india it industry

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India IT Industry

The Indian information technology (IT) industry has played a major role in placing India on the international map. The

industry is mainly governed by IT software and facilities for instance System Integration, Software experiments,

Custom Application Development and Maintenance (CADM), network services and IT Solutions. According toNasscom's findings Indian IT-BPO industry expanded by 12% during the Fiscal year 2009 and attained aggregate

returns of US$ 71.6 billion. Out of the derived revenue US$ 59.6 billion was solely earned by the software and

services division. Moreover, the industry witnessed an increase of around US$ 7 million in FY 2008-09 i.e. US$ 47.3

billion against US$ 40.9 billion accrued in FY 2008-09

IT Outsourcing in India

As per NASSCOM, IT exports in business process outsourcing (BPO) services attained revenues of US$ 48 billion in

FY 2008-09 and accounted for more than 77% of the entire software and services income. Over the years India has

been the most favorable outsourcing hub for firm on a lookout to offshore their IT operations. The factors behind India

being a preferred destination are its reasonably priced labor, favorable business ambiance and availability of expert

workforce. Considering its escalating growth, IBM has plans to increase its business process outsourcing (BPO)functions in India besides employing 5,000 workforces to assist its growth.

In the next few years, the industry is all set to witness some multi-million dollar agreements namely:

A 5 year agreement between HCL Technologies and News Corp for administering its information centers and

IT services in UK. As per the industry analysts, the pact is estimated to be in the range of US$ 200-US$ 250

million US$ 50 million agreement between HCL Technologies and Meggitt, UK-based security apparatus

manufacturer, for offering engineering facilities.

Global giant Walmart has short listed there Indian IT dealers namely Cognizant Technology Solutions, UST

Global and Infosys Technologies for a contract worth US$ 600 million

India's domestic IT Market

India's domestic IT Market over the years has become one of the major driving forces of the industry. The domestic IT

infrastructure is developing contexts of technology and intensity of penetration.

In the FY 2008-09, the domestic IT sector attained revenues worth US$ 24.3 billion as compared to US$ 23.1 billion

in FY 2007-08, registering a growth of 5.4%. Moreover, 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 US$ 100

million. By the FY 2012, the domestic sector is estimated to expand to US$ 1.7 billion against the existing from US$ 1

billion.

Government initiative in India's domestic IT Market

The Indian government has established a National Taskforce on IT with an aim of formatting a durable

National IT Policy for India Endorsement of the IT Act, which offers an authorized structure to assist electronic trade and electronic

operations.


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Major investments in India's domestic IT Market

According to Andhra Pradesh Government the state's SEZs and Software Technology Parks of India (STPI)

will witness an investment of US$ 3.27 billion in the next few years. VMware Inc, San Francisco-based IT firm is looking forward to invest US$ 100 million by 2010 in India.

EMC Corporation's total Indian assets is expected to reach US$ 2 billion by 2014

Future of Indian IT Industry

The Indian IT sector persists to be one of the flourishing sectors of Indian financial system indicating a speedy

expansion in the coming years. As per NASSCOM, the Indian IT exports are anticipated to attain US$ 175 billion by

2020 out of which the domestic sector will account for US$ 50 billion in earnings.

In total the export and domestic IT sector are expected to attain profits amounting to US$ 225 billion along with new

prospects from BRIC nations and Japan for its outsourcing operations.

Information technology in India

TheIndianInformation Technology industry accounts for a 5.19% of the country'sGDPand export

earnings as of 2009, while providing employment to a significant number of itstertiary sectorworkforce.

More than 2.3 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, annual revenues from

outsourcing operations in India amounted toUS$54.33 billion compared toChinawith $35.76 billion

andPhilippineswith $8.85 billion.[1]

India's outsourcing industry is expected to increase to US$225 billion

by 2020. The most prominent IT hub is IT capitalBangalore. The other emerging destinations

areChennai,Hyderabad,Kolkata,Pune,Mumbai,NCR, andBhubaneshwar. 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. India's growing stature in the information

age enabled it to form close ties with both theUnited States of Americaand theEuropean Union.

However, the recentglobal financial criseshas deeply impacted the Indian IT companies as well as global

companies. As a result hiring has dropped sharply and employees are looking at different sectors like the

financial service, telecommunications, and manufacturing industries, which have been growing

phenomenally over the last few years.[2]

India's IT Services industry was born inMumbaiin 1967 with the establishment of Tata Group in

partnership with Burroughs.[3]

The first software export zoneSEEPZwas set up here way back in 1973,

the old avatar of the modern day IT park. More than 80 percent of the country's software exports

happened out ofSEEPZ,Mumbaiin 80s.[4]

Each year India produces roughly 500,000 engineers in the country,[5][6]

out of them only 25% to 30%

possessed both technical competency andEnglish languageskills, although 12% of India's population
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iki/Philippineshttp://en.wikipedia.org/wiki/People%27s_Republic_of_Chinahttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Tertiary_sectorhttp://en.wikipedia.org/wiki/GDPhttp://en.wikipedia.org/wiki/India


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can speak in English.[7]

India developed a number of outsourcing companies specializing in customer

support viaInternetor telephone connections. By 2009, India also has a total of 37,160,000telephone

linesin use,[8]

a total of 506,040,000mobile phoneconnections,[9]

a total of 81,000,000 Internet users

comprising 7.0% of the country's population,[10]

and 7,570,000 people in the country have access

tobroadband Internet making it the 12th largest country in the world in terms ofbroadband Internet

users.[11]

Totalfixed-lineandwirelesssubscribers reached 543.20 million as of November, 2009.[12]

SeeCommunications in India.

Contents

[hide]

1 Formative years (till 1991)

2 19912001

3 2001present

4 chennai

5 Top Eight IT Hubs in India

6 See also

7 References

8 Further reading

9 External links

[edit]

Formative years (till 1991)The Indian Government acquired the EVS EM computers from theSoviet Union, which were used in large

companies and research laboratories. In 1968Tata Consultancy Servicesestablished

inSEEPZ,Mumbai[3]

by theTata Groupwere the country's largest software producers during the 1960s.

As an outcome of the various policies ofJawaharlal Nehru(office: 15 August 1947 27 May 1964) the

economically beleaguered country was able to build a large scientific workforce, third in numbers only to

that of the United States of America and the Soviet Union. On 18 August 1951 the minister of

educationMaulana Abul Kalam Azad, inaugurated theIndian Institute of

TechnologyatKharagpurinWest Bengal. Possibly modeled after theMassachusetts Institute ofTechnologythese institutions were conceived by a 22 member committee of scholars and entrepreneurs

under the chairmanship of N. R. Sarkar.

Relaxed immigration laws in the United States of America (1965) attracted a number of skilled Indian

professionals aiming for research. By 1960 as many as 10,000 Indians were estimated to have settled in

the US. Kapur (2006)By the 1980s a number of engineers from India were seeking employment in other
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countries. In response, the Indian companies realigned wages to retain their experienced staff. In

theEncyclopedia of India, Kamdar (2006) reports on the role of Indian immigrants (1980 - early 1990s) in

promoting technology-driven growth:

The United States technological lead was driven in no small part by the brain power of brilliant immigrants, many of whom

came from India. The inestimable contributions of thousands of highly trained Indian migrants in every area of American

scientific and technological achievement culminated with the information technology revolution most associated

withCaliforniasSilicon Valley in the 1980s and 1990s.[13]

TheNational Informatics Centrewas established in March 1975. The inception of The Computer

Maintenance Company (CMC) followed in October 1976. Between 1977-1980 the country's Information

Technology companies Tata Infotech,Patni Computer SystemsandWiprohad become visible. The

'microchip revolution' of the 1980s had convinced bothIndira Gandhiand her successorRajiv Gandhithat

electronics and telecommunications were vital to India's growth and development.MTNLunderwenttechnological improvements. Between 1986-1987, the Indian government embarked upon the creation of

three wide-area computer networking schemes: INDONET (intended to serve the IBM mainframes in

India), NICNET (the network for India's National Informatics Centre), and the academic research oriented

Education and Research Network (ERNET).

[edit]19912001

RegulatedVSATlinks became visible in 1985. 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 calledSoftware 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 l ink

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 Indian economy underwent economic reforms in 1991, leading to a new era ofglobalizationand

international economic integration. Economic growth of over 6% annually was seen between 1993-2002.

The economic reforms were driven in part by significant the internet usage in the country. The new

administration underAtal Bihari Vajpayeewhich placed the development of Information Technology
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among its top five priorities 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 recommendations of international bodies like the World Trade

Organization(WTO),International Telecommunications Union(ITU), andWorld Bank. In addition, the Task Force incorporated

the experiences ofSingaporeand 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.

The New Telecommunications Policy, 1999 (NTP 1999) helped further liberalize India's

telecommunications sector. TheInformation Technology Act2000 created legal procedures for electronic

transactions and e-commerce.

Throughout the 1990s, another wave of Indian professionals entered the United States. The number

ofIndian Americansreached 1.7 million by 2000. This immigration consisted largely of highly educated

technologically proficient workers. Within the United States, Indians fared well in science, engineering,

and management. Graduates from the Indian Institutes of Technology (IIT) became known for their

technical skills. The success of Information Technology in India not only had economic repercussions but

also had far-reaching political consequences. India's reputation both as a source and a destination for

skilled workforce helped it improve its relations with a number of world economies. The relationship

between economy and technologyvalued in thewestern worldfacilitated the growth of an

entrepreneurial class of immigrant Indians, which further helped aid in promoting technology-driven

growth.

[edit]2001present
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InfosysMedia Centre inElectronic City, Bangalore.

Millenium Tower inKolkata, Salt Lake Sector-5, a mojor IT hub in the city.

Tidel Parkone of the largest software parks in Asiawas set up on the July 4, 2000 inChennai, to aid the growth of

Information Technology inTamil Nadu.

Cyber Towers at Hitech City in Hyderbad
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Patni Knowledge Park,Airoli,Navi Mumbai

Cognizant's Delivery Center inPune

India is now one of the biggest IT capitals in the modern world.

The economic effect of the technologically inclined services sector in Indiaaccounting for 40% of the

country's GDP and 30% of export earnings as of 2006, while employing only 25% of its workforceis

summarized by Sharma (2006):

The share of IT (mainly software) in total exports increased from 1 percent in 1990 to 18 percent in 2001. IT-enabled services

such as backoffice operations, remote maintenance, accounting, publiccall centers, medical transcription, insurance claims,

and other bulk processing are rapidly expanding. Indian companies such asHCL,TCS,Wipro, andInfosysmay yet become

household names around the world.

Today, Bangalore is known as theSilicon Valley of Indiaand contributes 33% of Indian IT Exports. India's

second and third largest software companies are head-quartered in Bangalore, as are many of the global

SEI-CMM Level 5 Companies.

[edit]chennai

Next to Bangalore Chennai plays an important role in IT. Lot of companies were developed in Chennai, in

the last few years.
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AndMumbaitoo has its share of IT companies that are India's first and largest, likeTCSand well

established likeReliance,Patni,LnT Infotech,i-Flex,WNS, Shine, Naukri, Jobspert etc are head-

quartered inMumbai. and these IT and dot com companies are ruling the roost of Mumbai's relatively

high octane industry ofInformation Technology.

Such is the growth in investment and outsourcing, it was revealed that Cap Gemini will soon have more

staff in India than it does in its home market of France with 21,000 personnel+ in India.[14]

On 25 June 2002 India and theEuropean Unionagreed to bilateral cooperation in the field of science and

technology. A joint EU-India group of scholars was formed on 23 November 2001 to further promote joint

research and development. India holds observer status atCERNwhile a joint India-EU Software

Education and Development Center is due atBangalore.

India's IT industry (USD bn)[15]

Particulars FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

IT Services 10.4 13.5 17.8 23.5 31.0

- Exports 7.3 10.0 13.13 18.0 23.1

- Domestic 3.1 3.5 4.5 5.5 7.9

ITES-BPO 3.4 5.2 7.2 9.5 12.5

- Exports 3.1 4.6 6.3 8.4 10.9

- Domestic 0.3 0.6 0.9 1.1 1.6

Engineering services, R&D and Software products 2.9 3.9 5.3 6.5 8.6

- Exports 2.5 3.1 4.0 4.9 6.4
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- Domestic 0.4 0.7 1.3 1.6 2.4

Hardware 5.0 5.9 7.0 8.5 12.0

- Exports 0.5 0.5 0.6 0.5 0.5

- Domestic 4.4 5.1 6.5 8.0 11.5

Total IT industry (including hardware) 21.6 28.4 37.4 48.0 64.

[edit]Top Eight IT Hubs in India

Ranking City Description

1 Bangalore Popularly known as the capital of theSilicon Valley of Indiais currently leading

inInformation TechnologyIndustries in India.

2 ChennaiFamously known as "Gateway of South India", it is the second largest exporter of

Software.

[16]

3 Hyderabad Hyderabad which has goodinfrastructureand good government support is also a

goodtechnologybase inIndia.

4 Pune Pune, a major industrial technological hub in India.

5 Kolkata Kolkata which is slowly becoming a major IT hub in near future. All major IT companies are

present here.

6 NCR

The National Capital Region of India comprisingDelhi,Gurgaon,Faridabad,Noida,Greater

NoidaandGhaziabadare having ambitious projects and are trying to do every possible

thing for this purpose.
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7 Mumbai

Popularly known as the commercial, entertainment, financial capital ofIndia, This is one

city that has seen tremendous growth in IT and BPO industry, it recorded 63% growth in

2008.[17]

TCS,Patni,LnT Infotech,I-FlexWNSand other companies are headquartered

here.

8 Bhubaneswar

The capital City of OdishaIndia, Bhubaneswar is one of the emerging IT City in India.

Hosompany: Infosys , Satyam, TCS and Wipro. Have IT SEZ on Infocity-I and new SEZ is

going to start on Infocity-II. There are many Large, Mid and Small It companies present in

this City from last 2 decades.

Q1.What is the future of IT industry in India ?

A1.According to leading reports, Indian software industry is set to achieve a turnover of 10billion dollars by the year 2005. The projected demand for trained I.T. professionals is

estimated at over 400,000 per year. There is a clear imbalance between the demand and

supply of IT professionals with the result that this sector offers one of the highestremuneration packages. The Internet is a new revolution that is sweeping the world. Itpromises to change the way we work, live, shop, communicate and entertain ourselves.

Q2.What are the Educational Courses and List of Institutes?A2. Most engineering colleges offer a B.E. / B.tech in computer engineering. For moreinformation on Computer Engineering, please refer to the section under engineering. Othercomputer courses offered by universities include: B.Sc. (Computer) also known as B.C.S

(Bachelor of Computer Science) M.C.A. (Master of Computer Applications) M.C.M. (Master ofComputer Management) D.C.A. (Diploma in Computer Applications) D.C.E. (Diploma inComputer Engineering) D.C.S. (Diploma in Computer Science)

With the infotech boom, hundreds of private computer institutes have opened up across the

country. The courses conducted by these institutions range from computer fundamentals toadvanced computer languages. However there are no standards of teaching and course

content and the quality of students differs considerably from institute to institute.Department of Electronics Accreditation of Computer Courses (DOEACC) Under this scheme

there are four level of courses. These are : "O" Level - Foundation Level This would certify

the candidate's competence as a programmer assistant or equivalent level. It is visualisedas the lowest rung and the course, and should be at least a full-time one-year course.Students from accredited institutes can apply for this examination after completing their

101 Level course if they have 10+2 or I.T.I. certificate equivalent qualification.

Direct applicants need one year relevant experience (which signifies job experience in

information Technology (IT) including teaching in a recognised institution) or a pass in theNCVT-DP & CS (Data Preparation and Computer software) Examination, besides 10+2 or

equivalent qualification. 'A' level (advanced diploma level) This will give proof of the

candidate's skills as a programmer. It should be equivalent to full-time studies of anaverage student for a year. Those who have done 'O' level and graduation followed by anaccredited "A" level course are eligible. In the case of direct applicants, candidates with 'O'

level and graduation and with one year relevant experience are eligible. A Government
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recognised polytechnic engineering diploma + A level course fulfils the eligibility. 'B' level(Graduate level) This will give certification to the candidate for proficiency as a systems

analyst or software designer or engineer as the case may be. The course duration at the

approved institute should be equivalent to a three year, full-time course. Graduates andgovernment recognised polytechnic diploma holders. 'B' Level candidates who havecompleted the accredited 'B' Level course are eligible. In case of direct applicants, students

with Level 'A' followed by two years) relevant experience and graduates with three yearsrelevant experience are eligible.

Governments recognised PPDCA / PGDCA accords exemption from some courses. 'C' Ievel(master degree level) This will recognise the candidates proficiency as a systems manager.The course duration at the recognised institute should be equivalent to a full-time 18

months course. Candidates with Level 'B' or B.Tech./B.E./M.C.A./M.Sc./Master's degree (inmaths/statistics/operations re-search)/M.B.A. (after B.Sc./B.A. with Maths) followed by anaccredited 'C' Level course are eligible. In case of direct applicants, candidate with Level

'B'/B.Tech/ B.E' /M.C.A./Master's degree (in Maths/ GATE (computer) Statistics/ OperationResearch)/M.B.A. (after B.SC., B.A. with Maths) followed by 18 months relevant experiencein each case are eligible. Registration is a prerequisite for taking the examination. At any

point of time, a candidate can register only at one level. The registration is valid for fiveyears.

Contact Address- DOEACC Control Centre, c/o Manpower Development Division, Departmentof Electronics, Electronics Niketan (2nd Floor), 6 Lodhi Road, CGO Complex, New Delhi.

Industry Certified Courses Global infotech majors including Microsoft, Oracle, Cisco, IBM etchave come out with their own certification programs which provide an indicator of theproficiency levels of candidates with those certifications and are recognised world wide. The

certifications from Microsoft include MCSE - Microsoft Certified Systems Engineer MCP -

Microsoft Certified Professionals MCSD - Microsoft Certified Solutions Developer. Microsofthas authorised several computer institutes to provide training for these certifications and

the examination is conducted by Microsoft itself. Candidates who are successful in the test

are globally recognised as proficient in the corresponding Microsoft technologies. Similarcertifications are also offered by other companies.

Q3.What is the Nature of Jobs ?A3. Introduction With the advent of the PC the information technology industry underwent aquantum change. Suddenly computers were all pervasive and work automation took off in a

big way. The software revolution totally changed the way we work. Availability of cheap and

easy to use software packages increased productivity levels manifold. Probably no sector isuntouched by information technology. Manufacturing, Finance, Banking, Marketing,Entertainment, Education and several other fields are reaping the benefits of I.T. As a result

the I.T industry employs not only staff trained in computers but also professionals from all

other fields which could also be non-technical in nature. The rapid development of

technologies such as networking, multimedia and the Internet have created totally new jobcategories where none existed a few years ago. This sector is also the one that is witnessingthe fastest growth and change rate. New software and techniques come out every month

and professionals have to keep pace with the rapid advancements. The hardcore technical

jobs in the IT industry can broadly be classified as hardware jobs and software jobs. Nontechnical jobs include functional expert consultants, web designers, data entry professionalsetc. Hardware Jobs Software Jobs Specialised Jobs Internet Related Jobs Multimedia Jobs


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Q4 What is the remuneration in each field?A4. Hardware Jobs Remuneration - Rs. (per annum) VLSI Design Engineers 1,20,000upwards Production 60,000 3,00,000 Maintenance 36,000 96,000 Networking 72,000

upwards (entry level) Software Jobs Programmers 84,000 3,00,000 (entry level) Project

Leaders 2,00,000 6,00,000 System Analysts 3,00,000 upwards Senior Managers 4,00,000upwards Specialised Applications CAD/CAM 72,000 2,40,000 ERP 2,40,000 upwards

Internet Related Webmasters 1,20,000 upwards (entry level) Web Designers 84,000upwards (entry level) Web Application Developers 1,20,000 upwards (entry level)

Multimedia DTP operators 30,000 upwards (entry level) Computer Animators 60,000upwards (entry level) CD-ROM developers 96,000 upwards (entry level) Video/Audio Editors84,000 upwards (entry level)

Q5.What are the Emerging Technologies ?A5.E-commerce The Internet revolution is sweeping the world and is changing the waycompanies traditionally dealt with customers. Now customers can compare and shop

without moving out of their homes by using the Internet. Electronic commerce relates to all

commercial transactions that take place through the Internet. It is estimated that thequantum of e-commerce will jump to 400 billion US dollars by the year 2001. In order to

enter this field, in addition to a basic degree in computer science/engineering one musthave sound knowledge of software used in the front end such as Java, DHTML, Visual basicetc, the backend which is generally databases such as Oracle and SQL server as well asnetworking and web server maintenance. In addition an understanding of businesstransactions is also essential.

Supply Chain Management In any industry there are lot of vendors providing various

material inputs used in final production. On the distribution side there are channels

comprising of wholesalers, distributors and retailers. Supply chain management softwarecuts down the time taken for the supplies to arrive from the vendor and reduces the

inventory levels thus cutting cost. On the marketing side, it ensures that products reach theend customers in time to fulfill their demand.

Customer Relationship Management Companies offering products and services have to dealwith a number of customers. Customer relationship management software provides a recordof all previous dealings with customers so that the company personnel can take the rightdecision while dealing with them.

Q6.What is the Future Scenario ?A6.According to leading reports, Indian software industry is set to achieve a turnover of 10

billion dollars by the year 2005. The projected demand for trained I.T. professionals is

estimated at over 400,000 per year. There is a clear imbalance between the demand andsupply of IT professionals with the result that this sector offers one of the highest

remuneration packages. With the Internet rapidly changing the way we live, shop, entertain

and work there is a tremendous scope for entrepreneurs with radical new in this field.

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IT Person of the Year

The Men Who Saved Satyam
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India's IT Industry

Information Technology is one of the most important industries in the Indian economy.

The IT industry of India has registered huge growth in recent years. India's IT industry

grew from 150 million US Dollars in 1990-1991 to a whopping 50 billion UD Dollars in2006-2007. In the last ten years the Information Technology industry in India has grown

at an average annual rate of 30%.

The liberalization of the Indian economy in the early nineties has played a major role in

the growth of the IT industry of India. Deregulation policies adopted by the Government

of India have led to substantial domestic investment and inflow of foreign capital to this

industry. In 1970, high import duties had forced IBM to leave India. However, after the

early nineties, many multi national IT companies, including IBM, have set up their

operations in India. During the ten year period 1992-2002, the Indian software industrygrew at double the rate as the US software industry.

Some of the major reasons for the significant growth of the IT industry of India

are -

Abundant availability of skilled manpower

Reduced telecommunication and internet costs

Reduced import duties on software and hardware products

Cost advantages

Encouraging government policies

Some of the major companies in the IT industry of India are -

Tata Consultancy Services (TCS)

Infosys

Wipro

IBM

HP

HCL

Cognizant Technology Solutions (CTS) Patni

Satyam

NIIT

India's IT industry caters to both domestic and export markets. Exports contribute

around 75% of the total revenue of the IT industry in India. The IT industry can be


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broadly divided into four segments -

IT services

Softwares (includes both engineering and Research and Development)

ITES-BPO

Hardware

IT Industry, Information Technology Industry

Information technology, and the hardware and software associated with the IT

industry, are an integral part of nearly every major global industry.

The information technology (IT) industry has become of the most robust industries in the

world. IT, more than any other industry or economic facet, has an increased

productivity, particularly in the developed world, and therefore is a key driver of global

economic growth. Economies of scale and insatiable demand from both consumers andenterprises characterize this rapidly growing sector.

The Information Technology Association of America (ITAA) explains 'information

technology' as encompassing all possible aspects of information systems based oncomputers.

Both software development and the hardware involved in the IT industry include

everything from computer systems, to the design, implementation, study and

development of IT and management systems.

Owing to its easy accessibility and the wide range of IT products available, the demand

for IT services has increased substantially over the years. The IT sector has emerged

as a major global source of both growth and employment.

Features of the IT Industry at a Glance

Economies of scale for the information technology industry are high. The marginal cost

of each unit of additional software or hardware is insignificant compared to the value

addition that results from it.

Unlike other common industries, the IT industry is knowledge-based.


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Efficient utilization of skilled labor forces in the IT sector can help an economy achieve

a rapid pace of economic growth.

The IT industry helps many other sectors in the growth process of the economy

including the services and manufacturing sectors.

The role of the IT Industry

The IT industry can serve as a medium of e-governance, as it assures easy accessibility

to information. The use of information technology in the service sector improves

operational efficiency and adds to transparency. It also serves as a medium of skill

formation.

MAJOR STEPS TAKEN FOR PROMTION OF IT INDUSTRY

Domain of the IT Industry

A wide variety of services come under the domain of the information technology

industry. Some of these services are as follows:

Systems architecture

Database design and development

Networking

Application development

Testing

Documentation

Maintenance and hosting

Operational support

Security services

Top Players in Indian IT Industry

The leading companies in the information technology industry of India are Wipro Ltd, Aditya

Technologies, NIIT Ltd, Asset Infotech Ltd, Patni Computer Systems (P) Ltd, Atari Informatics

Ltd, Polaris Software Lab Ltd, Baan Info Systems India P Ltd, B-commerce Infosystems Pvt Ltd,

HCL Infosystems Ltd, Cerulean Information Technology Pvt Ltd, Hexaware Technologies Ltd,


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Iflex Solutions Ltd, CMC Ltd, Igate Global Solutions Ltd, HCL Corporation Ltd, Infosys

Technologies Ltd, Satyam Computer Services Ltd, Larsen & Toubro Ltd, Tata Consultancy

Services, Tata Infotech Ltd and Mastek Ltd.

Aditya Technologies was established on the 25th of October, 1988. The firm is primarily a

specialist in the field of making and selling of official equipments. A member of the small scaleindustrial fraternity of India the company has offices all over the country. Asset Infotech Ltd

deals in the provision of education as well as solutions in the field of information technology.

Atari Informatics Ltd was incorporated in 2000.

The company provides a number of services including - consultancy services, providing

education and training on life insurance and non life insurance services and products and total

solutions. It also operates a number of specialized and professional training institutes as well.

Baan Info Systems India P Ltd is based in the city of Mumbai. It provides a number of products

and services to its clients like third party reporting software that includes Safari and Crystal

Reports manufacturing, projects, finance, exchange, supply chain, EDI, sales, front office,

distribution, e-commerce and DEM. HCL Infosystems is one of the major software companies ofIndia. It was established in 1976 and deals in a number of products and services like desktops

and notebooks, security products, workstations, storage solutions, servers, HCL storage

solutions, chipsets, HCL IGL NAS servers, sun servers, SUN storage solutions, thin clients,

EMC storage solutions, display products, solutions, networking products and software licenses.

Hexaware Technologies Ltd is one of the major global information technology services providers

in India. The company is based in the United States of America and was incorporated in 1990

by Atul Nishar. It counts among the most prominent business process outsourcing companies

as well. The information technology services and products of Iflex Solutions Ltd are provided

only to companies that deal in financial services. As such their main clients are UBS, Banco de

Chile, Citibank, Shinsei Bank and International Monetary Fund. The prominent partners of Iflex

Solutions Ltd are Sun Microsystems, IBM, Hewlett Packard, Oracle, Intel and Microsoft.

Contribution of India's IT Industry to EconomicProgress

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 insupporting 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


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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 crucialfactors. 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.

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 saidthat the growth of India's IT industry has been instrumental in facilitating the economic progress

of India.

Export Potential of India's IT Industry

The export potential of India's IT industry has been recognized by all developed nations across

the world. As per the NASSCOM-McKinsey report, IT export from India in the year 2008 is

projected to be 35% of total Indian exports. According to this report, the products and services

of IT sector will account for more than 7.5% of the total growth of GDP in India in the 2008

fiscal.

The IT and IT enabled sectors, the online businesses, and the software products of India are

renowned all over the world for their quality and cost efficiency. With its huge growth potential,

the information technology sector of India has emerged as a preferred investment area for the

IT biggies across the world.


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As per the NASSCOM- McKinsey report, the IT sector of India will provide 2.2 million job

opportunities for the skilled Indian workforce by the end of 2008. The market capitalization of the

IT sector is expected to be about 225 billion US dollars by 2008.

The Government of India with the help of the IT ministry has taken all the necessary initiativesand policy measures to facilitate software exports from India. Efforts are also on to reach the full

potential of the India's IT industry. There is no doubt that growth of Indian software exports

crucially depends on the US demand for the same.

The subprime failure in US has brought about recession in the economy of the United States in

the recent time. This slowdown of America is going to have adverse effects on all major

economies of the world.

The economists and financial experts are of the opinion that the US subprime crash and the

consequent recession will not have any major effect on the Indian IT sector. As an aftermath of

financial slowdown, the US businesses are expected to depend more and more on the Indian ITand ITES sector to get their job done by way of outsourcing.

Owing to the easy availability of skilled workforce at a much lower rate and top quality software

product, the growth momentum of the Indian IT sector and software exports are expected to

remain more or less same in the near future. The projected growth rate is 33% for the year

2008. Software export from India is expected to account for more than 40 billion US dollars by

the end of 2008 financial year.

Based on the strong export potential of India's IT industry, the volume of software exports from

India is expected to reach the US$ 60 billion target, set for the 2010 fiscal year.

Structure of Indias IT Industry

The IT industry has emerged as one of the most important industries in the Indian

economy contributing significantly to the growth of the economy.

The IT industry of India got a major boost from the liberalization of the Indian economy.

India's software exports have grown at an annual average rate of more than 50% since

1991. The structure of the IT industry is quite different from other industries in the Indian

economy. The IT industry of India is hugely dependant on skilled manpower. Primarily aknowledge based industry, the IT industry of India has reordered significant success

due to the huge availability of skilled personnel in India.

The industry structure in the IT sector has four major categories. These are -

IT services


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IT enabled services

Software products

Hardware

IT servicesIT services constitute a major part of the IT industry of India. IT services include client,

server and web based services. Opportunities in the IT services sector exist in the areas

of consulting services, management services, internet services and application

maintenance. The major users of IT services are -

Government

Banking

Financial services

Retail and distribution

Manufacturing

IT enabled services

The services which make extensive use of information and telecommunication

technologies are categorized as IT enabled services. The IT enabled services is the

most important contributor to the growth of the IT industry of India. Some of the

important services covered by the ITES sector in India are -

Customer-interaction services including call-centers

Back-office services

Revenue accounting

Data entry and data conversion

HR services

Transcription and translation services

Content development and animation

Remote education,

Data search


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GIS

Market research

Network consultancy

Software productsSoftware products are among the most highly exported products from India. The

software industry in India originated in the 1970s and grew at a significant pace in the

last ten years. Between 1996-1997 and 2002-2003, the Indian software industry grew

more than five times from 2630 crores to 13200 crores. During the same period

software and service exports from India grew by almost twelve times.

Hardware

The hardware sector of the It industry focuses on the manufacturing and assembling ofcomputer hardware. The consumption of computer hardware is high in the domestic

market. Due to the rise in the number of IT companies, sales of desktops, laptops,

servers, routers, etc have been on the rise in recent years. Many domestic and multi-

national; companies have invested in the computer hardware market in India.

Another categorization in the structure of India's IT industry is related to the market.

There are two major market classifications - the domestic market and the export market.

The export market, dominates the IT industry accounting for 75% of the revenue.

FDI in India's IT IndustryThe information technology industry of India has been attracting considerable amount of foreign

direct investment in the recent years. Investments are being made in the four principal sectors

of the Indian information technology industry - online businesses, information technology

services, information technology based services and software merchandise.

Newer investment opportunities are opening up every now and then in the Indian information

technology scenario.

As per the findings of the NASSCOM-McKinsey report the Indian information technology issupposed to receive between 4 and 5 billion United States dollars by way of foreign direct

investment in the year 2008.

There are however other ways in which foreign direct investment is being made in the

information technology industry of India. A number of major information technology companies

of the world have set up shop in India trying to recruit the skilled information technology

professionals of India.


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One of the major advantages of this method is that the Indian information technology

professionals are more viable from the economic point of view Since they are at par with the

international standards as far as skills are concerned it is pretty easy to extract good work out of

them. This has however helped in the expansion of the job market in India as an increasing

number of people are landing jobs with the international information technology companies and

are living better lives.

Foreign direct investment in India's information technology industry has also been contributed to

by the remarkable growth of the industry in the recent years.

The worth of the Indian information technology industry was 150 million United States dollars in

the financial year 1991-92 and since then it has grown at an appreciable rate to be worth 5.7

billion US dollars in the 1999-2000 fiscal. The information technology has been among the best

as far as rate of growth is concerned. This has lured the investors from all over the world.

Policies and Regulations of Indian IT IndustryThe policies and regulations of Indian information technology industry are the basic

guidelines that have been set up by the Department of Information Technology of the

Ministry of Communications and Information Technology of the Government of India.

There are a number of guidelines on various aspects of the Indian IT industry that are

supposed to be followed by the information technology industry of India. They may be

enumerated as below:

Preparation for project proposals State Data Centre

National Electronics or Information Technology Hardware Manufacturing Policies

Electronics and Information Technology Industry

Implementation of Common Services Centres Scheme in States

Establishment of State Wide Area Network

Capacity Building and Institutional Framework for e-governance under NeGP

.IN Internet Domain Registration

Submitting Proposals for DIT support needed to host Symposiums, Conferences,

Workshops and Seminars in the fields of electronics, and Information and

Communication Technology .IN Internet Domain Name-Policy Framework and Implementation

The policy and regulations on State Data Centre are made up of a number of policies

and regulations on a number of issues. There are a few regulations on the State Data

Centre along with annexures on issues like manpower requirements, physical

requirements, standard requirements and best practices on security. The Industrial

Promotion Division of the Department of Information Technology are responsible for


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formulating the rules and regulations for the Electronics and Information Technology

Industry.

The organization deals with the following issues - Deemed exports, Industrial approval

policies, Export promotion schemes, Foreign investment policies, Export promotion

capital goods(EPCG)scheme, Fiscal policies, Duty exemption and remission schemesand Foreign trade policy.

As far as the policies on .IN Internet Domain Registration are concerned they are

divided into two separate and major categories. One set of policies and regulations is on

.IN Internet domain name and the other set is on the National Internet Exchange of

India. The draft paper on the national electronics and information technology hardware

manufacturing policies contains a number of issues that are important in the context of

the overall information technology scenario of the country. They may be mentioned as

below:

Procurement and rewarehousing certificates

Vision, strategies and aims for assisting electronics and information technology

hardware manufacturing

Inviting large EMS companies to set up/augment Indian operations

Tariff policy

Developing semiconductor industry

EXIM policy issues

Looking at the international market

Hardware manufacturing cluster parks (HMCP)

HRD in VLSI design and embedded software Fostering the sourcing of locally manufactured products

Improving labor laws

Upgrading the general infrastructure

Patenting

Reducing the time of transaction

Certification of quality

Assisting research and development

Removing mandatory customs bonding for electronics and IT Units

Selling Indian products

Rate of depreciation Fostering relocation of manufacturing plants to India.

Size of Indias IT Industry


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The size of India's IT industry has grown significantly over the years. The size of this sunshine

industry of India grew from 150 million US Dollars to 50 billion US Dollars between 1990-1991

and 2006-2007. The growth of the IT industry has been very high in the last few years. The size

of the Information Technology industry of India was 5.7 billion US Dollars in 1999-2000. After

the turn of the century the industry experienced exponential growth to reach the 50 billion mark

by 2006-2007.

The size of the IT industry grew consistently during the period - 1995-2000

1995-1996 - 1224 million US Dollars




1999- 2000 - 5700 million US Dollars


According to the NASSCOM- McKinsey report on the IT industry of India, the projectedrevenue of the IT industry of India for the year 2008 is 87 billion US Dollars. Theprojected exports or the year 2008, accord to this report, is 50 billion US Dollars.

Some of the important aspects of the NASSCOM- McKinsey report related to the size of

India's IT industry are -

There is potential of 2.2 million people being employed in the IT industry of India by the

end of 2008.

Contribution of software and services to the total GDP of India will be more than 7.5%.

FDI (Foreign Direct Investment) of 4.5 billion US Dollars expected in the IT industry bythe end of 2008.

35% of total exports from India will be from IT exports.

225 billion US Dollars worth of market capitalization from IT shares.

Softwares and services are exported to bout 95 companies from India. North America

accounts for 61% of the software exports from India.

The projections about the size of India's IT industry present a very optimistic picture.

The industry is expected to grow to double its current size by the year 2012. India's IT

industry is expected to grow at an annual average rate of 18% in the next five years.

The industry is also expected to cross the 100 billion US Dollar mark by 2011. One of

the major areas of growth for the IT industry of India is by tapping the potential in the

domestic market. The IT industry of India is largely dependant on the export market.

Penetrating more into the domestic market would create further opportunities of growth

for the IT industry.


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Growth of India's IT Industry

India's IT industry has recorded phenomenal growth over the last decade. During the period

from 1992-2001, the compounded annual growth rate of the Indian IT services industry hasbeen over 50%. The software sector in India has grown at almost double the rate of the US

software sector.

The statistics of the India's IT industry substantiates the huge momentum acquired by the IT

sector in the recent past. During the financial year 2000-2001, the software industry in India

accounted for $8.26 billion. The corresponding figure was $100 million 10 years back.

As per the report of a study undertaken by NASSCOM-McKinsey, the software export from

Indian IT industry is likely to reach 50 billion US dollars in the year 2008. This growth rate of the

software sector for the year 2008 has been projected on the basis of the 35% per year growthrate achieved in the last couple of years.

Export of software and services from India is expected to add almost 41 billion US dollars to the

annual revenue of the Indian government in the current year. The share of technology industry

in India's GDP is expected to reach 5.5% in 2008; while the corresponding figure in 1998 was

as small as 1.2%.The study of NASSCOM has revealed that the growth of India's IT industry

has prompted the growth of Indian exports by almost 36%. Another favorable effect of India's IT

boom is the expansion of opportunities of employment. By the end of fiscal year 2008, the IT

sector of India is expected to employ around 2 million skilled Indian youths.

The growth of India's IT sector has brought about many other positive changes in the Indianeconomy. The purchasing power of a large section of Indian population has increased

dramatically. This has resulted in an increase in the average standard of living of the majority of

population of the country. The increase in purchasing power of the common people has

propelled the growth rate of t

india it industry

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