Question

Write a short note on IT industry in India.what are its future prospects ?

Answer 1

IT industry in India

During the past decade, the Indian IT industry has been experiencing a dramatic growth. It grew from Rs.4.7 billion in 1991 to Rs.755.47 billion in 2003, accounting for nearly 3% of the GDP. The revenues generated from software exports reached $10.4 billion for the financial year 2003 with a 30% growth over the previous year. The main factors which contributed to the success story of the Indian IT industry are: 

-Support from the government in the form of industrial parks, which enjoy various incentives and tax benefits.

-Liberal export import policy. 

-Strict quality policies adopted by the IT industry in terms of reliability, stability and maintainability by adhering to the standards laid down by the ISO 

The Indian IT Industry has grown from a mere USD 150 million in 1990-91 to USD 50 billion in 2006-07 with annual growth rates of nearly 30% in the last 10 years.

The growth of the Indian economy is mainly owed to the IT sector and the liberalised government policy of reduction in telecommunication cost and import duties on hardware and software. Apart from the Multinationals like IBM, HP setting up shop in India for cost advantages and cheap labour, this industry has seen growth of successful Indian companies like TCS, Infosys, Wipro, HCL, Patni etc. The industry's contribution to GDP has significantly grown from 1.2% in 1999-2000 to 4.8% in 2005-2006

Growth phase

With a CAGR of over 50% between 1992 and 2002, the Indian software sector has expanded twice as quickly as the American software sector

There are many economic and political factors that is expected to have contributed to the growth of the Indian IT industry. In 1968 the Tatas conglomerate set up the Indian software services firm Tata Consultancy Services. Later, in 1970 IBM had to exit India due to high import duties. In 1991, due to a balance of payments crisis the government liberalized the economy. In 1994 the telecom sector was liberalized that led to the growth of the industry and increased competitiveness

Answer 2

India's IT Services industry was born inMumbai in 1967 with the establishment of the Tata Group in partnership with Burroughs. The first software export zone, SEEPZ – the precursor to the modern-day IT park – was established in Mumbai in 1973. More than 80 percent of the country's software exports were from SEEPZ in the 1980s.

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, which is approximately 3-4 times cheaper than the US, 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 centres in India.

The IT industry has also created significant demand in the Indian education sector, especially for engineering and computer science. The Indian IT and ITeS industry is divided into four major segments – IT services, Business Process Management (BPM), software products and engineering services, and hardware.

India has come out on top with the highest proportion of digital talent in the country at 76 per cent compared to the global average of 56 per cent!.