Information Technology in India

Submitted By Gullipalli Ramchand (120)

Submitted To Prof. Kalpana Kumaran

Date: 14/11/2011

Presence Status and Future Prospects for Economic Development 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 in 2006-2007. 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 multinational IT companies, including IBM, have set up their operations in India. During the ten year period 19922002, the Indian software industry grew at double the rate as the US software industry.

The Indian IT industry broadly categorized into IT services and software, IT-BPO and hardware segment. The services and software segment of IT industry in India is more robust than its hardware counterpart. India has become one of the most favored destinations for sourcing software and services. IT services and software continues to remain the key contributor to the IT sectors revenues, IT-BPO is emerging as the fastest growing segment of the sector which is cleared from graph. Emerging as one of the key investment markets in the country, the IT-BPO segment of the industry is on rapid growth path. Hardware segment of the IT industry in India has not shown the same level of progress as experienced by IT and software.

The revenue of IT services & software and IT-BPO taken together reached US$ 22.2 billion during 200405 out of which US $17.3 billion was earned through exports. From the above graph we can say that around 70% of total revenue generated by IT sector is contributed by IT services and Software sector in

2010 which show how important is this sector. Also we can say that IT-BPO sector show continues growth. The sector is estimated to have grown by 19% in FY2011, generating revenue of almost US$76 billion.

(Contribution of each part as a % of total revenue)

70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 IT services & Software IT BPO Hardware

It is predicted that IT-BPO sector is to enable the industry to grow its export four-fold and its domestics business over seven-fold from the current level, by 2020(30 million). Its agenda is to actively promote India as a trusted outsourcing destination and strength the brand of India Inc. overseas.

Export v/s Domestic IT market in India:

The IT industry accounts for a major share in the exports from India. This is expected to grow further in coming years. The information technology industry is one of the major sources of foreign currency or India.

Software exports from India are expected to grow in coming years. New markets for software exports from India have opened up in the Middle East, South and Southeast Asia, Africa, and Eastern Europe. The reputation that India has earned as a major destination for IT outsourcing has opened further possibilities. Many developing countries are now using the Indian model for growth in the IT sector. Another important area of future growth for the IT industry of India is the domestic market. While exports dominate the IT industry at present, there is huge scope of growth in the domestic market which can be tapped in the future. The US recession has had its share of negative impacts on the Indian IT industry. However, the industry has faced the challenges posed by the global market and is sustaining its rate of growth. The focus for the future is to ensure that the benefits of the IT industry percolate to the grassroot levels.

 Growth of IT Professionals:
The biggest benefit of the IT industry is the huge employment it generates. For a developing country like India, with a huge population, the high rate of employment in the IT sector is a big advantage. An important reason for the success of Indian IT industry has been the large supply of IT skilled workforce. Indias stock of IT professionals is estimated to be more than 1 million during 2004-05, so that the IT industry revenue per IT professional is about US $27,000. A reasonable projection implies that IT industry revenue will increase by a factor of 5 from 200405 to 2010-11. Assuming 5 to 7%growth in revenue per employee per year, the number of professionals required will increase at the rate of around 25% per year from 2004-05 to 2010-11 to meet the demand. From above graph and some data we can say that IT play an important role in economic development of India. From the data ,it is clear that IT has a potential of not only accelerating the growth in the Indian economy but also promoting the broad based economic development. The IT should be promoted to be used as a tool for raising the living standard of common people and enriching their lives.