report on indian and foreign i.t.sector

8/2/2019 Report on Indian and Foreign i.t.sector

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A

COMPREHENCIVE PROJECT

WITH RESPECT TO

COMPARISON OF FOREIGN AND INDIAN I.T. SECTOR

Prepared by: Faculty Guide:

Rajiv Naidu prof.Mittal Thaker

Rahul agrawal

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PREFACE:A management student needs practical hands on experience to succeed

as a manager.As a part of comprehencive project ,management teaches

us the practical exposure towards the industrial working and how

routine problems are faced and how one can bring solution to it.

This report is a comprehencive blend of work which involves all the

basic functions of management and research.This report helped me to

emphasis on the basic introduction of information techlonlogy in indiaand its concerned activities undertaken.

We had a detailed study on THE INFORMATION TECHNOLOGY

SECTOR and also tried to put special efforts to draw conclusion on

various aspects lead before for the study.

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ACKNOWLEDGEMENT:

This is say a special thanks to D.R. J.K PATEL INSTITUTE OF

MANAGEMENT WAGHODIA.

It would not have been possible to bring this report to the present form

without the support of the college and my foremost thanks to the

director of our college Dr.P.G.K Murthy for giving us the facilities andnot to forget our faculty co-ordinators without which the things might

not be so east at all,and their valuable contribution and guidance

throughout the presentation of the report.

We wish to extend our sincere thanks to Prof.Mittal Thakar for her

guidance through the various phases of the project,her constant guidance

and positive approach helped to cope up with the various problems lead

before us and constant improvement in the report.Further we would like to extend our special thanks to THE GUJARAT

TECHNOLOGY UNIVERSITY as it has given us a chance to add on to

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our knowledge by including report presentation as a part of our

curriculum.

-Rajiv Naidu

-Rahul Agrawal

CERTIFICATE:

DR.J.K.PATEL INSTITUTE OF MANAGEMENT

This is to certify that Mr.Rajiv Naidu and Rahul Agrawal ,the student of

M.B.A course have successfully undergone and completed his

comprehensive report titled the comparison of indian and foreign i.t.

sector

As a part of fullillment of MBA course under GUJARAT

TECHNOLOGY UNIVERSITY

We are satisfied with their performance and dedication towards theirwork shown during their repot.

We wish them best of luck for coming future.

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Date:

Project guide: Director

Prof.mittal thakar Dr.P.G.K. Murthy

CONTENTS:

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INTRODUCTION:

The Information technology industry in India has gained a brandidentity as a knowledge economy due to its IT and ITES sector. The ITITES industry has two major components: IT Services and business

process outsourcing (BPO). The growth in the service sector in India hasbeen led by the ITITES sector, contributing substantially to increase inGDP, employment, and exports. The sector has increased itscontribution to India's GDP from 6.1% in 2009-10 to 6.4% in 2010-11.

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According to NASSCOM, the ITBPO sector in India aggregatedrevenues of US$88.1 billion in FY2011. The top seven cities that

account for about 90% of this sectors exports are Bangalore, Chennai,Hyderabad, Mumbai, Pune, Delhi, Kolkata, Coimbatore and KochiExport dominate the ITITES industry, and constitute about 77% of thetotal industry revenue. Though the ITITES sector is export driven, thedomestic market is also significant with a robust revenue growth.

HISTORY:

The Indian Government acquired the EVS EM computers from theSoviet Union, which were used in large companies and researchlaboratories. In 1968 Tata Consultancy Servicesestablished in SEEPZ,Mumbai by the Tata Groupwere the country's largest software

producers during the 1960s.

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As an outcome of the various policies ofJawaharlal Nehru (office: 15

August 1947 27 May 1964) the economically beleaguered country wasable to build a large scientific workforce, third in numbers only to thatof the United States of America and the Soviet Union. On 18 August1951 the minister of education Maulana Abul Kalam Azad, inauguratedthe Indian Institute of Technology at Kharagpurin West Bengal.Possibly modeled after the Massachusetts Institute of Technology theseinstitutions were conceived by a 22 member committee of scholars andentrepreneurs 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 theUS. By the 1980s a number of engineers from India were seekingemployment in other countries. In response, the Indian companiesrealigned wages to retain their experienced staff. In the Encyclopedia ofIndia, Kamdar (2006) reports on the role of Indian immigrants (1980 -early 1990s) in promoting technology-driven growth:

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http://en.wikipedia.org/wiki/Jawaharlal_Nehruhttp://en.wikipedia.org/wiki/Maulana_Abul_Kalam_Azadhttp://en.wikipedia.org/wiki/Indian_Institute_of_Technologyhttp://en.wikipedia.org/wiki/Kharagpurhttp://en.wikipedia.org/wiki/West_Bengalhttp://en.wikipedia.org/wiki/Massachusetts_Institute_of_Technologyhttp://en.wikipedia.org/wiki/Encyclopedia_of_Indiahttp://en.wikipedia.org/wiki/Encyclopedia_of_Indiahttp://en.wikipedia.org/wiki/Jawaharlal_Nehruhttp://en.wikipedia.org/wiki/Maulana_Abul_Kalam_Azadhttp://en.wikipedia.org/wiki/Indian_Institute_of_Technologyhttp://en.wikipedia.org/wiki/Kharagpurhttp://en.wikipedia.org/wiki/West_Bengalhttp://en.wikipedia.org/wiki/Massachusetts_Institute_of_Technologyhttp://en.wikipedia.org/wiki/Encyclopedia_of_Indiahttp://en.wikipedia.org/wiki/Encyclopedia_of_India


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Information Technology companies Tata Infotech, Patni ComputerSystems and Wipro had become visible. The 'microchip revolution' of

the 1980s had convinced both Indira Gandhi and her successorRajivGandhi that electronics and telecommunications were vital to India'sgrowth and development. MTNL underwent technologicalimprovements. During 1986-1987, the Indian government embarkedupon 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 academicresearch oriented Education and Research Network (ERNET).

POST LIBERLIZATION:

Regulated VSAT links became visible in 1985. Desai (2006) describesthe steps taken to relax regulations on linking in 1991:

In 1991 the Department of Electronics broke this impasse, creating a

corporation called Software Technology Parks of India (STPI) that, being

owned by the government, could provide VSAT communications

without breaching its monopoly. STPI set up software technology parksin 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

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allowed work done in India to be transmitted abroad directly. Indian

firms soon convinced their American customers that a satellite link was

as reliable as a team of programmers working in the clients office.

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

The Indian economy underwent economic reforms in 1991, leading to anew era ofglobalization and international economic integration.Economic growth of over 6% annually was seen during 1993-2002. Theeconomic reforms were driven in part by significant the internet usage inthe country. The new administration underAtal Bihari Vajpayeewhich placed the development of Information Technology among its topfive priorities formed the Indian National Task Force on InformationTechnology 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 TradeOrganization (WTO), International Telecommunications Union (ITU),

and World Bank. In addition, the Task Force incorporated the

experiences ofSingapore and other nations, which implemented similar

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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 furtherliberalize India's telecommunications sector. The InformationTechnology Act 2000 created legal procedures for electronictransactions and e-commerce.

Throughout the 1990s, another wave of Indian professionals entered theUnited States. The number ofIndian Americans reached 1.7 million by2000. This immigration consisted largely of highly educatedtechnologically proficient workers. Within the United States, Indiansfared well in science, engineering, and management. Graduates from theIndian Institutes of Technology (IIT) and Indian Institute of InformationTechnology - Allahabad ( IIIT-A ) became known for their technicalskills. Thus GOI planned to establish new Institutes especially forInformation Technology to enhance this field. In 1998 India got the first

IT institute name Indian Institute of Information Technology atAllahabad. The success of Information Technology in India not only hadeconomic repercussions but also had far-reaching politicalconsequences. India's reputation both as a source and a destination forskilled workforce helped it improve its relations with a number of worldeconomies. The relationship between economy and technologyvaluedin the western worldfacilitated the growth of an entrepreneurial classof immigrant Indians, which further helped aid in promotingtechnology-driven growth.

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http://en.wikipedia.org/wiki/Information_Technology_Acthttp://en.wikipedia.org/wiki/Information_Technology_Acthttp://en.wikipedia.org/wiki/Indian_Americanhttp://en.wikipedia.org/wiki/Western_worldhttp://en.wikipedia.org/wiki/Information_Technology_Acthttp://en.wikipedia.org/wiki/Information_Technology_Acthttp://en.wikipedia.org/wiki/Indian_Americanhttp://en.wikipedia.org/wiki/Western_world


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MAJOR PLAYERS:

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Top 10 I.T. COMPANIES 20081 Tata Consultancy Services2 Infosys Technologies Limited3 Wipro Limited4 Satyam Computer Services*5 HCL Technologies Limited6 Tech Mahindra Limited7 Patni Computers Systems Limited8 i-Flex Solutions Limited9 L&T Infotech Limited10 Polaris Software Lab Limited

Major centres of IT and ITES Industry in India

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Major segments in IT Services exports

IT Services - Exports CONTRIBUTIONProject OrientedIT ConsultingSystems IntegrationCustom ApplicationDevelopmentNetwork Consulting

and IntegrationSoftware TestingOutsourcingApplicationManagement

IS OutsourcingOthers

Support andTrainingSoftwaredevelopment andsupportHardwaredeployment and

supportIT education andtraining

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Employment in the IndianIT and ITES Industry

2004 2005 2006 2007 2008 2009

MARKET

Total SIZE

Export (US BN $) 12.9 17.7 23.6 31.3 40.4 47.1

EMPLOYME

NT

51200

0

70600

0

92800

0

12430

00

15600

00

17366

15

REVENUE/E

PYL

US$/EPYL 25,19

5

25,071 25,431 25,181 25,897 27,122

DOMES

TIC

Market

Size

3.8 4.8 6.7 8.2 11.7 12.5

MARKE

T

(US $

billion)

SIZE

Employme

nt

318,0

00

352,00

0

365,00

0

378,00

0

450,00

0

500,00

0

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Revenue

per

employee

(US

$/employe

e)

11,95

0

13,636 18,356 21,693 26,000 25,000

Total Market

Size

(US $

billion)

16.7 22.5 30.3 39.5 52.1 59.6

Employme

nt

830,0

00

1,058,

000

1,293,

000

1,621,

000

2,010,

000

2,236,

615

Revenue

per

employee

(US

$/employee) 20,120 21,267 23,434 24,368 25,920 26,647

MAJOR I.T. HUBS

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Ranking City Description

1 BangalorePopularly known as the capital of the SiliconValley of India is currently leading in Information

Technology Industries in India.

2 Chennai

It is the Second largest exporter of Software next

to Bangalore. It has the largest operations for

India's top software company TCS, Infosys ( has

world's largest development center with 25,000

employers in Mahindra world city at Baranur nearChengalpattu, and many centers in IT corridor),

and other software companies like Wipro, CTS,

Patni, L&T infotech and many companies have

major operations in IT corridor, Ambatturand

other places in Chennai

3 Hyderabad

Hyderabad called as Cyberabad, which has good

infrastructure and good government support is alsoa good technology base in India. The Government

of AP Has built a separate township for IT

Industry called the HITEC City. [9]

4 Pune Pune, a major industrial point in India.

5 Coimbatore It is the Manchester of South India, second

largest city in the state of Tamil Nadu,India and

one of the largest industrial city in India. Amongmajor metro-markets Coimbatore (up 38%) MAY

11 (Bangalore showed the slowest rate of annual

growth at 4 percent driven by reduced demand in

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http://en.wikipedia.org/wiki/Bangalorehttp://en.wikipedia.org/wiki/Silicon_Valley_of_Indiahttp://en.wikipedia.org/wiki/Silicon_Valley_of_Indiahttp://en.wikipedia.org/wiki/Information_Technologyhttp://en.wikipedia.org/wiki/Information_Technologyhttp://en.wikipedia.org/wiki/Chennai,_Indiahttp://en.wikipedia.org/wiki/Bangalorehttp://en.wikipedia.org/wiki/TCShttp://en.wikipedia.org/wiki/Infosyshttp://en.wikipedia.org/wiki/IT_corridorhttp://en.wikipedia.org/wiki/Ambatturhttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Hyderabad,_Indiahttp://en.wikipedia.org/wiki/Infrastructurehttp://en.wikipedia.org/wiki/Technologyhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/HITEC_Cityhttp://en.wikipedia.org/wiki/Punehttp://en.wikipedia.org/wiki/Coimbatore,_Indiahttp://en.wikipedia.org/wiki/Bangalorehttp://en.wikipedia.org/wiki/Silicon_Valley_of_Indiahttp://en.wikipedia.org/wiki/Silicon_Valley_of_Indiahttp://en.wikipedia.org/wiki/Information_Technologyhttp://en.wikipedia.org/wiki/Information_Technologyhttp://en.wikipedia.org/wiki/Chennai,_Indiahttp://en.wikipedia.org/wiki/Bangalorehttp://en.wikipedia.org/wiki/TCShttp://en.wikipedia.org/wiki/Infosyshttp://en.wikipedia.org/wiki/IT_corridorhttp://en.wikipedia.org/wiki/Ambatturhttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Hyderabad,_Indiahttp://en.wikipedia.org/wiki/Infrastructurehttp://en.wikipedia.org/wiki/Technologyhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/HITEC_Cityhttp://en.wikipedia.org/wiki/Punehttp://en.wikipedia.org/wiki/Coimbatore,_India


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the BPO/ITES sector),It Become an Upcoming

Major IT hub of India

6 NCR

The National Capital Region of India comprising

Delhi, Gurgaon, Faridabad,Noida, Greater Noida

and Ghaziabad are having ambitious projects and

are trying to do every possible thing for this

purpose.

7 Mumbai

Popularly known as the commercial,

entertainment, financial capital ofIndia, This isone city that has seen tremendous growth in IT and

BPO industry, it recorded 63% growth in 2008.[10]

TCS, Patni, LnT Infotech, I-FlexWNS and other

companies are headquartered here.

8 Kolkata

Kolkata is a major IT hub in eastern India. All

major IT companies are present here. The city has

tremendous potential for growth in this sector withupcoming areas like Rajarhat.

9 Trivandrum

Trivandrum is the capital of Kerala. GOK provides

a good platform for IT development in the city

with India's largest IT parkTechno parkand

dedicated Techno city SEZs.

10 Kochi

Kochi is the commercial capital of Kerala and is

well connected by train, bus, sea and air. Info parkand smart city are the two SEZ IT parks with more

than 100 companies.

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http://en.wikipedia.org/wiki/NCR_Indiahttp://en.wikipedia.org/wiki/Delhihttp://en.wikipedia.org/wiki/Gurgaonhttp://en.wikipedia.org/wiki/Faridabadhttp://en.wikipedia.org/wiki/Noidahttp://en.wikipedia.org/wiki/Greater_Noidahttp://en.wikipedia.org/wiki/Ghaziabad,_Indiahttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Tata_Consultancy_Serviceshttp://en.wikipedia.org/wiki/Patni_Computer_Systemshttp://en.wikipedia.org/wiki/Larsen_&_Toubro_Infotechhttp://en.wikipedia.org/wiki/Oracle_Financial_Services_Softwarehttp://en.wikipedia.org/wiki/WNS_Global_Serviceshttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/Rajarhathttp://en.wikipedia.org/wiki/Trivandrumhttp://en.wikipedia.org/wiki/Technoparkhttp://en.wikipedia.org/wiki/Technocityhttp://en.wikipedia.org/wiki/Kochihttp://en.wikipedia.org/wiki/InfoPark,_Kochihttp://en.wikipedia.org/wiki/NCR_Indiahttp://en.wikipedia.org/wiki/Delhihttp://en.wikipedia.org/wiki/Gurgaonhttp://en.wikipedia.org/wiki/Faridabadhttp://en.wikipedia.org/wiki/Noidahttp://en.wikipedia.org/wiki/Greater_Noidahttp://en.wikipedia.org/wiki/Ghaziabad,_Indiahttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Tata_Consultancy_Serviceshttp://en.wikipedia.org/wiki/Patni_Computer_Systemshttp://en.wikipedia.org/wiki/Larsen_&_Toubro_Infotechhttp://en.wikipedia.org/wiki/Oracle_Financial_Services_Softwarehttp://en.wikipedia.org/wiki/WNS_Global_Serviceshttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/Rajarhathttp://en.wikipedia.org/wiki/Trivandrumhttp://en.wikipedia.org/wiki/Technoparkhttp://en.wikipedia.org/wiki/Technocityhttp://en.wikipedia.org/wiki/Kochihttp://en.wikipedia.org/wiki/InfoPark,_Kochi


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RECENT DEVELOPMENT:

The economic effect of the technologically inclined services sector in

Indiaaccounting for 40% of the country's GDP and 30% of exportearnings as of 2006, while employing only 25% of its workforceissummarized by Sharma (2006):

The share of IT (mainly software) in total exports increased from 1percent in 1990 to 18 percent in 2001. IT-enabled services such as backoffice operations, remote maintenance, accounting, public call centers,medical transcription, insurance claims, and other bulk processing arerapidly expanding. Indian companies such as HCL, TCS, Wipro, and

Infosys may yet become household names around the world.

Today, Bangalore is known as the Silicon Valley of India andcontributes 33% of Indian IT Exports. India's second and third largestsoftware companies are head-quartered in Bangalore, as are many of theglobal SEI-CMM Level 5 Companies.

Mumbai too has its share of IT companies that are India's first andlargest, like TCS and well established like Reliance, Patni, LnT

Infotech, I-Flex, WNS, Shine, Naukri, Jobs expert etc. are head-quartered in Mumbai. And these IT and dot com companies are rulingthe roost of Mumbai's relatively high octane industry ofInformationTechnology.

Such is the growth in investment and outsourcing, it was revealed thatCap Gemini will soon have more staff in India than it does in its homemarket of France with 21,000 personnel+ in India.[7]

On 25 June 2002 India and the European Union agreed to bilateral

cooperation in the field of science and technology. A joint EU-Indiagroup of scholars was formed on 23 November 2001 to further promote

joint research and development. India holds observer status at CERN

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http://en.wikipedia.org/wiki/Call_centerhttp://en.wikipedia.org/wiki/Medical_transcriptionhttp://en.wikipedia.org/wiki/HCL_Technologieshttp://en.wikipedia.org/wiki/Tata_Consultancy_Serviceshttp://en.wikipedia.org/wiki/Wiprohttp://en.wikipedia.org/wiki/Infosyshttp://en.wikipedia.org/wiki/Silicon_Valley_of_Indiahttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Tata_Consultancy_Serviceshttp://en.wikipedia.org/wiki/Reliancehttp://en.wikipedia.org/wiki/Patni_Computer_Systemshttp://en.wikipedia.org/wiki/Larsen_&_Toubro_Infotechhttp://en.wikipedia.org/wiki/Larsen_&_Toubro_Infotechhttp://en.wikipedia.org/wiki/Oracle_Financial_Services_Softwarehttp://en.wikipedia.org/wiki/WNS_Global_Serviceshttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Information_Technologyhttp://en.wikipedia.org/wiki/Information_Technologyhttp://en.wikipedia.org/wiki/Call_centerhttp://en.wikipedia.org/wiki/Medical_transcriptionhttp://en.wikipedia.org/wiki/HCL_Technologieshttp://en.wikipedia.org/wiki/Tata_Consultancy_Serviceshttp://en.wikipedia.org/wiki/Wiprohttp://en.wikipedia.org/wiki/Infosyshttp://en.wikipedia.org/wiki/Silicon_Valley_of_Indiahttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Tata_Consultancy_Serviceshttp://en.wikipedia.org/wiki/Reliancehttp://en.wikipedia.org/wiki/Patni_Computer_Systemshttp://en.wikipedia.org/wiki/Larsen_&_Toubro_Infotechhttp://en.wikipedia.org/wiki/Larsen_&_Toubro_Infotechhttp://en.wikipedia.org/wiki/Oracle_Financial_Services_Softwarehttp://en.wikipedia.org/wiki/WNS_Global_Serviceshttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Information_Technologyhttp://en.wikipedia.org/wiki/Information_Technology


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while a joint India-EU Software Education and Development Center isdue at BANGLORE.

AN OVERVIEW OF PERFORMANCE:

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COMPARING THE TOP PLAYERS:

As can be seen from the table above, Educomp Solutions has clockedthe highest Sales CAGR of 99% in the past five years, followed by HCLInfosystems (50%), Infosys (24%) and Wipro (22%). However, the

highest margins are enjoyed by the software majors Infosys (28%),closely followed by Educomp (27%) and TCS (24%).

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SWOT ANALYSIS:

STRENGHTS:

a) Since the salaries and cost of doing software business in westerncountries like United States and Britain is too high, companies have

been looking at cheaper alternatives and India certainly has a greateradvantage. Outsourcing has really been the major reason which hascaused the boom in the Indian software industry.

b) Additional factors which are causing the I.T. sector to flourish are thevisa restrictions, which prevent companies like Microsoft, Oracle andIBM to hire the adequate number of software professionals in their owncountry. Bill Gates ( founder of Microsoft) and others have repeatedlyinsisted to United States government that they need to remove the upperlimits of working permits/visa's so that they can hire a larger number ofIndian software professionals in their USA offices (we know that it isnot going to happen). India has a large number of engineers and that too

English speaking.

c) Moreover, the numbers of software engineers being produced in thesewestern countries are not enough so companies have to eventuallytransfer their work to India. Most Indian software professionals arehardworking and are able to devote more time to work than theirwestern counterparts.

d) Job placements in most engineering colleges is very good with many

companies like Wipro, Infosys, Satyam and several multinationalscompeting to hire good students. Even the starting salaries which areoffered to Indian software professionals are usually much more than thehighest salary a regular government employee has ever received in his

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30 years career.

e) Additionally, software is a white collar job, meaning you are mostlysitting in a nice air-conditioned office/cubicle and unlike many other

professions you do not have to run around to get your work done. Thereare plenty of jobs and you can change companies every two years andyour salary increases each time you do so.

f) Multinational companies regularly Indian software engineers overseasto countries like Australia, UK and USA for a few months to manyyears, during which they get paid even more.

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WEAKNESS:

a) The falling dollar: The value of US Dollar has come down by more

than 10% and has been eating away the margins of Indian software

industry. In future, the decline will increase and the advantage of doingbusiness in India will be lost because of the high salaries of software

engineers.

b) Time difference: Already there are issues with the difference in time

zones. There is a lack of real time communication since majority of

team on outsourced projects are at different locations. Problems are

partially solved by deploying an on-site coordinator which basicallydoes the coordination of both teams to some level.

c) Quality of Indian Engineers: Many projects which came to India are

taken back to US because of difference in Indian and western accents,

and sometimes they say that the quality of engineers in their own

countries is better than in India (which I personally do not necessarily

agree, may be in some exceptional cases but not all).

d) Salaries have peaked: Unlike the 20% salary hikes which have been

happening in past, in future the salary increases will probably be 5-10%.

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e) Layoff's (job loss): Recently the layoff news in TCS and IBM made

headlines. A small percentage of low performance Engineers were laid

off and it is happening in many companies now. This process will likely

increase in future and companies will prefer hiring freshers out of

college at relatively lower salaries.

f) Very Hectic and Stressful lifestyle in a long term: It is easy to devote

long hours when you are young and single. But over time when you

have a wife and children it gets tough. Software engineers do not get

enough time for their families and they lead a hectic and stressful

lifestyle later in life. Workplace politics in software offices is also

common. They eventually become more like a money making machine

for family than anything else as their personal life get's reduced to

nothing. There are more software engineers in Bangalore undergoing

stress relief programs than in any other profession. In software hubs like

Bangalore and Pune, it is very difficult to get admission of your kid in a

good school and traffic overall is a nightmare.

g) International competition increasing: Countries like China, Mexico

and Philippines are slowly catching up. Several Indian companies have

already opened their offices there. Did you know that China produces

more engineers than India but they really lack ability to speak English.The upcoming Chinese generations are much better and will certainly

compete with India in future.

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OPPORTUNITIES OF THE SECTOR:

1. Easy availability of Talent pool and cost advantage The sector ishuman power and knowledge-oriented and this cost accounts for morethan 40% of overall cost. Indians are considered to have bettermathematical skills required for writing software. The easy availabilityof this talent pool makes it a long-term advantage. Widespreadknowledge of English makes this pool employable, as compared to

other countries like China, Japan etc. Also, it is 5 to 8 times cheaper toemploy an Indian technologist than one from developed countries andthus the business has been flowing to India over the years.

2. Process and Quality Nearly all the Indian software companiestakeCMM (Capability Maturity Model) certification, which is thebenchmark of quality management. Out of approximately 250companies reaching supreme level i.e. level 5 of CMM, 60 are fromIndia. This gives the impression of the company being dependable and

hence, helps them tap the market easily.3. Supportive government policies In early 1970s when Americans

began looking offshore for software development, the governmentpolicies of India were not much supportive. However, post liberalization

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the government recognized the potential and took supportive stancetowards IT by reducing import tariff on Hardware and Software,

developing Software Technology Parks and introducing legislativeactions to protect intellectual property (e.g. Information technology act2000). Indian government policies are framed in a way that ensuresmaximum benefit out of IT outsourcing to India.

4. Unique geographic location The major consumer of IT products sofar has been the US. The time difference between India and US is 12hours and it offers economy of 24 hours a day by communicationequipment.

THREATS FOR THE SECTOR:

1. Threat of new emerging service economies Along with India,Israel and Ireland carry most of the benefits for development of ITSector. These countries are now taking up the market share and posingthreat to Indian IT sector. Moreover, software sector of Korea, Taiwan,Philippine challenges India.

2. Emergence of China as substitute China is gradually emerging as

a tough competitor in offshore IT services. China has begun offeringbetter rates with reduced operational costs as compared to India, becauseof its low cost talent pool. The government of China is taking measuresto improve the IT sector and to overcome the language barrier.Although China has not yet reached Indias revenue rate of USD 12.7

billion/year from Information technology services, Chinas IT and BPOsector is expected to grow 30 percent annually by 2013. Bill Gates hasforecasted that software sector of China would reach Indias in 5 years.

3. Hardware Sector lagging behind India is the leader for Softwareand ITeS sector. However, the development of hardware sector has beenlagging, due to it being a low margin business. Indian companies thushave to depend on foreign countries for their hardware requirement.

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4. Poor Infrastructure Greater communication facilities arenecessary for software, ITeS, BPO to grow at faster rate.

Communication network in India is far behind most of the westerndeveloped countries and worse than our closest competitor China.Arrival of 3G however, will give a relief to some extent.

5. Concentrated market and Anti-outsourcing United States andUnited Kingdom have been the dominant market for Indian IT sector.This dependency and concentration on few markets resulted in suddenfall in demand towards the end of last decade on the aftermath of therecent global crisis. Also, countries have started raising their concerns

regarding migration of jobs to India. Diversified client base would helpreduce the dependency of the sector on few economies.

6. Domestic consumption Overseas market accounts for 75% ofIndian software sector, mainly from software outsourcing. The demandfor IT products within India has been very less, as compared to those byother countries. The environment necessary for further growth ofsoftware sector would come with domestic consumption of its products.

7. Exchange rate A major part of the Sector revenue is earned in

foreign currency (due to high exports) but it incurs expenses (e.g.employee salary) in Indian rupees. Thus, appreciation of rupee reducesrevenues whereas depreciation increases the revenues. The fluctuatingexchange rate brings volatility in operating margins for IT sector.

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PORTERS 5 FORCES MODEL:

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A COMPARISON OF INDIAN AND FOREIGN I.T. SECTOR

Silicon Valley companies are based on know what. They know the

market, they know the technology and they know what products to maketo earn money.

Indian IT companies are based on know how. They do the softwarecoding for other companies that have the know what. If you tell themwhat to do, they know how and will do it for you.

Silicon Valley companies invest huge sums of money on R&D. Theygenerate new ideas and are constantly developing new ways of doingthings.

Indian IT companies have nothing called R&D. They do not generateany new ideas.

A typical Silicon Valley engineer is a specialist in a particulartechnology, like inkjet printing or virus detection. He spends all his lifeworking in this technology area.

A typical Indian IT engineer is a specialist in a few languages. He is notconcerned about the technology that he is working on and is willing todevelop any software with the languages that he knows.

A typical Silicon Valley engineers education and work experience allrelate to a technology. When he changes jobs, he changes to anothercompany working on the same technology.

A typical Indian IT engineers work experience does not teach him anytechnology. He may be a mechanical engineer currently working forthree months on banking software, and then the next three months onshoe retailing software.

Silicon Valley is all about the excitement of creating things out ofnothing. Companies like HP actually started in the garages of theirfounders.

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Indian IT does not know the meaning of creativity. Some companies arestarted by people who quit other companies and take some of the parent

firms software development contracts with them.Silicon Valleys entrepreneurs bet on people, ideas and inventions.

Indian ITs entrepreneurs bet on certainties. They start a firm aftergetting software development contracts.

Silicon Valleys firms are about technology management.

Indian ITs firms are about man management.

CONTRIBUTION TOWARDS ECONOMIC GROWTH:

The contribution of India's IT industry to economic progress has beenquite significant. The rapidly expanding socio-economic infrastructure

has proved to be of great use in supporting the growth of Indian

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information technology industry.

The flourishing Indian economy has helped the IT sector to maintain its

competitiveness in the global market. The IT and IT enabled services

industry in India has recorded a growth rate of 22.4% in the last fiscal

year. The total revenue from this sector was valued at 2.46 trillion

Indian rupees in the fiscal year 2007. Out of this figure, the domestic IT

market in India accounted for 900 billion rupees. So, the IT sector in

India has played a major role in drawing foreign funds into the domestic

market.

The growth and prosperity of India's IT industry depends on some

crucial factors.

These factors are as follows:

India is home to a large number of IT professionals, who have the

necessary skill and expertise to meet the demands and expectations of

the global IT industry.

The cost of skilled Indian workforce is reasonably low compared to

the developed nations. This makes the Indian IT services highly cost

efficient and this is also the reason as to why the IT enabled services

like business process outsourcing and knowledge process outsourcing

have expanded significantly in the Indian job market.

India has a huge pool of English-speaking IT professionals. This is whythe English-speaking countries like the US and the UK depend on the

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Indian IT industry for outsourcing their business processes.

The emergence of Indian information technology sector has broughtabout sea changes in the Indian job market. The IT sector of India offersa host of opportunities of employment. With IT biggies like Infosys,Cognizant, Wipro, Tata Consultancy Services, Accenture and severalother IT firms operating in some of the major Indian cities, there is nodearth of job opportunities for the Indian software professionals. The ITenabled sector of India absorbs a large number of graduates fromgeneral stream in the BPO and KPO firms. All these have solved theunemployment problem of India to a great extent. The average

purchasing power of the common people of India has improvedsubstantially. The consumption spending has recorded an all-time high.The aggregate demand has increased as a result. All these haveimproved the gross production of goods and services in the Indianeconomy.

CURRENT SCENARIO (FUTURE OUTLOOK FOR INDIA):After recession, the year 2010 has seen steady recovery by the sector.Global markets have seen a growth of 5% in GDP, with developingnations growing faster than developed nations. IT spend in 2011 is

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expected to grow nearly 4%. Worldwide IT spending will also benefitfrom the accelerated recovery in emerging market.

According to NASSCOM, India can reach $ 130 Billion in ITrevenue by 2015, with CAGR of 14%. With this, it would becontributing to 7% of annual GDP and creating 14.3 millionemployment opportunities.

With the government taking active measures to stimulate the growth ofIT sector and emergence of BPO and KPO over last few years, India isexpected to climb the global value and knowledge chain. In long-termwe can expect the Indian IT sector to see good growth. Different

segments of the sector are set to experience different growth rates. BPOindustry will experience high growth but the Software and ITeSsegment is expected to see slower growth.However, on company basis each company has to compete against otherdomestic as well as global player. They have to adapt new businessmodels to compete with global players e.g. Cloud, On-demandservices, and SaaS.With increased threat from countries like China,the companies will suffer loss unless they change business models.

It is very important that while investing in a company, an investorselects a sector, where the long-term future prospects are bright. In theabove case, we have seen that the IT sector is expected to have goodgrowth in the long run. Also, it is equally important that the companyhas an excellent financial track record (i.e. Green 10 Year X-Ray)and its long-term future prospects are Green (Very Good).

*The 10 YEAR X-RAY facilitates analysis of the financial performanceof the company considering the five most important parameters. A 10Year period will normally encompass an entire business cycle.

Analyzing the performance over this time frame is essential tounderstand how a company has fared during the good as well as badtimes. The five most important parameters that one needs to look at are

Net Sales Growth Rate, EPS Growth Rate, Book Value Per Share

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(BVPS) Growth Rate, Return on Invested Capital (ROIC) and Debt toNet Profit Ratio.

Given below is the MoneyWorks4me assessment for a few ITcompanies: At MoneyWorks4me we have assigned colour codes to the10 YEAR X-RAY and Future Prospects of the companies, as Green(Very Good), Orange (Somewhat Good) and Red (Not Good).

2022 FUTURE OF INDIAN I.T.SECTORAs enunciated by NASSCOMs Perspective 2020, thesuccess story of the industry would rely onthe following:

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Catalyzing growth beyond todays core marketsEstablishing India as a trusted global hub forprofessional servicesHarnessing ICT (Information and CommunicationTechnology) for inclusive growth

Developing a high caliber talent poolBuilding a pre-eminent innovation hub in India.

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RESEARCH METHODOLOGY:

A research design can be defined as the plan structure and strategy ofinvestigation conceived so as to obtain answer to research question andto control variants.

Types of tools used : exploratory

Tools : analysis of secondary data

Target groups : Indian and foreign

I.T.companies, people employed

there

SAMPLANING PROCEDURE:

POPULATION:

The population comprised of the entire population that are employed inthe Indian I.T. sector along with the Indian NRI those are placed inforeign I.T.sector.further it included the data regarding theI.T.companies of the foreign as well Indian origin.

SAMPLING UNIT:Through the sampling unit the study of the population becomes easy andnecessary analysis about the population can be drawn.

The study comprised of a sampling unit of 30

SAMP L ING METH O D:

SAMPLE SIZE:

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In order to drive useful conclusion about the study it is necessary that anappropriate sampling size is selected which could represent the entire

population.

STATISTICAL ANALYSIS:

The global technology spending on hardware and InformationTechnology (IT) related services is estimated to be about US $ 1.7

trillion and growing at a CAGR of about 7%1 in the last two years. Overand above this, the engineering and R&D spend accounts for about US $800 billion. The spend in IT Services and IT Enabled Services(ITES)/Business Process Outsourcing (BPO)3 was expected to touch

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over US 500 billion and US $ 450 billion in 2008 respectively, with ITServices recording a growth of 6.3% and BPO Services recording a

growth of 12% globally. IT Services is expected to grow at a CAGR of6 to 7% till 2012 and ITES is expected to grow at 10 to 12% over thesame period. Despite the current economic slowdown, technologyspending is expected to sustain in the long term and pick up after thenext 4 to 6 quarters. Given this background and the context of IndiasIT story, it has to be put in perspective that India still accounts for onlyabout 4.5%4 of this market. This indicates that there is ample room forIndia to tap the potential for growth in this market in the years to come.

Figure 1: Global technology spending in 2007

The Indian IT and ITES Industry recorded a turnover of US $ 60 billionin 2009, with exports accounting for about US $ 47 billion andcontributing to over 70% of industry revenues. The industry has grownat a CAGR of close to 30% between 2004 and 2009. The majorsegments of the Industry are IT Services, BPO, and EngineeringServices, R&D, and Products. Much of the activity is centered onservice offerings in Banking, Financial Services, and Insurance (BFSI),Hi-Tech and Telecom, Manufacturing, and Retail. These are alsoreferred to as various industry verticals in common parlance. Themajor market for software and services remains the Americas (primarilyUSA), accounting for about 60% of revenues. However, recognizing theneed to diversify their client base, companies in this industry have

increase the share of revenues outside of USA from about 30% in 2004to about 40% currently. Continental Europe and APAC are likely to seeincrease in their share of revenues.

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CAGR 30%

Figure 2: Indias IT and ITES Industry Turnover in US $billion

Figure 3: Major segments in the IT and ITES Industry

Figure 4: Industry verticals in the IT and ITES Sector

Figure 5: Share of export revenues from differentgeographies

CONCLUSION AND OUR OPINION ABOUT THE FUTURE OFSOFTWARE IN INDIA:

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Regardless of whatever happens to the future of software in India, thepeople who are outstanding in their profession will continue to be in

demand and will keep rising. I personally do not see any other industryin India which can offer better salaries to such a large group of people.Software is here to stay and it is not going anywhere.

But the fact which many are missing is that software industry (like otherindustries) is also about supply and demand, the demand of engineers

being high as of now and jobs are everywhere. These days almost everystudent in India after completing his 10th class board exam starts to

prepare for engineering entrance exams so that he/she can eventuallybecome a software engineer. Every year hundreds of new engineeringcolleges are opening up all over India and there are over 5 lakhengineers graduating every year and the number will continue toincrease. Even people from Civil and Mechanical engineering areentering software. There are additionally lakhs of MCA, BSC ComputerScience and others from NIIT/Aptech etc coming out (not all get good

jobs). From where I stand, I DO NOT SEE A BRIGHT FUTURE FORSOFTWARE ENGINEERS in India, even though the companies

themselves will likely do well, they will pick and choose the people theywant.

There was a time when the cost advantage in outsourcing industry was1:6.(Meaning: 1 engineer in USA = 6 Engineers in India), now that marginhas shrieked to 1:3, and with rising salaries and higher inflation in India,this ratio will further decrease. There is a good chance that ITcompanies will relocate to smaller cities in India where the cost of doing

business decreases.

report on indian and foreign i.t.sector

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