IT & ITES

Export revenue of IT/ IteS is expected to grow

Introduction
The global sourcing market in India continues to grow at a higher pace compared to the IT-BPM industry. India is the leading sourcing destination across the world, accounting for approximately 55 percent market share of the US$ 185-190 billion global services sourcing business in 2017-18. Indian IT & ITeS companies have set up over 1,000 global delivery centers in about 80 countries around the world.

More importantly, the industry has led the economic transformation of the country and altered the perception of India in the global economy. India’s cost competitiveness in providing IT services, cost savings of 60–70 percent over source countries, continues to be the mainstay of its Unique Selling Proposition (USP) in the global sourcing market. However, India is also gaining prominence in terms of intellectual capital with several global IT firms setting up their innovation centers in India.

India has become the digital capabilities hub of the world with around 75 percent of global digital talent present in the country.

Market Size
The internet industry in India is likely to double to reach US$ 250 billion by 2020, growing to 7.5 percent of gross domestic product (GDP). The number of internet users in India is expected to reach 730 million by 2020, supported by the fast adoption of digital technology, according to a report by National Association of Software and Services Companies (NASSCOM).

Indian IT exports increased to US$ 126 billion in FY18 while domestic revenues (including hardware) advanced to US$ 41 billion.

Indian IT and BPM industry is expected to grow to US$ 350 billion by 2025 and BPM is expected to account for US$ 50-55 billion out of the total revenue.

Total spending on IT by banking and security firms in India is expected to grow 8.6 percent year-on-year to US$ 7.8 billion by 2017!!.

India’s Personal Computer (PC) shipment advanced 11.4 percent year-on-year to 9.56 million units in 2017 on the back of rise in the quantum of large projects.

Revenue from the digital segment is expected to comprise 38 percent of the forecasted US$ 350 billion industry revenue by 2025.

Investments/ Developments
Indian IT’s core competencies and strengths have attracted significant investments from major countries. The computer software and hardware sector in India attracted cumulative Foreign Direct Investment (FDI) inflows US$ 29.825 billion from April 2000 to December 2017, according to data released by the Department of Industrial Policy and Promotion (DIPP).

Leading Indian IT firms like Infosys, Wipro, TCS and Tech Mahindra, are diversifying their offerings and showcasing leading ideas in the blockchain, artificial intelligence to clients using innovation hubs, research, and development centers, in order to create differentiated offerings.

Some of the major developments in the Indian IT and ITeS sector are as follows:

Nasscom has launched an online platform which is aimed at up-skilling over 2 million technology professionals and skilling another 2 million potential employees and students.

Revenue growth in the BFSI vertical reached nearly 9 percent y-o-y in the fourth quarter of 2017-18.

As of March 2018, there were over 1,140 GICs operating out of India.

Private Equity (PE)/Venture Capital (VC) investments in India’s IT & ITeS sector reached US$ 7.6 billion during April-December 2017.

Government Initiatives
Some of the major initiatives taken by the government to promote IT and ITeS sector in India are as follows:

As a part of Union Budget 2018-19, NITI Aayog is going to set up a national level programme that will enable efforts in AI* and will help in leveraging AI* technology for development works in the country.

The Government of India is going to explore new opportunities in various sectors such as providing BPO service from home, digital healthcare and agriculture to achieve the target of making India a US$ 1 trillion digital economy.

Road Ahead
India is the topmost offshoring destination for IT companies across the world. Having proven its capabilities in delivering both onshore and offshore services to global clients, emerging technologies now offer an entire new gamut of opportunities for top IT firms in India. Export revenue of the industry is expected to grow 7-9 percent year-on-year to US$ 135-137 billion in FY19.

Source: Ibef