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IT Industry In India:Information Technology (IT) industry in India is one of the fastest growing industries.

Indian IT industry has built up valuable brand equity for itself in the global markets. IT industry in India comprises of software industry and information technology enabled services (ITES), which also includes business process outsourcing (BPO) industry. India is considered as a pioneer in software development and a favorite destination for ITenabled services. The origin of IT industry in India can be traced to 1974, when the mainframe manufacturer, Burroughs, asked its India sales agent, Tata Consultancy Services (TCS), to export programmers for installing system software for a U.S. client. The IT industry originated under unfavorable conditions. Local markets were absent and government policy toward private enterprise was hostile. The industry was begun by Bombay-based conglomerates which entered the business by supplying programmers to global IT firms located overseas. During that time Indian economy was state-controlled and the state remained hostile to the software industry through the 1970s. Import tariffs were high (135% on hardware and 100% on software) and software was not considered an "industry", so that exporters were ineligible for bank finance. Government policy towards IT sector changed when Rajiv Gandhi became Prime Minister in 1984. His New Computer Policy (NCP-1984) consisted of a package of reduced import tariffs on hardware and software (reduced to 60%), recognition of software exports as a "delicensed industry", i.e., henceforth eligible for bank finance and freed from license-permit raj, permission for foreign firms to set up wholly-owned, exportdedicated units and a project to set up a chain of software parks that would offer infrastructure at below-market costs. These policies laid the foundation for the development of a world-class IT industry in India. The Indian Information Technology industry accounts for a 5.19% of the country's GDP and export earnings as of 2009, while providing employment to a significant number of its tertiary sector workforce. More than 2.5 million people are employed in the sector either directly or indirectly, making it one of the biggest job creators in India and a mainstay of the national economy. In 2010-11, annual revenues from IT-BPO sector is estimated to have grown over US$76 billion compared to China with $35.76 billion and Philippines with $8.85 billion.[1] India's outsourcing industry is expected to increase to US$225 billion by 2020. The most prominent IT hub is Bangalore. The other emerging destinations are Chennai,

000 Internet users²comprising 7. As a result hiring has dropped sharply and employees are looking at different sectors like the financial service. India's IT Services industry was born in Mumbai in 1967 with the establishment of Tata Group in partnership with Burroughs. On 18 August 1951 the minister of education Maulana Abul Kalam Azad. Technically proficient immigrants from India sought jobs in the western world from the 1950s onwards as India's education system produced more engineers than its industry could absorb.000 people in the country have access to broadband Internet² making it the 12th largest country in the world in terms of broadband Internet users. a total of 506. out of them only 25% to 30% possessed both technical competency and English language skills.000 telephone lines in use. Formative years (till 1991) The Indian Government acquired the EVS EM computers from the Soviet Union. By 2009. Ahmadabad.160. Total fixed-line and wireless subscribers reached 543. although 12% of India's population can speak in English India developed a number of outsourcing companies specializing in customer support via Internet or telephone connections. a total of 81.0% of the country's population. 2009. More than 80 percent of the country's software exports happened out of SEEPZ. Mumbai.000 mobile phone connections. third in numbers only to that of the United States of America and the Soviet Union. India also has a total of 37.Hyderabad Coimbatore. Kolkata. As an outcome of the various policies of Jawaharlal Nehru (office: 15 August 1947 ± 27 May 1964) the economically beleaguered country was able to build a large scientific workforce. However. the recent global financial crises has deeply impacted the Indian IT companies as well as global companies. India's growing stature in the Information Age enabled it to form close ties with both the United States of America and the European Union. and 7. which have been growing phenomenally over the last few years. which were used in large companies and research laboratories. Kochi.000.040. Pune.000 engineers in the country. and manufacturing industries.570. telecommunications. Possibly modeled after the Massachusetts Institute of Technology these institutions . In 1968 Tata Consultancy Services²established in SEEPZ. Mumbai by the Tata Group²were the country's largest software producers during the 1960s. the old avatar of the modern day IT park. Mumbai in 80s. Each year India produces roughly 500. The first software export zone SEEPZ was set up here way back in 1973. inaugurated the Indian Institute of Technology at Kharagpur in West Bengal. NCR .20 million as of November.

Relaxed immigration laws in the United States of America (1965) attracted a number of skilled Indian professionals aiming for research. the Indian government embarked upon the creation of three wide-area computer networking schemes: INDONET (intended to serve the IBM mainframes in India). and the academic research oriented Education and Research Network (ERNET). Sarkar. Kamdar (2006) reports on the role of Indian immigrants (1980 .were conceived by a 22 member committee of scholars and entrepreneurs under the chairmanship of N. In 1993 the government began to allow individual companies their own dedicated links. In the Encyclopedia of India. Patni Computer Systems and Wipro had become visible. The 'microchip revolution' of the 1980s had convinced both Indira Gandhi and her successor Rajiv Gandhi that electronics and telecommunications were vital to India's growth and development. and commercial Internet . MTNL underwent technological improvements. Between 1986-1987. R. the local link was a wireless radio link. By the 1980s a number of engineers from India were seeking employment in other countries. 1991±2001 Regulated VSAT links became visible in 1985. NICNET (the network for India's National Informatics Centre).000 Indians were estimated to have settled in the US. he 64 kbit/s leased line service in 1992.early 1990s) in promoting technology-driven growth: The National Informatics Centre was established in March 1975. STPI set up software technology parks in different cities. By 1960 as many as 10. could provide VSAT communications without breaching its monopoly. Between 1977-1980 the country's Information Technology companies Tata Infotech. Desai (2006) describes the steps taken to relax regulations on linking in 1991: In 1991 the Department of Electronics broke this impasse. the Indian companies realigned wages to retain their experienced staff. which allowed work done in India to be transmitted abroad directly. Videsh Sanchar Nigam Limited (VSNL) introduced Gateway Electronic Mail Service in 1991. creating a corporation called Software Technology Parks of India (STPI) that. In response. each of which provided satellite links to be used by firms. Indian firms soon convinced their American customers that a satellite link was as reliable as a team of programmers working in the clients¶ office. being owned by the government. The inception of The Computer Maintenance Company (CMC) followed in October 1976.

the Task Force incorporated the experiences of Singapore and other nations. the Task Force produced an extensive background report on the state of technology in India and an IT Action Plan with 108 recommendations. The Indian economy underwent economic reforms in 1991. The number of Indian Americans reached 1. Much of what it proposed was also consistent with the thinking and recommendations of international bodies like the World Trade Organization (WTO). Indians fared well in science. This immigration consisted largely of highly educated technologically proficient workers. International Telecommunications Union (ITU). Election results were displayed via National Informatics Centre's NICNET. 1999 (NTP 1999) helped further liberalize India's telecommunications sector.7 million by 2000. Throughout the 1990s. and the software industry. India's reputation both as a source . 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 could act quickly because it built upon the experience and frustrations of state governments. Thus GOI planned to establish new Institutes especially for Information Technology to enhance this field. Within the United States. Economic growth of over 6% annually was seen between 1993-2002. It was less a task of invention than of sparking action on a consensus that had already evolved within the networking community and government. engineering. Graduates from the Indian Institutes of Technology (IIT) became known for their technical skills.access on a visible scale in 1992. The success of Information Technology in India not only had economic repercussions but also had far-reaching political consequences. another wave of Indian professionals entered the United States. which implemented similar programs. leading to a new era of globalization and international economic integration. The economic reforms were driven in part by significant the internet usage in the country. The New Telecommunications Policy. central government agencies. In addition. The new administration under Atal Bihari Vajpayee²which placed the development of Information Technology among its top five priorities² formed the Indian National Task Force on Information Technology and Software Development. universities. In 1998 India got the first IT institute name Indian Institute of Information Technology at Gwalior. and management. and World Bank. The Information Technology Act 2000 created legal procedures for electronic transactions and e-commerce.

Bangalore. Salt Lake Sector-5. The relationship between economy and technology² valued in the western world²facilitated the growth of an entrepreneurial class of immigrant Indians. . a major IT hub in the city. Millenium Tower in Kolkata.and a destination for skilled workforce helped it improve its relations with a number of world economies. which further helped aid in promoting technology-driven growth 2001±present Infosys Media Centre in Electronic City.

2000 in Chennai. Cyber Towers at Hitech City in Hyderbad Patni Knowledge Park. remote . IT-enabled services such as back office operations. The economic effect of the technologically inclined services sector in India² accounting for 40% of the country's GDP and 30% of export earnings as of 2006. Airoli. Navi Mumbai Cognizant's Delivery Center in Pune India is now one of the biggest IT capitals in the modern world. while employing only 25% of its workforce²is summarized by Sharma (2006): The share of IT (mainly software) in total exports increased from 1 percent in 1990 to 18 percent in 2001.Tidel Park²one of the largest software parks in Asia²was set up on the July 4. to aid the growth of Information Technology in Tamil Nadu.

accounting. On 25 June 2002 India and the European Union agreed to bilateral cooperation in the field of science and technology. Jobspert etc. Bangalore is known as the Silicon Valley of India and contributes 33% of Indian IT Exports. LnT Infotech. Indian companies such as HCL. it was revealed that Cap Gemini will soon have more staff in India than it does in its home market of France with 21. WNS. India's second and third largest software companies are headquartered in Bangalore. i-Flex. public call centers medical transcription. Such is the growth in investment and outsourcing. are head-quartered in Mumbai. And Mumbai too has its share of IT companies that are India's first and largest. Top 10 IT Hubs in India Ranking City Description Popularly known as the capital of the Silicon Valley of India is currently leading in Information Technology Industries in India. Today.maintenance. as are many of the global SEI-CMM Level 5 Companies. Shine. TCS. Naukri. and other bulk processing are rapidly expanding.000 personnel+ in India. and Infosys may yet become household names around the world. A joint EU-India group of scholars was formed on 23 November 2001 to further promote joint research and development. like TCS and well established like Reliance Patni. and these IT and dot com companies are ruling the roost of Mumbai's relatively high octane industry of Information Technology. India holds observer status at CERN while a joint India-EU Software Education and Development Center is due at Bangalore. insurance claims. 1 Bangalore 2 Hyderabad Hyderabad which has good infrastructure and good government support is also a good technology base in . Wipro.

Popularly known as the commercial. 5 NCR 6 Famously known as "Gateway of South India". and Wipro are here. I-Flex WNS and other companies are headquartered here. entertainment. Kolkata is a major IT hub in eastern India.India. All major IT companies are present here. TCS.The Government of AP Has built a separate township for IT Industry called the HITEC City. LnT Infotech. Deutsche Bank and EXL BPO. Trivandrum GOK provides a good platform for IT devolopment in the city with India's largest IT park Technopark and dedicated Technocity SEZs. 3 4 Chennai Pune It is the second largest exporter of Software. This rapidly growing industrial hub houses a lot of IT/ITES and BPO giants. BPO & . Faridabad. financial capital of India. Infosyss. The city has tremendous potential for growth in this sector with upcoming areas like Rajarhat. a major industrial point in India. Tech Mahindra. There are plans to build the largest IT SEZ in India by Mahindra under the Mahindra World City. This is one city that has seen tremendous growth in IT and BPO industry. it recorded 63% growth in 2008. Noida. Genpact. Connexions IT services. The National Capital Region of India comprising Delhi.Greater Noida and Ghaziabad are having ambitious projects and are trying to do every possible thing for this purpose.Trivandrum. 7 Kolkata 8 Mumbai 9 Jaipur 10 Ahmedabad Fastest growing center of IT/IT-enabled services. Pune. Patni. the capital of kerala is a green metropolis and tier I city. Gurgaon.

High inflow of FDI in the IT sector is expected to continue in coming years. The Nasscom.2 million by the end of 2008 which is expected to increase significantly in coming years. The information technology industry is one of the major sources of foreign currency or India. The inflow of huge volumes of FDI in the IT industry of India has not only boosted the industry but the entire Indian economy in recent years. Future of Indian IT Industry The current scenario in the IT industry of India and the tremendous growth registered in recent years has generated much optimism about the future of the Indian Information technology industry.KPO. FDI (Foreign Direct Investment) .The biggest benefit of the IT industry is the huge employment it generates. and Eastern Europe. the high rate of employment in the IT sector is a big advantage. This is expected to grow further in coming years. The report also projects 50 billion US Dollars of IT exports from India by the end of 2008. For a developing country like India. with a huge population. The major areas of benefit that the future growth in the IT industry can generate for the Indian economy are ± Exports .The IT industry accounts for a major share in the exports from India. Analysts are upbeat about the huge potential of growth in the Information Technology industry in India. The reputation that India has earned as . 2. The IT industry is expected to generate employment of 2. Software exports from India are expected to grow in coming years. Employment . Africa.McKinsey report on the IT industry of India projects that the Indian IT industry will reach 87 billion US Dollars by the end of 2008. New markets for software exports from India have opened up in the Middle East. South and Southeast Asia.2 million Employment is expected to be created in the IT industry according to this report.

The Indian information technology industry also needs to co-ordinate with the academic circles as well as other industries in India for better performance and improved productivity.a major destination for IT outsourcing has opened further possibilities. the industry has faced the challenges posed by the global market and is sustaining its rate of growth. Challenges before Indian IT Industry At present there are a number of challenges that are facing the information technology industry of India. there is huge scope of growth in the domestic market which can be tapped in the future. also needs to be qualitative rather than just being quantitative. Many developing countries are now using the Indian model for growth in the IT sector. ecosystems and knowledge. The information technology sector of India also has to spread the range of its activities and also look at the opportunities in other countries. The innovation needs to be done in three areas that are connected to the information technology industry of India such as business models. While exports dominate the IT industry at present. The skill level of the information technology professionals is one area that needs improvement and presents a considerable amount of challenge before the Indian information technology industry. The focus for the future is to ensure that the benefits of the IT industry percolate to the grassroot levels. One of the major challenges for the Indian information technology industry was to keep maintaining its excellent performance standards. However. Another important area of future growth for the IT industry of India is the domestic market. The improvement however. The US recession has had its share of negative impacts on the Indian IT industry. The experts are however of the opinion that there are certain things that need to be done in order to make sure that India can maintain its status as one of the leading information technology destinations of the world. The first step that needs to be taken is to create an environment for innovation that could be carried for a long time. The experts are of the opinion that the business process outsourcing service providers in India need to change their operations to a way that .

Wisconsin and Maryland. These states are also supposed to be considering these laws and their implementation. In the recent times a bill has been passed in the state of New Jersey that allows only the citizens or legal non-Americans to be given contracts. The information technology professionals who aim at working in the country are also likely to be hindered by the legislation as a significant amount of these professionals have been going to work in the USA for a long time. One of the most important crises facing the Indian information technology industry concerns the human resources aspect. Connecticut. This legislation has also affected some other states like Missouri. The problems with outsourcing in countries like the United States of America are posing problems for the Indian information technology industry as well. . This is supposed to have an adverse effect on the outsourcing that is the source upon which the information technology industry of India more oriented to the knowledge process outsourcing.