
now become eligible for bank finance and the industry was unrestricted from license-permit raj. Foreign
companies now had the permission to set up autonomous, export-dedicated units. A project was also set up to
establish a chain of software parks to provide infrastructure at costs lower than the market price. These policies
eventually made the Indian IT industry what it is today.

As Dossani says, “In the mid-1980s, work shifted to India and was done mainly by domestic firms. This was due
to a new technology for software development and was despite new policies friendlier to foreign firms. The shift
of work to India was responsible for Bangalore’s development and the relative decline of other centers, notably
Mumbai. Since the 1990s, value-addition has increased and domestic firms have become less dominant. This was
due to the evolution of multinational firms’ response to new policies.”

Dept. of Biotechnology Holds Roundtable in Berlin to Showcase India’s Research Potential

Today, Indian IT companies include the likes of Tata Consultancy Services (TCS), Wipro, Infosys, HCL, and
many more, which are recognised all over the world as providers of top class software services. Some of the major
factors which played a key role in India’s emergence as key global IT player are:

The Indian education system, though stressful, also has become streamlined to create a world-class IT workforce.
Indian engineers are in demand all over the world. The emphasis on English language also adds to the attraction.
In addition, the prices offered by Indian IT firms for software development and services are also very competitive.

24
25
History of IT sector in India before 1991

In 1965, immigration laws in USA were modified and the restrictions on immigrants were reduced considerably.
As a result a lot of Indian professionals migrated for research opportunities in USA. The IT revolution in
USA and the much fancied Silicon Valley in the US during the 80s and 90s could not have been possible without
the work of these migrated Indians. What this migration did for the Indian IT industry was creating innumerable
opportunities in the USA in the IT sector. Due to the fast growing IT sector in USA, there was a need for IT
professionals outside USA. India had a huge number of educated people and the education in India being in
English, there was a large population of English speaking technically strong people in India. Hence outsourcing
of work started gaining momentum and this led to the huge boom in the IT sector in India, whose most of the
work is exporting software and software services to the US and other overseas clients.

Tata Consultancy Services (TCS) was started by the TATA group for software development services in India in
1968. TCS started the software services by developing punched card facilities for TATA steel employees
(TSICO). The first overseas client for TCS was Burroughs Corporation, United States. The job of TCS was to
write software code for the Burroughs machines in 1974. With word of mouth, TCS grabbed a number of projects,
small and big during the following years and today TCS is India's top IT company with a turnover of more than
$10 billion. In 1966, Azim Premji became the chairmen of the large company WIPRO and the focus of WIPRO
was concentrated on the IT services sector. Patni Computer Systems started developing software and providing
services since the beginning of the company in 1972 (At that time it was named Data Conversion Inc). In 1981,
Infosys was founded by Narayan Murthy and his colleagues. Infosys was completely committed towards
providing quality software services and also developed an IT business model which was later followed by most
ofthe ITcompaniesinIndia.

The Indian economy during this period was completely controlled by the Indian Government and there were strict
restrictions and regulations for private business entities in India. Hence there was no major growth in the IT
sectorinIndia till1991.

26
Economic reforms in 1991 and development of IT sector in India

The Indian government had strict control over the private business entities in India before liberalisation of
economy in 1991. Moreover, the wide area networks and internet lines were completely controlled by the entral
government. As a result, the Indian IT sector was totally held back due to these restraints on the functioning of
the software services providers.

The first major IT reform by the Indian Government was the creation of corporation called Software
Technology Parks of India (STPI). This corporation provided satellite links to major IT developers enabling
them to transmit the work done in India directly abroad. This reduced the costs incurred to the Indian IT
companies as well as helped the clients in US trust Indian industries and go for outsourcing. Finance minister,
Dr. Manmohan Singh, introduced the major economic reforms in 1991 to solve the debt problem created during
that time. As per these economic reforms the internation integration became possible. The huge restrictions on
overseas business were lifted and foreign investments were welcomed. As a result, the IT industry in India
became free and the business of outsourcing would finally gain momentum with more and more clients and
enterprises going for outsourcing of IT. Also, the inception of Windows and other user friendly operating
services made the PC experience even more simple and less time consuming. Coupled with development of high
level programming languages like Basic, C and others, the Indian IT brains had the perfect platform to rise in
the global arena. The Indian IT sector boomed and growed at gain of nearly 50% every year.

Another major event for Indian IT industry post the 1991 reforms was the Y2K bug. Fear of a complete breakdown
of computer services, the US corporations outsourced all the equipment and upgrading work to Indians. The task
of rectifying the Y2K bug was thrown to the Indians and as a result the modification of all the codes and softwares,
which were initially designed till a date of 1999 was to be edited and huge work was outsourced to the Indian IT
industries. The Indian IT industry has helped provide a national GDP of more than 6% since these economic
reforms took place 20 years ago and today, India is known as the IT hub of the world.

27
National Task Force, NTP and IT Act, 2000 helped IT sector grow in India

The NDA(National Democratic Alliance) government, under the leadership of prime minister Atal Bihari
Vajpayee, included the development of IT as the top priority in their long term agenda. Indian National Task
Force was formed for this purpose which overtook the development of IT services in large and small IT
enterprises in India. The National Task Force, within 3 months, provided a detailed report on the Indian IT and
technological industries with more than 100 recommendations which would help improve the IT services in
India. A swift action plan by the Central Government towards IT services growth was executed and all the
recommendations were acted upon sooner than later. The result of these efforts from the Indian Government
bore fruit with the IT exports touching more than $50 billion. Indian economy was no longer that of a
developing nation, but at par with those of the developed nations in the world.

The New Telecommunications Policy, 1999 (NTP 1999) helped free the telecommunications sector in India.
This helped availability of the infrastructure for the telecommunication. The satellites, towers and other telecom
related businesses were no longer owned by the Central Government. The entry of private sector in these
departments helped the telecom sector grow rapidly resulting the boom in IT sector in India eventually. The
growth of IT is totally dependent on the innovation and development of telecom industry. The Information
Technology Act 2000 provided legal recognition of the electronic documents, digital signatures, offences and
contraventions. This helped a long way in striking deals with US clients as no longer the person to person
meeting was required for finalisation of business deals.

Salary details of professionals in IT industries in India

There is a huge hype regarding the salaries of IT professionals in India. One may hear a salary as low as Rs.
2500 per month to a salary as high as Rs. 1 lakh per month for software professionals. Hence there is no way
there can be a generalisation of the salaries of the IT professionals. The salaries are dependent on the skills of
the professionals, qualification of the employees and the experience of the employees. I have enlisted average
salaries of IT professionals based on the experience and designation. This list cannot be taken as the standard
salary packages for IT professionals an the information cannot be used to demand equivalent salaries from IT

28
employers. It is just an average estimate of the salaries only for comparison purpose.

Average Salary of IT professional having experience of 0-2 years: Rs. 2-4 lakh per year

Average Salary of IT professional having experience of 2-5 years: Rs. 4-7 lakh per year

Average Salary of IT professional having experience of 5-8 years: Rs. 7-12 lakh per year

Average Salary of IT professional having experience of 8-12 years: Rs. 12-18 lakh per year

Average Salary of IT professional having experience of more than 12 years: More than Rs. 18 lakh per year

The IT sector in India today outsources software services across the world and because of the economic reforms
in 1991 and the various liberalisation acts introduced by the subsequent Governments helped the IT sector in India
grow immensely. The IT sector has provided employment to more than 30 lakh Indians and has become a source
of income for more than 2 crore Indians indirectly. Because of the IT sector, Indian middle class has attained an
important status and standard of living has increased considerably in India because of the IT revolution.

The journey of Indian IT industry started in 1974, when Burroughs, mainframe manufacturer, offered Tata
Consultancy Services (TCS) to export programmers for the installation of system software for its US client. But
the situation was very worse that no local business firm was supported and the policy of Indian Government
towards private companies was also very aggressive. The Indian IT industry was started by a Bombay-based
corporation which entered the business with the supply of programmers to IT companies located overseas.

Till 1984, IT was not considered as an industry and was not given any subsidies. In 1984, some strategic reforms
were made and considered IT as an industry. In the same year, Indian Government introduced a policy, New
Computer Policy (NCP), which consisted of a package of slashed import tariffs on hardware and software. And
the policy also recognized the software exports as a ‘delicensed industry’. Delicensed industry is eligible for bank
finances, free from the license-permit and to set up offshore units of foreign companies in India.

29
30
Services (TTS) was started by the DATA group for software development services in India in 1968. In 1981,
Informs was founded by Marinara Murphy and his colleagues. Informs was completely committed towards
providing quality software services and also developed an IT business model which was later followed by most
of the IT companies in India. Economic reforms in 1991 and development of IT sector in India The Indian
government had strict control over the private business entities in India before liberalizing of economy in 1991.

The first major IT reform by the Indian Government was the creation of corporation called Software Technology
Parks of India (STEP). This corporation provided satellite links to major IT developers enabling them to transmit
the work done in India directly abroad. As a result, the IT industry in India became free and the business of
outsourcing would finally gain momentum with more and more clients and enterprises going for outsourcing of
IT. Another major event for Indian IT industry post the 1991 reforms was the YUK bug.

Fear of a omelet breakdown of computer services, the US corporations outsourced all the equipment and
upgrading work to Indians. Impact of the recession on Indian IT sector . The global economic crisis in 2008 and
Rezone crisis has made it a roller coaster ride for the world economies. Asia Pacific experienced a deferred impact
of the economic crisis. With the expectations of a sluggish GAP growth and consequent reduction in IT spending,
countries [markets which have a higher dependency on the export markets are affected more than other countries
/ markets with stronger mommies demand.

India was one of the world’s fastest-growing tech markets, focused mainly on exports also experienced the tremors
of the global economic crisis. Domestic IT Outsourcing: For years, the Indian IT industry fate was solely being
decided by foreign markets, especially the US. Although, the markets still holds the lion’s share in the total IT
revenues, there has been a gradual transition in this trend. With the economic downturn post 2008 significantly
cutting down IT spending in the global markets, IT impasses have been forced to look out for new avenues of
sustaining growth.

A part of the focus thus started shifting to the European and Asian market. IT service providers are realizing the
potential of the domestic market and are building specific plans to work with Indian enterprises. Industry experts
point out that the domestic IT market is expected to grow at a CARR of around 7% between FYI and IFFY and
reach more than $36 billion by the end of IFFY. It’s predictable that most of the History Of IT Industry In India
By Mantissa’s

31
Literature review
A few studies in this field of IT industry were found in the course of review of
literature. Contents of the important one are briefly discussed below:
Somesh Kumar (2007) examined in his study the growth performance and past
and present trend of Indian IT industry. He also discussed about the government
policies and its effect, with adverse or favorable. He described how IT sector acts as a
catalyst of growth and development.
T.S.Srinivasan (2005) examined in this study the growth rate of revenues as
earned by IT/ITES sector and its growing contribution towards GDP. He made the
comparison of spending on this sector between India and Chiana and also presented
the consequences of trouble as arise with Y2K problems with its effect on this sector
that made great differences in revenues. But still the consistent growth rate can be
observed from this study.
Rafiq Dossani (2005) discussed in his study the evolution of India’s software
industry and the effect of rigid and hostile government policies concerned this sector
internal as well as international market. He also shows that technologically

sophisticated industry can develop even when many conditions typically present
elsewhere are missing. He also examined the conditions in which transnational entry
was made.
Balaji Parthasarathy (2004) discussed in his study about the details of different
phases of IT industry starting prior to 1984. He presented the revenues earned by this
industry from international as well as from domestic market, percentage of export

revenues and share of Software Technology Park’s in such revenues from pre
liberalized period. He also examined the government policies and its effect with
32
briefly discussing the contribution towards GDP by this sector.
Suma. S. Athreye (2003) discussed about the growth of Indian Software
companies during different periods and showing the growth of software exports for
different times with a detailed study on slowdown period. This study also presented
the picture of financial liberalization along with the evolution in Indian Software
Industry where the evolving strategies of firm lie at the heart of an unfolding dynamic
of sector’s growth.
In addition to above some literature in form of articles in different academic, business
journals and websites etc has been found. The essence of them are enumerated as
below-
Information Technology scenario can be viewed from different perspective that
Indian IT industry as an industry caters to the IT requirements and its deployment
deployment
within Indian industry. To make the improvement in business efficiency new
solutions and ideologies are being accepted by helping in automating business5
process and converting them into extremely cost effective moneymaking machine.
(http://www.cxotoday.com/-Article by Aarti Shah 4thJanuary 2008)
It discussed about the problems of linear growth with its overcome measures in
Indian Software industry. Opening up the Indian market to the foreign players and the
economic reforms of 1990 acted as a catalyst for Indian Software industry Continues
increase in export in export as well as domestic revenues accompanied with growing

33
number of employees indicates a total spectacular growth. It also specifies two
different models of revenue recognition. (www.expresscomputeronline.com -
a r t i c l e
by Neeraj Verma 16thJuly 2007)
The impact of IT is not restricted to its passive contribution to GDP alone. IT
acts as a transformational agent in Indian economic development helps to promote
infrastructure like power, road, electricity etc. Growth of domestic market shows a
CAGR of 23% over 05-06. The infrastructures cost tends to going down with this
prosperous growth. But several problems like absence of active demand, scarcity in
proper infrastructure also exists. It also recognizes that a vibrant and innovative
domestic IT market is sine qua non for sustaining the countries IT industry’s
competitive advantage. (www.nasscom.in p u b l i s h e d o n 2 7 thSeptember 2007)
IT, a fastest growing industry in India makes a significant contribution to GDP in
way of exportation of IT services and ITES product and becomes a preferred global
sourcing base in this sector. But some problems are there in relation to risk
management, human capital attraction and retention and cost management. A key
demand driver for Indian IT services and ITES industry has been the changing global
business landscape, which has exerted performance pressure on MNC enterprises.
(www.ibef.com, published on 21stFebruary 2006)

34
The value proposition of offshore development being well established,
corporate in west are increasingly outsourcing to India and it promises a bright future
for Indian Software industry as a whole. In spite of having all favorable factors the
Indian IT sector acquires only 3% of global market. As per Budget parameters of
2004 like SEZ, Service Tax, Surcharge etc creates a great impact on this growin

1) Dubey Mohit and Aarti Garg (2014)3

opine that the IT industry plays vital

role among all the industries in achieving country‟s objective of economic

development. The IT sector has been rich over the years and has emerged as a

key contributor to the global economic growth. IT sector is comprised of

Software Services, Enabled Services (ITES) and Hardware. The sector has seen

steady rise in growth trajectory throughout past few years. According to

NASSCOM, the sector has shared 7 % of GDP in Indian economy. The prime

aim of this article is to analyze the growth and performance of Information

Technology in India. The study concludes that the IT sector has been

revolutionary by creating employment opportunities with multiple scopes in

various domains. Indian IT sector is one of the parts of global village and it is an

instrumental way to transform Indian people in to the social modernization.

2) G. V. Vijayasri (2013)4

observes the relationship of the Indian economy and

Information Technology industry along with Government promotion policies

35
regarding IT industry. The study shows that the IT Industry has to play major

role to the industrial verticals such as railways, airways, sea- network that have

smooth functioning with IT Industry. The paper also looks back in to the years

1992-2001 where the phenomenal growth of industry services was marked over

50%.With the support of IT policies IT sector has provided 2.9 million jobs

directly and 8.9 million jobs indirectly to the nation. Yet, IT sector has some

challenges to face like insufficient subsidy, mistargeting and Government scares

resources of the Indian IT industry and the rapid growth of 50,000 graduate

engineers are in the queue of seeking employment in IT Industry in India every

year.

3) Saji T.G. et al.’s (2013)

the Global Financial Crisis and Performance of the

Indian Corporate sector: A firm level analysis‟ involves the impact of financial

crisis on some selected corporate sectors e.g. Banking, Reality and Infrastructure

Sector, Automobile, FMCG, Pharmaceuticals & Information Technology. The

selected four large groups of companies were Infosys, Wipro, TCS and Tech

Mahindra .This study includes financial performances like sales growth, earning

growth, profit margin, return on equity, solvency ratio, earning per share,

36
dividend yield and net worth of return from the period of 2006-07 to 2008-09.
The study was mainly based on pre and post crisis of the six sectors that were

analyzed on the basis of secondary data collection. The results of the study

showed that the growth of banking sector during the period of crisis was up

securing all financial performances whereas, in this study of IT sector, the sales

and earning profile were considerably improved in the study period. Wherein,

Automobile companies in India slightly showed a steep decline in their earnings.

FMCG (Fast moving consumer goods) were seemed to be not much affected by

crisis while the pharmaceutical selected companies‟ growth showed negative

trends in case of EPS, Dividend yield, return on net worth and came to the

conclusion that the degree of global crisis did not shock the same of the Indian

corporate sector. Some sectors were hit by global crisis and some remained

unaffected.

4) Economic Survey (2012-13)6

concludes that Indian IT and ITES sector have

started facing many challenges due to the rising growth of other countries in

software services for example Sri Lanka 28 %, Argentina 37%, Philippines 69%,

Ukraine59%, Costa Rica 35% and Russian Federation 27% during the years 2005

to 2011 which was higher than the world‟s top ten exporters. The big issue of

outsourcing in USA and UK is that both countries have just initiated a local

workforce. India should take up opportunity through improving a value chain

software services focusing on domestic sector, raising wages in urban BPO,

37
moving towards rural areas for skill development and English language training

with USA, European and different calyzes the

vertical-wise trends of IT industry. Today in India the demand side of the IT

sector (spending) varies in segment to segment of the business. Manufacturing is

a broad sector whereas telecom is focused and well regulated, construction and

retail are dominated by unorganized sectors; education that is dominated by

government and so on. His methodology of the study is to compare 2012 data of

IT spending and forecast in 2013 in percentage growth of IT industry and

compare the verticals among Banking, Manufacturing, Telecom, Construction,

Education, Automotive and Retail. He concludes that IT is now interwoven with

business and it is not only finding business solutions but also finding a new

6) Kathuria Rajat and Mansi Kedia (2012)8

trace upon the growth phase of

Telecom industry. The growth of teledensity increased with more than 75%

driven by the growth of mobile telephony. In the case of mobile telecom

network, India has become the second largest in the world after China. The

research further points out the fact that, though the process o f telecom

liberalization began in the 1980s, but the real reformation transcends in 1994

with the enactment the National Telecom Policy (NTP).Not only that

Government created its corporatized departmental monopoly like MTNL and

VSNL. The rest of monopoly managed by DoT (Department of

Telecommunication) The Telecom Regulatory Authority was eventually set up in

38
1997The new telecom act created the TDSAT (Telecom Dispute Settlement and

Appellate Tribunal) it was fast track disputes settlement process .DoT was also

created BSNL in 2000 for provisions for services separately. Even at this point

the country is obvious regarding the absence of strong policy of Electronic

System Design and Manufacturing (ESDM) and critical to develop in the

country. It is examined that combination of IT and telecommunications with their

convergence technology has brought numerous opportunities from different

domains. Thus, IT has come up as a sunrise sector for the country.

7) Natarajan Ganesh (2012)9

carries out that the all economies are passing through

difficult times but IT industry has clear opportunity of the three million people by

their reinforce skills and deliver maximum value of the industry. The financial

services of JP Morgan and Barclays companies had bad impact on worlds

companies but Indian IT industry has shown its good prospects in the area of

Cloud computing, mobility, enterprises, social media and big data.. Foundation

leadership (NASSCOM) Provide strong new initiatives in the field of IT industry

in India.

8) Pushap Sourabh C.‟s (2012)

10 Dataquest article “Embracing New Trends”

brings out how cloud computing has been emerging as a compatible

infrastructure that challenges that of the traditional infrastructure. He concludes

while undergoing the HIS survey, IDC survey, and one executive statement that
39
cloud computing is play to disruptive role in IT services with the maximum

impact on the infrastructure space. Moreover, the overall compound annual

was of server market. Apple, Microsoft, Google and Amazon have adopted this

new cloud computing infrastructure in order to sell this services and it has been

fueling growth of the market. The data centre and service providers are facing

challenges to the infrastructure rigidity and technology. He ends ups stating that

cloud computing and new technology infrastructure model has enabled business

environment and new technology.

9) Sharma, Onkar‟s (2012)

11 descriptive paper points out that the IT sector had a

rosy picture of exports during 2003 to 2008, but when its exports grew at 26%

(CAGR) which was not easy way to gain during above mentioned period. Size of

IT does a matter of sector‟s growth. The global major of the IT companies

exports are steadily counterparts but domestic market has not grown as on

exports as also the IT industry reached size of $100 billion. It cannot continue to

multiply at the same rate as before. It has the paining phase of maturity and

growth rates will gradually stabilize at a reasonable level and have to develop

some strategies for emerging global challenges as US and UK are supposed to be

extra cautions against India‟s outsourcing. Further he concludes that the IT

industry leapt past the $112 billion mark in 2012. At the time when the business

sentiment is bleak, Indian IT industry has emerged as a major contributor to

India‟s GDP.
40
10) Verma, Shweta (2012)12 discussed how the market of domestic IT services

declined due to certain factors like uncertain market conditions, continuous

global economic recession and a weakened investment climate in the country and

how this down turn came up with different opportunities to the domestic IT

services to expand in the market. The core of the IT services used to cater various

verticals like telecom, IT/ITeS, manufacturing, and BFSI. But after economic

slowdown, service providers ventured in to other sectors such as retail, education,

healthcare and energy & utilities. On the other sides new areas like IT

infrastructure management, IT outsourcing, and cloud based services seemed

more profitable in terms of growth so, the sector needs to part with its traditional

networking and co-location services. It was also the time when small and

medium businesses looked forward for IT services for their better integration and

the industry saw a number of smaller deals coming from the SMBs segment.

businesses rather than larger contracts of multi million of multi years. In case of

Tier I players, such as IBM, Wipro, TCS, and HCL kept on dominating in the

market contributing about 40% to the total market share with their developmental

strategies like Wipro begged some large projects from government for three

different states . Wipro InfoTech company therefore revenue were affected by

above mention government to slow decision making and delay in projects. Only

TCS (giant) has promote healthy growth in 2011 for cloud based plant launched

for small and medium business. HCL Info system and IBM‟s growth was stalled

by market slowdown. IT is a good time to re-look new strategies for IT service

41
providers to change as changing these market dynamics. Some new areas of IT

sector are infrastructure services, cloud, mobility and business analytics.

11) World Information Economy Report (2012)

13 includes various software based

issues in to six chapters such as expansion of ICT in almost every field for socio

economic and global development, the linkage between software capabilities and

development, regional and global trends in the context of production, spending,

trade, investment, venture capital and employment in the software sector, trends

and implications of free and open source software (FOSS) and its‟ analysis of the

market orientation of software production in developing countries like India, Sri

Lanka, and Korea, Software trend with BRIC (Brazil, Republic of Korea,

Russian Federation, India and China)countries , and policy recommendations on

how governments and their development partners should leverage software for

development and strengthen national software systems. Seeing quick adoption

and absorption of software at small and large levels in the country the report

unveils that the country has vast scope in software and hence country must go

ahead with innovation. The introduction of ICT motivates small and medium

developers towards production. The report simultaneously mentions examples of

those country or groups of countries with their first steps in software

development like Nigeria's new software strategy, Republic of Korea‟s The E-

Government Frame platform, A global UNCTAD/WISTA (Women‟s

International Shipping & Trading Association) survey of national IT/Software

42
Associations, Sri Lanka‟s emerging Android ecosystem, Software trends in the

BRIC countries, Malaysia‟s Public Sector‟s Open Source Software Programme,

famers with information etc. Furthermore, the report traces upon National

Software System and Government has a pivotal role to play for National

Software System by its‟ software friendly policies. For Software System, any

country has to create accessible, affordable and qualitative ICT infrastructure

with qualified human resource and capitalist only than they can link them with

rest of the world. Therefore, report enlists some policies recommendations for

government such as giving proper attention to FOSS, Prompt action for national

software system, adoption of new ICT in education, promoting international

standard based skills, modifying software development strategy according to its‟

needs, supporting legal and regulatory framework, supporting sector based either

IT or ITeS associations and clusters, meetings of developers, software SMEs‟

development and more.

12) Ananth Karthik (2011)

14 scrutinizes offshore activities of global corporations

which have three options. The first is open, second one is non subsidiary at an

offshore location or partner with third party service provider and thirdly it can

have both subsidiary and a partner relationship. When MNCs‟ subsidiaries

dedicate work in offshore location for their parent organization are called

captives. Captive is like value chain to become center for excellence. It is a new

transformation around adopting new business model and pioneers of the global
43
delivery model. Indian domestic captive markets has tremendous amount of

growth from $ 3 billion in 2003 to $10.6 billion in 2009. The Market grew at

11.6 per cent over the last three years and witnessed growth of 44% in the

number of software product development. The Traditional model is outmoded

model where as ROW (rest of the world) GSM (Global Sourcing Management)

as a part of captive or vender or a hybrid model. It has been across the world.

Today it is new model in emerging business such as risk- reward, outcome- based

pricing. In Open innovation network there are numbers of universities launching

its multiple research programs running under challenging areas with MNCs.

Today‟s India has the global leadership. The country has turned in to head

quarter from running captive centers. They have their own business units and

also have global stockholders based out of head quarter; report back into them in

44
Research methodology

It is to be the main purpose to produce the details of research project. We are

adopting here the case study approach as it regards one of the most ideal as well as

multi-perspectival need in holistic and in-depth investigation. Here we are conducting

the research by explanatory (used for doing casual investigation) and collective case

studies (group of case studies required).

To conduct the study the following methodologies are adopted here. They are

as follows:

1. Ratio analysis is adopted to analyze the financial performance of the sample

companies and to compare the inter-firm and industrial performance.

Profitability and liquidity ratios are examined to evaluate the performance of

the concerned companies. It also facilitates the comparison between the past

and present result and indicates the future dimensions of the performance.

2. Multiple regression analysis is conducted to quantify the linear relationship

between liquidity and profitability ratios of the company and also to

discover the variable/variables which mostly influence the overall

profitability return on capital employed (ROCE, hereafter) of the company.

The analysis is carried on by taking ROCE as dependent and liquidity ratios

(current ratio, quick ratio and absolute liquid ratio and debt equity ratio) as

independent variables. The variables (ratios) are retained in the regression

model on the basis of high t value (|t|>2) and low p-value (p<0.05). In the

present study Durbin-Watson test (DW, here after) is conducted to examine

the autocorrelation among residuals. If DW test statistic lies between 1.5 and

2.5 then it indicates that the residuals are independent. Another severe
45
problem is multicollinearity in the regression model. Tolerance value is the

amount of a variable unexplained by the other independent variables; small

tolerance values denote high collinearity. A common cut-off threshold is a

tolerance value of .10 which corresponds to a VIF (Variance Inflation

Factor) value of 10 (Hair, et.al, 2009).

3. Pictorial presentation like tables, column chart, bar chart and line charts are

used to facilitate the analysis and interpretation of the data. Line chart is

used in the study to understand the trend over the time. Colum chart and bar

charts are used to facilitate the interpretation of the data in a simplest and easier way.

There are 15 IT companies to be analysed as discussed above. In order to analyze and

interpret the results accurately some steps are to be followed for each company such as –

st Step – to check the stationary pattern of the given data by the use of correlograms for

every factor i.e.

Correlograms of – (i) Sales, (ii) Compensation, (iii) Income, (iv) Expenses and (v)

Employees (total 5 Correlograms)

IInd Step – after checking the stationary pattern of data; there are some non stationary factors

also. So in order to make the non stationary data into stationary data a collectively Residual

graph and Residual correlogram are prepared to adjust the non stationary residuals among

various stationary factors to take them collectively on a single platform for further

calculations.

IIIrd Step – after making the whole data stationary, finally the Least Square and ARMA

46
method is used to estimate the equation for analysing the impact of variables.

IVth Step - at last a graph is prepared to check the whole scenario and individual performance

of each factor.

(4.2) For Non – IT Companies:

Only graphical method is used to represent the whole scenario of recessionary period.

Basically four factors are taken for analysis of all the 10 Non- IT Companies.

1. Sales of the company

2. Expenses of the company

3.income of the company

4. Profit of the company

Therefore a single graph is prepared for sales, expenses and income. And a separate graph is

made for profit because it contains negative values while other three factors contains positive

values only.

Method Used for IT Companies: in this study ARMA (p, q) Model is used for analysing the

results in an accurate manner. And ARMA (1,1) it simply means that the regression of u t on

itself lagged one period, it is first order because it considers the u t & its immediate past

value, which moving on average for every 1 year and hence continued. The general model

introduced by Box and Jenkins (1976) includes autoregressive as well as moving average

parameters.

Formula:

AR (1)

t Zt at Z c 1

MA (1)

Zt at at 1

47
 ARMA (p, q)

Zt Zt pZt p at at qat q

... ... 1 1 1 1

ARMA (1,1)

L Zt L at

(1 ) (1 )

Here: c= constant, t= time, L= Lag, µ= constant, ø = coefficient, a t = white noise,

Z t = today’s value

Steps to be followed for analyzing the given data:

1. First of all the Correlograms are formulated with the help of EViews.6, to do the

stationary check of the given data. Whether the given series is stationary or non-

stationary.

2. If data is stationary then go for the estimate equation i.e. NLS and ARMA; hence

interpret the results.

3. If data is not stationary then a correlogram of residuals is to be made; in order to make

the data stationary and again go for estimate equation.

4. The graphical representation of the data for analyzing the whole scenario of recession

as pre, post and during recessionary period. What was the overall performance of a

company by analysing each variable individually.

Description about the resulting values:

Data Stationary Checks: the given data is stationary or not, it is the first condition to

be fulfilled for every time series. And this can be done with the help of correlograms.

We can judge very easily just on seeing the correlogram.

Correlogram: the spikes given in the correlogram in the form of ACFs & PACFs;

48
which help in analyzing the data stationary condition. If the spikes of ACFs are falling

down or coming down gradually then it is called as white noise (no autocorrelation).

But it is not declining gradually then it can’t be said as a stationary series and we have

to go for the Correlogram of residuals for making the given data stationary and then

check the result again for the decreasing size of the spikes in ACFs and PACFs.

Coefficient value: will show the percentage dependability of an independent variable

on the dependent variable as how much effect of the independent variable will impose

on the dependent variable if one unit of the independent variable is increased or

decreased (if one unit changed).

P-value: The Probability value (P-value) is used to measure how reliably the

independent variables can predict the dependent variable. It is compared to the

significance level which is typically 0, 05. If the P-value is greater than 0, 05, it can

be said that the independent variable does not show a statistically significant

relationship with the dependent variable.R2

- value: R2 is the proportion of variance in the dependent variable that can be

predicted from independent variables. R2 is generally considered to be secondary

importance, unless the primary concern is of using regression equation to make

accurate predictions. R2 is an overall measurement of the strength of association, and

does not reflect how any independent variable is associated with the dependent

variable.Aduj. R2

- value: There is also adjusted R2 which gives more accurate value

value indicates that prediction power of dependent variable by independent variables

is also high.

DW –value: The Durbin – Watson value is used to check the autocorrelation among

49
the series. It should always be greater than R2

value, otherwise considered as non

spurious. Its value should be positioned ≤ 2; then it is considered as best otherwise not

so good for the analysis purpose. And if R2

> DW then it would be considered as non-

stationary. If DW is closer to 4 then it is an evidence of negative serial correlation.

Q- Static value: If its value is < 0, 05 or 5% then there is a significant autocorrelation

between the variables. It also describes that there is no significant pattern left in the

ACFs and PACFs of the residuals in a correlogram; which means that the residuals of

the selected model are White Noise.

AIC or SIC selection: Both of these used to compare in- sample or out – sample

forecasting performance of the model. But none of them is superior to other. Higher

the value better would be result for reflecting the forecasting performance.

ACFs and PACFs: If the spikes are coming down gradually then it means that the

given data is stationary and the residuals of the selected ARMA model are White

Noise.

METHODS APPLIED TO ACHIEVE OBJECTIVES

For Objective 1: The researcher has applied a statistical tool ARIMA to analyze the

impact of recession on IT sector.

For Objective 2: The researcher has used graphs to assess the trend of recession on

non-IT sector.

For Objective - 3, 4, 5, 6 and 7: To achieve these objectives Content Analysis method

50
Data analysis , Interpretation & Presentation

The Indian IT and ITES industry (including the domestic font) showing an overall growth of
30.7% against a projected growth rate of 27%. Now it becomes cleared that India is quickly but
quietly acquiring the top position particularly in the area of software designing and web based
services. This growth rate also helps to grow Indian economy and emerging to be one of the
developed countries in the next decade. India became the leading offshore destination and account
for 65% of global industry in offshore IT and 46% in BPO industry from the last decade. The
addressable market for the offshore IT is around US $150-180 billion. During 4 to 5 years India
is holding the first position around the world. This only accelerates the Indian economy with a
high spark. It can be said that Indian economy becomes more globally integrated. Indian IT and
ITES including export and domestic is expected to exceed USD$47.8 billion annual revenue in
the current fiscal 2007, an increase of 28% in the same. Software and service exports remain
mainstay of the sector contributing USD $ 31.3 billion and beating a forecast to register a 32.6%
growth and it is expected to increase USD$ 60 billion by 2008-09 forming a part of 30% of total

export.

51
EXPORT REVENUES FROM DIFFERENT SEGMENT OF IT INDUSTRY IN USD $

The above table-3 and figure-3 explains the export revenues earned by IT sector during the
study period. In 2001-02 Indian IT earns export revenues of USD $ 7.6 billion and it increases to
USD $ 31.1 billion in 2007-07. The export revenues from IT services follows increasing trend for
the period since 2001-02 to 2006-07. It grows gradually. The revenues from export of IT services
was USD $ 5.8 billion in 2001-02 and reached to USD $ 10.0 billion in 2004-05 and attains USD
$ 17.8 billion in 2006-07. The CAGR of export revenues from IT-Services is 20.5 percent for the
study period. The export revenues from ITES-BPO also shows growing trend for this period of
six years. In 2002-03 this segment earns USD $ 2.5 billion which reach to USD $ 8.4 billion in
2006-07 with CAGR of 33.3 percent. Software and engineering services demonstrates a rising
trend of export revenues for the particular study period. It earns revenues of USD $ 0.3 billion in
2001-02, USD $ 3.1 billion in 2004-05 and

USD $ 4.9 billion in 2006-07. The CAGR of export revenues from this segment is

59.3 percent.

It is a known fact that a major part of export revenues come from US and UK market and the rest
of the world stands for a small portion. Actually India at the first

52
TOTAL REVENUES EARNED BY IT AND ITES SECTOR

The above Table (Table-2) shows that the revenues of IT services, ITes BPO and software
products &engineering services increase gradually during the study period. IT-Services earns a
revenue of USD $ 17.8 billion in 2006-07 compared to USD $ 5.8 billion in 2001-02 from export.
The domestic revenues from IT services also increasing steadily and shows a sharp increase of
USD $ 2.1 billion in 2001-02 to USD $ 5.5 billion in 2006-07. The compound annual growth rate
(CAGR, hereafter) of IT-Services is 19.76 for the study period. The export revenues from ITes-
BPO shows increasing trend during the study period. Revenues from export in
2001-02 was USD $ 1.5 billion and increased to USD $ 8.4 billion in 2006-07.
Domestic revenues from this segment is also impressive and shows an increase from USD $ 0.1
billion to USD $ 1.1 billion in 2006-07. The CAGR of ITes-BPO revenue is 34.57 percent. The
other segment of Indian IT sector is software product and engineering services demonstrated an
increasing trend in case of revenues earned from domestic as well as from export. The export
revenue of this segment in 2001-02 was USD $ 0.3 billion in 2001-02, USD $ 2.5 billion in 2003-
04 and USD $ 4.9 billion in 2006-07. Domestic revenue is USD $ 1.6 billion in 2007-07 compared
to USD $ 0.4 billion in 2001-02. The CAGR of the revenue earned by this segment is 44.98
percent for the study period. The Figure-2 shows the pictorial presentation of the revenues earned
from the above mentioned segment of Indian IT industry.

53
CONTRIBUTION TO GDP

54
CONCLUSION
The services sector in India has grown faster than agriculture and industry. As a result,
the share of services in GDP has increased over time. In the 1990s, services growth was
particularly strong, and this has led to the services share in output being relatively large in India.
The acceleration in growth of the services sector in India in the 1990s was due to fast growth in
communications, banking services, business services (IT), and community services. Growth of
agriculture is vital not so much for generating more employment, but basically for raising the
income levels of the people engaged in it. But industry, particularly manufacturing, needs to
grow faster for ensuring macroeconomic balance between growing demand and supply of goods,
price stability and trade balance. And above all, it needs to grow faster to generate employment,
as it appears to be the only one among the three sectors, which has reasonably high and growing
employment intensity.

Despite the service sector becoming India's engine of growth

(accounting for more than 60% of GDP), there's no gainsaying the fact the India is still an
agrarian economy, with close to 70% of the population depending on this sector. The agricultural
sector, which continues to be highly monsoon-dependent, has been one of the most erratic
sectors. Services can become the major driving force of economic growth, in case of India’s
sustainability of a service-led growth It has been argued that income from the service sector is
growing much in excess of the demand generated for services by the commodity sector and since
income might grow faster than employment in the organized services, service-led growth can
have serious implications for inflation, income distribution and balance of payments. In short, it
is argued that this growth is not sustainable in the long run.

55
The review of literature has given a broad overview of the various research studies carried out in
the past years. It throws light on the strengths and the weaknesses of the research. The present
study focuses on the growth and performance of the Indian IT industry

The past and present study of the IT sector in India is concerned with the growth, status, challenges
and weaknesses of the IT sector. Generally speaking, the reports of NASSCOM, World
Information Economy Reports and Ministry of Information Technology Reports in India reflect
only the segment-wise review of IT sector.

Besides, it has also been observed that very often the sample selected for research is too small
comprising large players of the IT sector and neglecting the small and medium sized companies
consequently a time picture does not emerge.

Most of the studies are restricted to a period of two years to maximum five years which does not
reflect the complete picture of the company‟s business environment. Hence, there is a need to
carry out the study of a longer duration. Therefore, this research is based on the period of nine
years from 2003-04 to 2011-12.

In addition, the most of study comprised of limited areas of research variables which won‟t suffice
to various dimensions of the IT sector in India whereas this research study has focused on various
dimensions of information technology examined with Indian economy.

At the present point of time Indian IT industry exists at its peak position. A major part of
export revenues has been earned by this sector. But the real picture was not always the same. This
sector was most neglected up to 1980 and facing typical certain problems of absence of local
market, hostile and rigid government policies, poor urban and rural infrastructure with heavy
power cut, under developed transport system etc. Due to all these hindrances the growth of IT
sector was halted. But during 1990 the picture was almost changed. That time has become one of
the main centers for software development work. The software market was boosted by domestic

56
deregulation, entrepreneurial flair technically well equipped and with abundant English speaking
manpower force.

From the last decade India has become the leading offshore destination and accounts for 65%
of the global industry in offshore IT and 46% of BPO industry. During last four to five years India
has captured such leadership position. The addressable market for the offshore IT is around US $
150 to $ 180 billion. In India the domestic market earned the revenues of US $ 29.6 billion and
that has increased to US $ 39.6 billion and is expected to cross 60 billion by 2010.

This sector also contributes a great portion towards Indian GDP and its contribution increases
day by day. Opening of Indian economy helps to grow this sector enormously. Now a day it
presently contributes 7% approximately to Indian GDP.

Indian IT industry is a flourishing industry and the liberalized policies of Government help
this sector to grow gradually. IT services and information technology enabled services have
shown unprecedented growth. The demand for such services has grown substantially. The growth
of the Indian IT industry is likely to be very good in future. The future trend of Indian IT industry
appears to be very bright, promising and prosperous.

6.2 Suggestions

Though in the post reform period Indian IT industry has shown a very extraordinary and
extravagant growth but it has to face a keen and cut throat competition in the globalize business
environment. Some top Indian originated companies like TCS Limited, CMC Limited, HCL
Inosystem Limited, Satyam Computer Services Limited Infoys Limited etc. constituted global
market but several U.S.A, U.K based companies operate in India and Indian personals work for
these countries instead of their own country. So Indian companies must pay their attention in the
following aspects –

1. More IT software developing units should be constructed instead of BPOcenters to

accommodate Indian software engineers to prohibit brain drain from India.

57
 2. Some of the Indian IT companies maintain international standard to providesoftware
services to their customers as per international quality. But other IT companies to compete
internationally also must take this type of project.

3. Indian IT companies always concentrate on the international market so theymust try to

explore Indian domestic market to provide better quality product at a lower cost.

4. Now a day cyber crime is a great problem not only for India but also for thewhole world.
So Government of India (GOI) must take some necessary measures to prohibit increasing
cyber crimes on net and tighten the cyber security. GOI also prepare strict rules and
regulations in regards to those crimes and should make sure that all must abide that rules
and regulations.

5. In the budget proposals GOI should not impose such high rate of tax asimposed by way of
MAT (Minimum Alternative Tax) by GOI in the year
2006-07 that can pull down the revenue percent as earned by the Indian IT

sector and should continue the Special Economic Zone (SEZ) benefits for this industry for
another five years.

6. To boost up the domestic IT market GOI must take some urgent steps. Sonot only The
Indian Government but also the Indian IT companies should
look after this matter.

7. Each and every IT companies put their emphasis only on software segmenttill now
hardware sector is totally neglected so IT companies must make sure that hardware sector
should get proper importance.

8. Still now we are importing some hardware components from aboard whishpull up the price
of laptops and computers. So the Indian IT companies should look after this matter and
start to manufacture their own components.

58
 9. It is very much unfortunate many of foreign companies are operating inIndia at a large scale
as a result some large Indian IT companies can only compete with them. But the small
Indian IT companies are unable to do so.

10.As IT is purely human based industry, therefore it must takes some steps to provide them
required training with a view to equip them necessary knowledge to form future personnel
panel.

11.Indian IT industry only develops in certain urban areas only but till now rural areas are
still neglected. So they must focus on these areas and on these people also.

12.Indian IT companies must provide some customer’s data protection software so that the
interest of the customers can be protected as there is increasing trend of cyber crimes.
Therefore they must adopt some major steps to prohibit such crimes on net.

13.Infrastructure is a very important part of this industry. Better Infrastructure can help the IT
companies to progress further. So the Indian IT companies must give some stress on such
field and adopt the actions to build up the

urban as well as rural infrastructure.

14.Software developers must acquainted with the needs of the customers and always try to
satisfy their needs in the changing business environment. According to the customer’s need,
choice and preferences they should develop the software.

6.3 Limitation of Study

This study carries on projecting the actual financial position of Indian IT sector. But it
contains two limitations as it has only taken into account the financial indices and absolutely
disregards the human resources which are inevitable for this type of industry because IT is purely
knowledge based industry. Another limitation of this study is that we are taking only five IT
companies’ six years’ Annual Reports that may limit our discussion.
59
6.4Scope for Further Research
The present study is basically deals with the financial performance of Indian IT sector after
post liberalized period. To discuss the financial position of IT sector in India we have taken top
five companies and analyze their annual reports to view the actual scenario of financial growth
and stability in this sector. In course of the study, it has been felt that some future research may
be carried on in relation to this IT industry. A few such areas are mentioned below-

1. Future performance and prospect of Indian IT industry may be another

important of research.

2. Comparative study on Indian IT industry with other type of industries likeconstruction,

manufacturing, iron and steel industry etc. in India may be another important of research.

3. Comparison of financial condition of Indian IT industry with one or morethan one other
countries IT industry may become another area of research work.

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