This action might not be possible to undo. Are you sure you want to continue?
Submitted to: Dr. Joseph TJ
Prepared by: Group 10 Rajiv Raghu Ayon Dasgupta Khushi Manas Kar Lasya Reddy A
1|P a g e
TABLE OF CONTENTS
EXECUTIVE SUMMARY ……………………………………………..3 INTRODUCTION ……………………………………………………… 4 INDUSTRY ENVIRONMENT ………………………………………..10 INDUSTRY STRUCTURE …………………………………………... 14 INDUSTRY CONDUCTAND PRACTICES ……………………….. 16 INDUSTRY PERFORMANCE ……………………………………… 25 COMPETITION ANALYSIS ………………………………………... 33 FUTURE OF IT INDUSTRY …………………………………………36 SUMMARY AND CONCLUSION ………………………………….. 37
2|P a g e
In the following report on Indian Information Technology industry, we have broadly covered the overview of the industry and compared it with the global industry. The market potential estimations and forecasts have also been covered in the report. We have used various techniques to bring out the strengths and weaknesses of the industry. Few of the techniques used are Porter’s Five Forces analysis in which the threat from the existing companies, new entrants, buyers, suppliers and the substitutes have been taken into consideration. Porter’s 5 forces model used here is a framework for industry analysis that determines the competitive intensity and therefore the attractiveness of the industry. Using Herfindahl Index we have arrived in knowing the relative competitiveness of the industry. In conduct and practices, the various practices of the industry such as marketing intensity, export intensity, R&D intensity have been found out for the four major companies in the Indian IT industry. In performance analysis, i.e. Profitability, Return on Assets, Return on Sales, Sales growth of the major players in the industry has been found and interpreted on their outcome. Lastly, the future of the Indian IT industry has been outlined.
3|P a g e
In actuality. information system. 4|P a g e . information or perceived knowledge in any visual format whatsoever. database and software design. engineering computer hardware. computer software. processing the information. and more into integrations of other technologies such as the use of cell phones. is considered part of the domain space known as Information Technology (IT). and later retrieving information as necessary. anything that renders data. programming languages. IT is the area of managing technology and spans wide variety of areas that include but are not limited to things such as processes. A few of the duties that IT professionals perform may include data management. networking. In some companies. as well as management and administration of entire systems. In short. this is referred to as Management Information Services (or MIS) or simply as Information Services (or IS). which is increasing the demand for such jobs. transmitting the information as necessary. protecting information. computer hardware. The information technology department of a large company would be responsible for storing information. Information technology is starting to spread farther than the conventional personal computer and network technology. IT professionals perform a variety of functions (IT Disciplines/Competencies) that range from installing applications to designing complex computer networks and information databases. via any multimedia distribution mechanism. televisions. information technology is the use of computers and software to manage information.INFORMATION TECHNOLOGY Definition: We use the term information technology or IT to refer to an entire industry. and data constructs. and more. automobiles.
Telegraph Early 1800s. Phoenicians created symbols. Morse Code Developed in1835 by Samuel Morse Telephone and Radio Developed in 1876 5|P a g e . B. The First Information Explosion.1840 A. Around 2000 B. The Mechanical Age: 1450A. .D.The development of book indexes and the widespread use of page numbers.1940. the Chinese made paper from rags.C. by Hindus in India who created a nine-digit numbering system..Around 100 A. Knowledge and information could now be converted into electrical impulses.D. Johann Gutenberg (Mainz. 3000 B. C. The discovery of ways to harness electricity was the key advance made during this period. the Romans gave the letters Latin names to create the alphabet we use today.1450 A..D.C.D. . The Beginnings of Telecommunication. The Electromechanical Age: 1840 . Germany) invented the movable metal-type printing process in 1450. Sumerians' input technology was a stylus that could scratch marks in wet clay. First humans communicated only through speaking and picture drawings.C.The first numbering systems similar to those in use today were invented between 100 and 200 A. the Pascaline by Blaise Pascal." Slide Rules by William Oughtred. Leibniz's Machine by Gottfried Wilhelm von Leibniz. the Sumerians in Mesopotamia (what is today southern Iraq) devised cuniform.The Greeks later adopted the Phoenician alphabet and added vowels. Electromechanical Computing by Herman Hollerith and IBM.D.. The Premechanical Age: 3000 B.HISTORY OF INFORMATION TECHNOLOGY A. The first general purpose "computers" Actually people who held the job title "computer: one who works with numbers. Voltaic Battery Late 18th Century. on which modern-day papermaking is based.
and J.the Electronic Discreet Variable Computer. Microsoft Word. Rotating Magnetic Drums. The First High-Speed. a physicist. EDSAC (Electronic Delay Storage Automatic Calculator).Present. The Second Generation computers 1959-1963 used transistors. EDVAC . The Third Generation computers 1964-1979 used electronic pulses to process the information. 6|P a g e .g. an electrical engineer. The First Generation Computers 1951-1958 used Vacuum tubes. Punched Cards. speed of processing increased. Electronic Numerical Integrator and Computer (ENIAC) Developers John Mauchly. size of the machine reduced. The Fourth Generation computers 1979-Present uses Artificial Intelligence. General-Purpose Computer Using Vacuum Tubes. The Electronic Age: 1940 . Prosper Eckert.: dBase. Fourth generation language software products E. Here the generations of Computers came into existence.D.
It encompasses the technologies. modification. ITIL The Information Technology Infrastructure Library (ITIL) is a set of concepts and techniques for managing information technology (IT) infrastructure. development. disruption. UNIX it is a computer Operating System (or OS) used most commonly in servers and workstations. integrity and IT Governance IT Governance. such as Sun Microsystems. and presenting business data. security refers to protecting from unauthorized access. Computer Networking is a focus within engineering that deals with communication between computer systems or devices. is a subset of Corporate Governance focused on information technology (IT) systems performance and risk management.POPULAR SKILLS INFORMATION TECHNOLOGY Computer Networking A computer network is any set of computers or devices connected to each other with the ability to exchange data. The goals of the confidentiality. HP and IBM. ITIL® is the most widely accepted approach to IT service management in the world. 7|P a g e . and operations. information security include protecting availability of information. LINUX it is a Unix-like computer Operating System (or OS) that uses the Linux kernel. use. and means for collecting. or destruction. applications. Information Security Information information and information systems disclosure. Business Intelligence Business Intelligence (BI) is the ways in which we store and use business information. or Information Technology Governance. analysing. integrating. Linux started out as a personal computer system used by individuals. and has since gained the support of several large corporations.
Microsoft Certifications The Microsoft Certified IT Professional (MCITP) credential shows that you have current skills and proven job-role capabilities to work effectively with a comprehensive set of Microsoft technologies. It is the highest level of professional certification that Cisco provides. penetration testing.CERTIFICATIONS Information Security Certifications The profession of information security has seen an increased demand for professionals who are experienced in network security auditing. Oracle DBA Certification The Oracle certified professional is a mid level designation of skill level in Oracle's certification programs. Cisco Certifications The expert-level certification is the Cisco Certified Internetwork Expert (CCIE). and digital forensics investigation. 8|P a g e .
Hyderabad.85 billion. and manufacturing industries. telecommunications. 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. annual revenues from IT-BPO sector is estimated to have grown over US$76 billion compared to China with $35. NCR and Kochi. The most prominent IT hub is IT capital Bangalore. More than 2. while providing employment to a significant number of its tertiary sector workforce. which have been growing phenomenally over the last few years. India's outsourcing industry is expected to increase to US$225 billion by 2020. 9|P a g e . However. making it one of the biggest job creators in India and a mainstay of the national economy. Pune. In 2010-11. As a result hiring has dropped sharply and employees are looking at different sectors like the financial service. Mumbai. 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. The other emerging destinations are Chennai. Kolkata.19% of the country's GDP and export earnings as of 2009.5 million people are employed in the sector either directly or indirectly.76 billion and Philippines with $8. the recent global financial crisis has deeply impacted the Indian IT companies as well as global companies.IT INDUSTRY IN INDIA The Indian Information Technology industry accounts for a 5.
Language spoken: English is widely spoken language in India. will not get tax benefit.S.PEST ANALYSIS Political 1. 3. Indian political structure is considered stable enough expect the fact that there is a fear of hung parliament. A number of technical institutes and universities over the country offer IT education. Teledensity – 19. 2. Economic attractiveness due to cost advantage and other factors. 4. India has the lowest call rate. Government owned companies and PSUs have decided to give more IT projects to Indian IT companies. USD 20 billion in 2008-09.S companies that outsource IT work to other locations other than U. Domestic IT Spending: Domestic market to grow by 20% and reach approx.86% 10 | P a g e . Global IT spending has increased immensely. the layoffs and job-cuts have resulted in low attrition rate. 2. Decline in real estate prices has resulted in reduced rental expenditures. 3. 2. 5. Technological 1. 4. Economic 1.S. U. Due to recession. India has second largest telephone network after China 3. 2. English medium being the most accepted medium of education. Terrorist attack or war will make a huge hazard to this sector. Social 1. government has declared that U.
11 | P a g e . This shows that the market for IT industry is opening up and shows a good sign. we can infer that the total global IT spending is increasing at a constant rate since 2006.Break up of Total Global IT Spending From the above graph.
Indian IT industry Revenue Break-up by company The above pie chart shows the revenue break up of different IT / ITES companies. The top four companies are: TCS – 11% Wipro – 10% Infosys – 8% HCL and Satyam – 4% each 12 | P a g e .
13 | P a g e . This indicates that the value lies between 1000 and 1800. Decrease in the Herfindahl index generally indicate a loss of pricing power and an increase in competition. As such.978606.HERFINDAHL INDEX The Herfindahl index (HI) is a measure of industry concentration equal to the sum of the squared market shares of the firms in the industry. although this varies from case to case. The US uses the Herfindahl index to determine whether mergers are justifiable. moving from a very large amount of very small firms to a single monopolistic producer. The Herfindahl Index for the IT companies when computed (taken from the Capitaline database) returns a value of 1272. the index can range from 0 to 10. The Herfindahl index is defined as the sum of the squares of the market shares of each individual firm. whereas increases imply the opposite. So this shows that the companies in this industry are to be moderately concentrated (50% to 80%). The Department of Justice considers Herfindahl indices between 1000 and 1800 to be moderately concentrated and indices above 1800 to be highly concentrated. increases of over 100 points generally provoke scrutiny.000.
9. The cost would be quite high if it is an established brand. i. each oligopolist should be aware of competitor’s actions. 2. we can say that the competition for this industry is OLIGOPOLY. The companies are: 1. Infosys Technologies Ltd TCS Wipro Ltd HCL. For our analysis. With this. there are very sellers and many buyers. 50% to 80%. Strategic planning by oligopolists needs to take into account the likely responses of the other market participants. 14 | P a g e . Here. we have considered the four major players based on the Herfindahl Index.e. These ranges depend on the company that provides service. 2) Product Differentiation – Product differentiation is high in this industry. it falls in the medium concentration level. As there are few sellers. 3. 4. Since the Herfindahl index for this industry is 1272. In this market..INDUSTRY STRUCTURE Number of players in the IT industry are 72 (Source: Capitaline). Differentiation Practices Followed: 1) Pricing – Pricing schemes range from simple to high management costs.
Product Differentiation is high in this industry. That is. There is imperfect information flow 15 | P a g e .SPECTRUM OF INDUSTRY STRUCTURE Oligopoly Market: The concentration here is for the new firms because of few sellers. The entry and exit barriers are high here. entry into the industry as well as the exit from the industry is difficult.
They are: A.INDUSTRY CONDUCT We deal with four aspects under the industry conduct. Technology Intensity D. Foreign / International Exposure 16 | P a g e . Marketing / Advertising Intensity C. Industry and firm level practices B.
If the company is a well known and reputed company then the pricing would be set at a high level. then it would provide services at a lower cost. Pricing strategies for IT services have traditionally focused on covering costs. INDUSTRY AND FIRM LEVEL PRACTICES One of the most important industry and firm level practices is the Pricing strategy. Pricing strategies are one of the most important challenges and decisions for today's IT service providers. easily copied by competitors. to complex models with high management costs.A. achieving desired margins and meeting the competition. It depends on the brand of the company. if a company is not a known brand. These pricing schemes range from simple approaches. So a company which is a new entrant can pick up its market by providing services to its client at a relatively lower price. 17 | P a g e . Likewise.
4117. Capitaline) 18 | P a g e . Marketing Expenses / Advertising Intensity = 1.B.787923 (Source: as per 15th Feb 2011. 2302.39 Net Sales: Rs.89 So. MARKETING / ADVERTISING INTENSITY It is computed in the following manner: Marketing/Advertising Intensity = Total Marketing Expenses / Net Sales Total Marketing Expenses: Rs.
TECHNOLOGY INTENSITY The comparative research is done to the following four major players: Infosys TCS Wipro HCL Technology Intensity is split into two parts: R&D focus and Technology Imports. Among the 19 | P a g e . almost all the companies started investing more in R&D to pull up their market.02 0.HCL 0.Wipro 0.TCS R&D Focus .C.01 R&D Focus .025 0. R&D Focus (%) = R&D Expense / Net Sales 0.005 0 2006 2007 2008 2009 2010 Since the year 2009. when recession ended.015 R&D Focus .Infy R&D Focus .
008 0.007 0. Cloud computing and platform based offerings started gaining popularity and companies started spending on these technologies.006 0. this is the reason for dipping graph of the above companies since 2007.companies Infosys has spent more in R&D when compared to that of the other companies.003 Tech Imports .Wipro Tech Imports .001 0 2006 2007 2008 2009 2010 Since recession IT companies started importing less technology from other countries. Technology Imports (%) = Forex Spending on Tech Imports / Net sales 0.Infy 0.HCL 0. Hence.TCS 0.002 0. 20 | P a g e .005 Tech Imports .004 Tech Imports .
20 1. FOREIGN / INTERNATIONAL EXPOSURE It involves two parts.20 0.00 2006 2007 2008 2009 2010 During the recession period.D.80 Export Intensity . huge opportunities started pouring in from other countries and the market picked up gradually.40 0.60 Export Intensity . As and when the recession period came to an end.Infy 0. 21 | P a g e . They are: Export Intensity and Import Intensity Export Intensity (%) = Total Forex Earnings / Net Sales 1. Due to this many companies started earning in Forex after 2008.00 0.Wipro Export Intensity .TCS Export Intensity . most of the companies could not earn much in Forex as the market was very low.HCL 0.
Infy 0.TCS Import Intensity .05 0. 22 | P a g e .45 0.20 Import Intensity .30 Import Intensity .HCL 0.15 0. their net sales is increasing as the markets in India have already opened up. especially the European market. So.50 0.35 0.10 0.Wipro Import Intensity . On the other hand.00 2006 2007 2008 2009 2010 Most of the companies are cautious about their spending in the Forex as the foreign markets are still suffering from recession. they are reluctant to spend more in the Forex as a precautionary factor.25 0.Import Intensity (%) = Total Forex Spending / Net Sales 0.40 0.
23 | P a g e .LEVERAGE Leverage is a general term for any technique to multiply gains and losses.Wipro Leverage .05 0 2006 2007 2008 2009 2010 The graph for HCL started increasing at a very high rate since 2008 because it had bagged a huge offer from a Finland based financial giant ―O P Pohjola‖.TCS Leverage .3 0.15 0.Infy Leverage . For all the remaining companies. The leverage values of the taken four companies are: 0. debt ratio is at a minimum level and they are still recovering from the global recession.35 0.HCL 0. Due to these it acquired lots of assets to provide service due to which its debts started increasing.45 0.1 Leverage .25 0.2 0.4 0.
1 2007 2008 2009 2010 Companies today are involved in acquiring more assets as new opportunities are coming their way.WORKING CAPITAL RATIO Working capital is the liquid capital available with the company to carry on with its day-to-day activities. 24 | P a g e . So the graph of most of the companies is increasing since 2009 when recession came to an end.6 0.3 0.4 WRC .TCS WRC .7 0.5 0. It is given as: Current Assets / Current Liabilities The working capital ratio of the four companies is : 0.1 0 2006 -0.Wipro WRC . Many companies especially in India are receiving offers from other countries to provide them services.2 0.HCL 0.Infy WRC .
80 in 2008 to 4. in USA it raised from 4. Moreover.10 in 2009.4 per cent. By FY 2012. The combined effect had slowed down economic growth in developing countries. -Adverse impact on exports and deferred capital expenditure.Slowing down of industrial output and corporate profits. sales has been continuously increasing in terms of IT industry. combined with elevated risk perception. India’s domestic IT market over the years has become one of the major driving forces of the industry.7 billion from the existing $1billion.3 billion compared to $23. the domestic IT sector attained revenues worth $24.Since 2003. had lead to lower capital flows and reduced levels of foreign direct investment.60 in 2009. emerging market countries were not the cause of recession. registering a growth of 5.90 in 2008 to 7. Unemployment rate in Japan rose from 3. The domestic IT infrastructure is developing in contexts of technology and intensity of penetration.1 billion in FY 2007-08. UK. Recession hit the export performance of developing countries and resulted in choking of credit. . finally resulting into lower GDP. the increasing demand for IT services and goods by India Inc has strengthened the expansion of the domestic market with agreements’ worth rising up extraordinarily to $100 million. but they were amongst its worst affected victims. The global impact of the current crisis may be outlined as under: -Massive job cuts in USA. Global Financial Crisis leads to massive job losses as the slowdown has cut the demand for consumer products that result in the closing of factories also in some of the countries.INDUSTRY PERFORMANCE In 2008-09. Japan by major companies. Though it slowed down in 2008 due to global recession because of sub-prime crisis but again it started strengthening at end of 2009. In FY 2008-09. 25 | P a g e . the domestic sector is estimated to expand to $1.
2 in Jan 2009. The global impact of the current crisis may be outlined as under: Slowing down of industrial output and corporate profits. In the charts that follow. hindering their ongoing economic process.GROWTH ANALYSIS Growth / Profit Trends in IT industry since 2005: Since 2005. Stock Markets of China.73 in Jan 2006 to 8. It had fallen from $98753 million in Jan 2008 to $77869 million in Jan 2009. we first take a look at the trends for the entire category of software companies.10 in Jan 2009. Global Financial Crisis leads to massive job losses as the slowdown has cut the demand for consumer products that result in the closing of factories also in some of the countries. GDP rate in China fell from 10.58 in Jan 2006 to 5.e. Growth Trend in India On carefully investigating the behavior of IT companies. Recession had shown very severe impact on the export sector in US. This is the worst recession we had in the last sixty years and globally the worst financial crisis we had since the Great Depression of 1930s the software industry--as represented by public software companies--went through a consolidation and a mild recovery.03 to 0. in Japan it is 0.25 in 2006 to 0.28 in 2009.78 to 1.50 in 2009 and this downfall continued in USA also and it fell from 2.25 in 2009. in Japan it fell from 2. finally resulting into lower GDP rate.31 in Jan 2009. Japan and USA had slumped due to the recession. in China it fell from 5. it was found that the companies 26 | P a g e . economies of world were running smoothly until great recession of 2007 impacted the world economies. Interest rates are also showing downfall in all the three countries i. during and after the past three global recessions. in USA it fell from 4. which as a result affected growth of IT industry.
Wipro.2 1 0.4 infosys 0.2 0 2005-06 2006-07 2007-08 2008-09 2009-10 27 | P a g e . Profitability can be calculated by: The following graphs show the performance of the 4 major IT companies: Profitability (%) = Profit after Tax (PAT) / Net Sales 1. about 85 % are toppled during bad times.that were growth leaders coming into recession often cannot retain their momentum.8 cognizant 0. it is expected to rise by 15-18 percent during 2010-11. The Indian IT industry has survived the global financial slowdown despite initial negative impact in terms of steep fall in overseas order for Indian IT products.6 wipro tcs 0. Operating margins of IT companies like Infosys. HCL etc increased by 5 to 7 percent in 2009-10 over the previous year in terms of growth rate in revenue after fall from 25-30 percent during 2005-07 to 10-15 percent during 2007-09. Profitability Ratios: A class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time.
This is the worst recession we had in the last sixty years and globally the worst financial crisis. the profitability was increasing until great recession of 2007 impacted the world economies. again increased after that also and due to global recession it slowed down after mid of 2008.For most of these ratios. having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well. Since 2005. hindering their ongoing economic process because of which profitability of companies in IT industry came down in 2007-08. PAT 20000 18000 16000 14000 12000 cognizant wipro tcs infosys 10000 8000 6000 4000 2000 0 2005-06 2007-06 2008-07 2009-2008 2010-09 28 | P a g e .
PBDIT 25000 20000 15000 cognizant wipro 10000 tcs infosys 5000 0 2005-06 2007-06 2008-07 2009-2008 2010-09 29 | P a g e . PAT of companies still were increasing and not affected as it was dependent on total assets of companies which were increasing from 2005.PAT(%) 2000000 1800000 1600000 1400000 1200000 1000000 800000 cognizant wipro tcs infosys 600000 400000 200000 0 2005-06 2007-06 2008-07 2009-2008 2010-09 During greater depression in 2007 and sub-prime crisis in 2008-09.
5 0 2005-06 2007-06 2008-07 2009-2008 2010-09 30 | P a g e .PBDIT(%) 2500000 2000000 1500000 cognizant wipro 1000000 tcs infosys 500000 0 2005-06 2007-06 2008-07 2009-2008 2010-09 During greater depression in 2007 and sub-prime crisis in 2008-09 PBDIT of companies still were increasing and not adversely affected. Return on Assets (ROA) 2.5 2 1.5 cognizant wipro 1 tcs infosys 0.
Calculated by dividing a company's annual earnings by its total assets.ROA(%) 250 200 150 cognizant wipro 100 tcs infosys 50 0 2005-06 2006-07 2007-08 2008-09 2009-10 ROA gives an idea as to how efficient management is at using its assets to generate earnings.4 1. The formula for return on assets is: Net Income / Total Assets Although the total assets of companies of this industry were increasing but due to great depression in 2007 and . Sometimes this is referred to as "return on investment". Return On Sales (ROS ) 1.2 0 2005-06 2007-06 2008-07 2009-2008 2010-09 cognizant wipro tcs infosys 31 | P a g e .4 0.6 0.2 1 0. ROA is displayed as a percentage.8 0.economic breakdown in 2008-09 due to recession again affected the ROA of almost all software companies down during these period but the PBDIT during these period were also increasing.
while a decreasing ROS could signal looming financial troubles.ROS (%) 140 120 100 80 60 40 20 0 2005-06 2006-07 2007-08 2008-09 2009-10 cognizant wipro tcs infosys A ratio widely used to evaluate a company's operational efficiency. An increasing ROS indicates the company is growing more efficient.Thus recession in IT industry affected most of companies only few companies like Infosys shielded from its adverse affect due to strict policies and measures they adopted. ROS is also known as a firm's "operating profit margin". it is best to compare a company's ROS over time to look for trends. As with many ratios. and compare it to other companies in the industry. When considering ROS of companies like Infosys were more or less stable. while companies like CTS were affected due to greater depression in 2007. It is calculated using this formula: This measure is helpful to management. providing insight into how much profit is being produced per dollar of sales. 32 | P a g e .
PORTER’S FIVE FORCES MODEL 1) Threats for substitutes 2) Bargaining of supplier power 3) Bargaining power of customer 4) Barriers for entry 5) Rivalry among firms Threats for substitutes: Threats for substitutes are medium in the IT sector. the Philippines and China. Other offshore locations such as Eastern Europe. are emerging 33 | P a g e .
However. for the existing products and services. High industry growth strong competitors few numbers of large companies. positioning are the major differentiating factors. the job-cuts. Availability of vast talent pool of freshers and experienced employee is another factor pertaining to the shift. This is because that large number of IT companies vying for IT projects resulting in high competition for projects. MNCs are ramping up capacity and employee strength. the clients continue the old companies. Bargaining of supplier power: Bargaining power of supplier is shifted from high to low. and space for small enterprises. This is due to the slowdown. littledifferentiation. the quality of products being same. Price quoted for projects is a major differentiator. Indian IT sector is dependent on USA and BFSI in particular for majority of its revenues. low-cost. Demand and supply of IT professionals is no longer that favourable to employees. Commoditized offerings. this should have an impact only in the medium to long term and not in the short term. and with the recent financial crisis. the new spending from these has reduced tremendously.and are posing threat to Indian IT industry because of their cost-advantage. Rivalry among firms: Since there are only four major players in Indian IT sector the rivalry among firms is relatively high. the layoffs and bleak IT outlook. 34 | P a g e . Barriers for entry: Entry barriers are very low in this IT sector. This is because of low capital requirements. Bargaining power of customer: Bargaining power of customer is very high in this sector. However. large value chain.
ecosystems and knowledge. However 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. According to this report. the online businesses.5% of the total growth of GDP in India in the 2009 fiscal. The improvement however. As per the NASSCOM. The Government of India with the help of the IT ministry has taken all the necessary initiatives and policy measures to facilitate software exports from India. and the software products of India are renowned all over the world for their quality and cost efficiency. As per the NASSCOM-McKinsey report. The market capitalization of the IT sector is expected to be about 225 billion US dollars by 2009. THE EXPORT POTENTIAL The export potential of India's IT industry has been recognized by all developed nations across the world. also needs to be qualitative rather than just being quantitative. 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 first step that needs to be taken is to create an environment for innovation that could be carried for a long time. the information technology sector of India has emerged as a preferred investment area for the IT biggies across the world. 35 | P a g e .McKinsey report.2 million job opportunities for the skilled Indian workforce by the end of 2009. the products and services of IT sector will account for more than 7. Efforts are also on to reach the full potential of the India's IT industry.CHALLENGES BEFORE IT At present there are a number of challenges that information technology industry faces currently in India. One of the major challenges for the Indian information technology industry is to keep maintaining its excellent performance standards. 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. There is no doubt that growth of Indian software exports crucially depends on the US demand for the same. With its huge growth potential. IT export from India in the year 2009 is projected to be 40% of total Indian exports. The IT and IT enabled sectors. The innovation needs to be done in three areas that are connected to the information technology industry of India such as business models. the IT sector of India will provide 3.
3. Software services that are being used in outsourcing will go a long way.FUTURE OF INFORMATION TECHNOLOGY IT industry will continue to gain momentum. FDI (Foreign Direct Investment): High inflow of FDI in the IT sector is expected to continue in coming years. The immense expansion in networking technologies is expected to continue into the next decade also. By the year 2019. 2. By 2029. ever expanding our lifespan. The information technology industry is one of the major sources of foreign currency or India. 36 | P a g e . The IT industry is expected to generate employment of 3. For a developing country like India. We will have found cures for the major diseases that kill 95% of us in the developed world. This is expected to grow further in coming years. 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. we will become godlike—tiny computer chips embedded into our bodies will stop disease and reverse aging.2 million by the end of 2010 which is expected to increase significantly in coming years. with a huge population. humans will have largely overcome the limits of our humanity. The major areas of benefit that the future growth in the IT industry can generate for the Indian economy are – 1. EXPORTS: The IT industry accounts for a major share in the exports from India. thanks to information technology (IT). EMPLOYEMENT: The biggest benefit of the IT industry is the huge employment it generates. Technologies that are emerging are Data Warehousing and Data Mining. IT will bring about a drastic improvement in the quality of life as it impacts application domains and global competitiveness. the high rate of employment in the IT sector is a big advantage. 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. They involve collecting data to find patterns and testing hypothesis in normal research. telecom and wireless will follow the trend.
The Indian Information Technology. the IT sector currently employing 2. Over the last five years. India's leadership position in the global IT and BPO industries are based primarily on the following advantages. Today a country’s IT potential is paramount for its march towards global competitiveness. India accounts for around 28 per cent of IT and BPO talent among 28 lowcost countries. It has a rapidly growing urban infrastructure fostering several IT centres in the country. It has created a level playing field among nations and has made positive impact on the lives of millions who are poor. improving defence capabilities and meeting up the energy and environmental challenges. Offshore service centres are spawning in the country due to operational excellence with low delivery cost. Favourable policy interventions. The companies continue to move up the value-chain to offer higher end research and analytics services to their clients. marginalized and living in rural and far flung topographies. Internet has made revolutionary changes with possibilities of e-filing Income Tax returns or applying for passports online or railway e-ticketing. healthy GDP. The IT/ITES exports have grown to a staggering US$ 46. 37 | P a g e . the IT & ITES industry has grown at a remarkable pace.SUMMARY AND CONCLUSION Information Technology has made possible information access at gigabit e speeds. witnessing high levels of activity both onshore as well as offshore. The Indian IT-BPO sector including the domestic and exports segments continue to grow from strength to strength. a majority of the Fortune 500 and Global 2000 corporations are sourcing IT/ITES from India and it is the premier destination for the global sourcing of IT/ITES accounting for 55% of the global market in offshore IT services and garnering 35% of the ITES/BPO market. software exports and BPO remain the mainstay of the sector.2 million professionals directly and another 8 million people indirectly accounts for over 5% of GDP. quality leadership and a conducive business environment.Information Technology-Enabled Services (IT-ITES) industry has continued to perform its role as the most consistent growth driver for the economy. Service.3 billion in 2008-09. enabling infrastructure and augmenting a wide skill base from the government has further enhanced India’s brand image. Consider some of the significant indicators for these remarkable achievements.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.