PORTER’S 5 Forces Analysis of Technology Industry

● Threat of New Entrants - LOW

Threat to new entrants is fairly minimal in the Indian IT service sector. The bargains that
come in have a fixed ticket size, which is one of the main causes. However, not every
business will be able to handle a job of that size. Also, there are roughly 4-5 players
who have developed the capacity to handle deals for millions of dollars. Although these
firms operate in a very specialized industry, startup culture still exists. These firms
operate in fields including fintech, agritech, and deep neural networks. Thus in a
manner, the big businesses have built a barrier to entry that makes it challenging for any
newcomer to enter and take the project.

● Bargaining Power of Buyers - HIGH

Customer negotiating power is strong. This is mostly attributable to Indian IT service

providers who are equipped to handle projects of that scope and scale. Despite the fact
that there are just a few of them, the clients have a wide range of options because each
business offers something unique.

● Bargaining Power of Suppliers - LOW

This one could be up for debate. As an illustration, consider software providers who sell
legally obtained software. Even while these suppliers supply bulk licences to Indian IT
services businesses, they are still able to charge for the software they offer. On the
other hand, due to the quantity of the orders placed for hardware components, the
makers of hardware cannot actually be in a dominant position. Also, this approach has
to alter if Cloud services begin to take off.

● Rivalry among existing competitors - HIGH

The landscape of the Indian IT Services business is heavily influenced by industry

competition. There are just a few significant IT services firms, as was already noted,
and competition exists among them for business transactions, market share, and
financial results. In some ways, the intense competition within the industry has aided in
the expansion of the Indian IT services business by fostering innovation and
encouraging companies to develop novel solutions.

● Threat of substitute products - LOW

There is a significant likelihood of substitution in the current economic climate, when the
economies of the globe are slowing down. Other developed nations' economies,
including the Philippines, are competing for international IT services contracts since
they can do the task for less money than Indians can. You may also believe that the
businesses that are awarding projects to the Indian IT services sector may perform a
backward integration and establish their own IT solution business. For instance, IBM,
Accenture, and other organisations now brag about their IT solutions division despite
once being predominantly consulting firms. They both have offshore facilities to serve
the entire planet.