REPORT ON IT INDUSTRY

SUBMITTED BY: GROUP 11 Ashwin Sarah Surendra Ankit Pallavi

1. INTRODUCTION
Information technology is defined as the design, development, implementation and management of computer based information system, particularly software application and computer hardware. Today, it has grown to cover most aspect of computing and technology. The reason why it has catapulted in importance is due to the improving accessibility, awareness and utility of technology. 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 and enterprises characterize this rapidly growing sector. The Information Technology Association of America (ITAA) explains 'information technology' as encompassing all possible aspects of information systems based on computers. 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.

1.1 ROLE OF IT PROFESSIONALS

IT professionals perform a variety of duties ranging from data management, networking, engineering computer hardware, database and software design, to the management and administration of entire systems. With the already high penetration of conventional personal computer and network technology, coupled with the growing convergence of information, communication and entertainment, the industry is now keenly focused on the integration with other technologies such as mobile phones, automobiles and televisions etc, thereby increasing the demand for such jobs. The largest firms globally include IBM, HP, Dell and Microsoft.

1.2 FEATURES OF THE IT INDUSTRY

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. 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.

1.3 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.

1.4 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

1.5 RECENT INITIATIVES IN IT SECTOR

1) Nanotechnology: DIT has started nanotechnology development programme during the 10th plan with an objective of creating infrastructure for research in nanoelectronics and nanometrology at the national level and also to fund small & medium level research projects in specific areas such as nonmaterials, nanodevices, carbon nanotubes (CNT) &nanosystem etc. 2) High-Performance/ Advanced Computing:

High Performance Computing: In the strategic area of High Performance Computing (HPC), Centre for Development of Advanced Computing (C-DAC) has developed in-house expertise for design and development of parallel processing technology based HPC systems, application development environments, system software tools and utilities, as well as development and porting of applications. CDAC's PARAM series of HPC systems have 60 installations worldwide.

Grid Computing: Grid Technologies provide dependable, pervasive, secure and inexpensive access to high-end geographically distributed computational resources. C-DAC has set up a nationwide grid of HPC systems named 'Garuda', which enables collaborative R&D among HPC user community in various sectors of science and engineering.

3)Technology Incubation and Development of Entrepreneurs (TIDE): DIT has also launched this scheme in the area of electronics & ICT in order to strengthen the technology incubation centres at the institutions of higher learning. The scheme aims to nurture

technology incubation and thus enable local development of electronics and ICT products and packages in the long run. The scheme provides financial support for nurturing the technoentrepreneurs as well as for strengthening the technology incubation activity at the institutions. 4)Multiplier Grant Scheme: DIT (DEPARTMENT OF INFORMATION TECHNOLOGY) has initiated this scheme to encourage collaborative R&D between industry and academics/R&D institutions for development of products and packages. The scheme aims to strengthen industry/ institute-linkages, encourage and accelerate development of indigenous products/ packages and bridge the gap between R&D and commercialization. 5)Free/Open Source Software (FOSS): A national resource centre for free and open source software (NRCFOSS) has been set up with an objective to contribute to the growth of free/open source softwares in India to research and development, human resource development, networking and entrepreneurship development as well as to serve as the reference point for all FOSS related activities in the country.

6)Creating Digital Opportunity: To enable wide proliferation of ICT in Indian languages, DIT has taken a major initiative to make available software tools & fonts in various Indian languages freely to the general public

2. OBJECTIVES OF THE STUDY

To get an overview of the IT industry. To study the global scenario of IT industry To study the Indian scenario of the IT industry To study the structure of the IT industry To study the macroeconomic factors affecting the industry To analyze the industry in terms of competition To analyze the performance of the top three Indian IT companies To study the future outlook of the IT industry in India

3. GLOBAL SCENARIO

Information technology (IT) is a huge industry in itself; it is the source of dramatic changes in business practices in all other sectors. There is some new innovation in technology happening every year. Some of these technologies are in great demand. They are beneficial for the growth of some of the companies in some sectors. An example that we can consider here is the Enterprise Resource Planning (ERP) - These systems integrate the internal and external management information across an entire organization. ERP systems automate this activity with an integrated software application. Their purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. These have yielded results and better performance for the companies that have used this effectively. This is the digital era and the producers/manufacturers prefer to alter their offerings according to the modern day trends/demands. A lot of money is spent on this aspect. IT spending is forecast to reach US $4 trillion in 2012 thereby making it one of the robust sectors. This is one sector that many countries are not hesitant to place their bets on. They dont mind spending huge amounts. In some of the countries, IT sector is where the majority of the spending takes place. Asian Paints, for instance, plans to spend more on IT systems as it sets up its largest manufacturing plant this year and invest in equipping its sales people with tablets and integrating those devices with its sales force automation software.Organisations are starting to spend on revamping their IT infrastructure to expand and compete domestically and globally 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. The companies like Google (which earns almost 95% of its revenue through ads) and Facebook (the social networking giants), popularizes the products and services when the manufacturer wishes to advertise through them. This helps the manufacturer to get a wide reach (provided the procedures to advertise are carried out neatly). This helps the growth of other organizations and sectors. The Worldwide IT-BPO spending for the years 2009 and 2010.

Worldwide technology products and services related spend reached USD 1.6 trillion in 2010, a growth of 4 per cent over 2009, with emerging verticals and emerging geographies, in addition to US, driving growth. The year saw wide ranging contract restructuring exercises, and deal size reductions as buyers came to terms with new business models and budgetary constraints. However, multi-sourcing saw higher adoption, precipitated by the increased maturity of Indian providers. Recent global M&A activity in the sector indicates select acquisitions by established service providers to enhance skill and scale. While cost and talent still remain essential considerations for global sourcing, savvy customers are constantly demanding more growth markets, flexibility and innovation.

3.1 KEY HIGHLIGHTS OF 2011

Global economy bouncing back, significant improvement in macro-economic conditions leading to IT spending growing by 4 per cent in 2010.

Worldwide hardware spends increased by 6.4 per cent on the back of a global refresh cycle.

IT Services spend increasing by 1.4 per cent, within which IT outsourcing grew by 2.4 per cent. Within IT outsourcing, global sourcing grew by 10.4 per cent in 2010, validating the industrys integral position in service delivery chain.

Continuous ROI focus led to BPO growing by 4 per cent, software products rose by 3.7 per cent led by increased focus on security, storage, and application development, while ER&D spend grew by 2.3 per cent in 2010.

Emerging verticals, (such as Healthcare, Government and Utilities) emerging geographies (such as Asia Pacific), emerging customer segments (SMB) experienced highest IT adoption.

The year saw wide-ranging contract restructuring exercises, and deal size reductions.

Growth of multi-sourcing precipitated by increasing maturity of India heritage providers.

While cost and talent still remain essential considerations for global sourcing, savvy customers are constantly demanding more growth markets, flexibility and innovation.

Emerging technologies altering business landscape, and adding value.

3.2 GROWTH RATE

Europe

Asia, Australia

% increase
South America

North America

Due to the European crisis, the growth rate is not significant. The growth rate is just under 1%. The Asian continental growth is supported by the countries such as India, China, Japan and Singapore. The Australian counterparts along with the Asian IT players have the maximum growth rate (just above 3%). The IT sectors in North America (The United States of America and Canada) and South America (majorly Mexico and Brazil) have a growth rate of just above 2%.

3.3 TOP 3 MAJOR PLAYERS GLOBALLY

It is really difficult to classify a major player in this industry. This is because, this industry is huge and has lot of components or parameters based on which we can categorise a market leader. Google is the market leader in the search engine sector which is an IT service. Amazon is the market leader in online retail which is again a part of the IT sector. There are many such dimensions like these and each organisation is special in their own aspects. We have considered the software and hardware components and chosen the top three players.

Hewlett Packard

Hewlett Packard is an American multinational Information Technology corporation headquartered in Palo Alto, California, United States of America that provides products, technologies, software, solutions and services to consumers, small- and medium-sized businesses (SMBs) and large enterprises, including customers in the government, health and education sectors.. The company was founded in a one-car garage in Palo Alto by William (Bill) Redington Hewlett and Dave Packard. HP is the world's leading PC manufacturer. It specializes in developing and manufacturing computing, data storage, and networking hardware, designing software and delivering services. Major product lines include personal computing devices, enterprise, and industry standard servers, related storage devices, networking products, software and a diverse range of printers, and other imaging products. HP markets its products to households, small- to medium-sized businesses and enterprises directly as well as via online distribution, consumer-electronics and office-supply retailers, software partners and major technology vendors. HP also has strong services and consulting business around its products and partner products.They are the market leaders. Their major sources of revenue comes from their products such as printers and cartridges.

 IBM

International Business Machines Corporation or IBM is an American multinational technology and consulting corporation headquartered in Armonk, New York, United States. IBM manufactures and sells computer hardware and software, and it offers infrastructure, hosting and consulting services in areas ranging from mainframe computers to nanotechnology. The company was founded in 1911 as the Computing Tabulating Recording Corporation through a merger of three companies: the Tabulating Machine Company, the International Time Recording Company, and the Computing Scale Corporation. CTR adopted the name International Business Machines in 1924, using a name previously designated to CTR's subsidiary in Canada and later South America. Its distinctive culture and product branding has given it the nickname Big Blue. Their major sources of revenue are from their systems and servers.

Microsoft

Microsoft is an American multinational corporation headquartered in Redmond, Washington, United States that develops, manufactures, licenses, and supports a wide range of products and services predominantly related to computing through its various product divisions. Established on April 4, 1975 to develop and sell BASIC interpreters for the Altair 8800, Microsoft rose to dominate the home computer operating system market with MS-DOS in the mid-1980s, followed by the Microsoft Windows line of operating systems. Microsoft would also come to dominate the office suite market with Microsoft Office. The company has diversified in recent years into the video game industry with the Xbox and its successor, the Xbox 360 as well as into the consumer electronics and digital services market with Zune, MSN and the Windows Phone OS. Their major source of revenue is from the Operating system (Windows).

4. INDIAN SCENARIO
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 industry grew 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

4.1 PERFORMANCE OF INDIAN IT INDUSTRY

In India, it is important to make the distinction between IT and ITES (IT enabled services). The latter refers to services delivered over telecom networks/ Internet to a range of external business areas (Colloquially referred to as KPO and BPO) and is treated elsewhere on this website (see ITES industry overview). Hence, we shall focus on the IT industry here by limiting the discussion to electronics hardware manufacturing and software development and services.

Despite the unprecedented global economic downturn, the Indian IT industry has weathered the storm well, and will achieve sustainable growth going forward. India is expected to witness an average 8% salary increase in 2010 and 50% of companies have strong hiring plans, according to a survey by global HR consultancy Mercer, giving yet another indication of the high confidence levels among the countrys corporate houses after the economy staged a faster-than-expected recovery from the slowdown.

While the larger players continue to lead growth, gradually increasing their share in the industry aggregate, several high-performing small and medium enterprises have also stood out.

4.2 GROWTH POTENTIAL OF INDIAN IT INDUSTRY

The strong demand for electronic hardware and software in India has been fuelled by a variety of drivers including the high growth rate of the economy, emergence of a vast domestic market catering to the new generation of young consumers, a thriving middleclass populace with increasing disposable incomes and a relatively low-cost work force having advanced technical skills.

Indeed, the Government has also identified growth of this sector as a thrust area as there remains great expectation for significant growth given the fairly low levels of penetration of

technology among the 1.1 billion population; There were only 60 million Internet users in 2009, 7 million DVD players and personal computers were sold in 2008-09, and 11 million new mobile subscribers were added every month in the same period. In this scenario there is now a big opportunity to step up the production to gain higher global share besides meeting the domestic demands.

The Indian IT sector has also built a strong reputation for its high standards of software development ability, service quality and information security in the foreign market- which has been acknowledged globally and has helped enhance buyer confidence. The industry continues its drive to set global benchmarks in quality and information security through a combination of provider and industry-level initiatives and strengthening the overall frameworks, creating greater awareness and facilitating wider adoption of standards and best practices.

4.3 MAJOR IT HUBS IN INDIA

Ranking City Description Popularly known as the capital of the Silicon Valley of India is 1 Bangalore currently leading in Information Technology Industries in India.

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 near Chengalpattu, and many centers 2 Chennai in IT corridor), and other software companies like Wipro, CTS, Patni, L&T infotech and many companies have major operations in IT corridor, Ambattur and other places in Chennai

Hyderabad called as Cyberabad, which has good infrastructure and 3 Hyderabad good government support is also a good technology base in India. The Government of AP Has built a separate township for IT Industry called

the HITEC City.

Pune, a major industrial point in India. 4 Pune

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.Among major metro-markets Coimbatore (up 38%) MAY 11 (Bangalore 5 Coimbatore showed the slowest rate of annual growth at 4 percent driven by reduced demand in the BPO/ITES sector),It Become an Upcoming Major IT hub of India

The National Capital Region of India comprising Delhi, Gurgaon, Faridabad, Noida, Greater Noida and Ghaziabad are having ambitious 6 NCR projects and are trying to do every possible thing for this purpose.

Popularly known as the commercial, entertainment, financial capital of India. This is one city that has seen tremendous growth in IT and BPO 7 Mumbai industry, it recorded 63% growth in 2008.TCS, Patni, LnTInfotech, IFlexWNS and other companies are headquartered here.

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 8 Kolkata sector with upcoming areas like Rajarhat . Trivandrum is the capital of Kerala. GOK provides a good platform for 9 Trivandrum IT development in the city with India's largest IT park Technopark and dedicated TechnocitySEZs.

Kochi is the commercial capital of Kerala and is well connected by train,bus,sea and air. Infopark and smartcity are the two SEZ IT parks 10 Kochi with more than 100 companies.

4.4 INDIAN IT AND GDP Over the years, Indian IT service offerings have evolved from application development and maintenance, to emerge as full service players providing testing services, infrastructure services, consulting and system integration.

Key Highlights during 2011

The IT-BPO sector in India is estimated to aggregate revenues of USD 88.1 billion in FY2011, with the IT software and services sector (excluding hardware) accounting for USD 76.1 billion of revenues. During FY 2011 direct employment is expected to reach nearly 2.5 million, an addition of 240,000 employees, while indirect job creation is estimated at 8.3 million. As a proportion of national GDP, the sector revenues have grown from 1.2 per cent in FY1998 to an estimated 6.4 per cent in FY 2011.

The share of IT-BPO industry in the total Indian exports (merchandise plus services) increased from less than 4 per cent in FY1998 to 26 per cent in FY2011. Export revenues (including Hardware) estimated to reach USD 59.4 billion in FY2011; Domestic revenues (including Hardware) of about USD 28.8 billion; total industry estimated to reach USD 88.1 billion

Software and services revenues (excluding Hardware), comprising over 86 per cent of the total industry revenues, expected to post USD 76.1 billion in FY2011; estimated growth of about 19.1 per cent over FY2010

The upbeat domestic IT-BPO spending trend will continue in FY2012 as the industry is expected to grow at 16 per cent to reach USD 20 billion. IT spending expected to significantly increase in verticals like automotive and healthcare while the government, with its focus on e-governance, will continue to be a major spender.

IT-BPO sector has become one of the most significant growth catalysts for the Indian economy. In addition to fuelling Indias economy, this industry is also positively influencing the lives of its people through an active direct and indirect contribution to the various socioeconomic parameters such as employment, standard of living and diversity among others. The industry has played a significant role in transforming Indias image from a slow moving bureaucratic economy to a land of innovative entrepreneurs and a global player in providing world class technology solutions and business services. The industry has helped India transform from a rural and agriculture-based economy to a knowledge based economy.

The IT Services was the fastest growing segment, growing by 22.7 per cent in FY2011, to account for exports of USD 33.5 billion.

While all IT Service lines exports revenues recorded double digit growth in FY2011, the industry made considerable progress in growing high-end services such as consulting and System Integration.

Application development continues to be the biggest segment, and this is being driven by increased customer interest around Cloud, mobile and collaboration technology.

Cloud computing making an immediate impact on infrastructure outsourcing rapidly converting to shared/Cloud-hosted IT.

Software testing services exports key focus area for the industry -India one of the leading destinations for outsourcing of software testing services accounting for 32 per cent of the total global sourcing share.

IT Services is one of the fastest growing segment in the Indian domestic market, rising by 16.8 per cent to reach INR 501 billion, driven by localised strategies designed by service providers

4.5 REGULATORY BODIES

Software Technological Park of India
They are the statutory body for providing singlewindow clearance to software exporters.

The Internet Corporation for Assigned Numbers and Names

They deal with the technical and policy aspects. They are responsible for the coordination of global Internet systemsensuring its stable and secure operations.

Department Of Telecommunications

They provide the licensing for starting an Internet service. A clearance from the DoT is required to start a BPO in India.

4.6MARKET SHARE AND REVENUE

5. STRUCTURE OF THE IT INDUSTRY

The industry structure in the IT sector has four major categories. These are 1. IT services 2. IT enabled services 3. Software products 4. Hardware IT SERVICES IT 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 1. Government 2. Banking 3. Financial services 4. Retail and distribution 5. Manufacturing IT ENABLED SERVICES

They are the services which make extensive use of information and telecommunication technology. Some of the important services covered by the ITES sector in India are 1. Customer-interaction services including call-center 2. Back-office services 3. Revenue accounting 4. Data entry and data conversion 5. HR services 6. Transcription and translation services 7. Content development and animation 8. Remote education,

9. Data search 10. GIS 11. Market research 12. Network consultancy SOFTWARE

Software 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 of computer 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 in the computer hardware segment of India.

Another categorization in the structure of India's IT industry is related to the market. Thereare two major market classifications - the domestic market and the export market. The export market, dominates the IT industry accounting for 75% of the revenue.

5.1 HERFINDAHL-HIRSCHMAN INDEX

HHI = the sum of the squares of the market shares = 24.9 + 18.3 + 15.7 + 13.8 + 10.5 + 3.4 + 3.4 + 3.4 + 2.9 + 1.6 + 1.2 + 1.1 + 1.0 + 0.8 + 0.7 = 1552.51 This indicates that the industry is moderately concentrated.

6. PEST ANALYSIS 6.1 Political factors:

These are the political factors that affect a business which can be government rules and regulations towards that particular business environment. For IT industry the Indian political structure is stable, but there are fears of hung parliament due to a lack of clear majority in parliament creating fear of wrong investing in the minds of investor thereby reducing capital. U.S government has declared that U.S firm that outsource IT works outside the U.S will not get tax benefits; this has caused reduction in U.S BPO contract from the U.S in the last fiscal year thereby reducing revenue from the U.S. Indian government has decided to contract IT job to Indian IT companies creating more opportunities for the company and the industry at large. In software development different countries is configuration rules and regulation are considered since client demand differs because of different system requirement. NASSCOM and DELIOTTE study (impacting economy and society 2007/2008), states that Indian government has strengthened the IT act, 2000 to provide a sound legal environment for companies to operate related to security of data in transmission and storage etc this has served as a positive factor. Infosys has to put Indian relationship with different countries of business into consideration before investing. Other factors to be considered are customer protection law, competitive regulations, and terrorist attacks.

POLITICAL STABILITY: India suffered political instability for a few years due to the failure of any party to win an absolute majority in Parliament. However, political stability has returned since the previous general elections in 1999. However, political instability did not change India's economic course though it delayed certain decisions relating to the economy. The political divide in India is not one of policy, but essentially of personalities. Economic liberalisation (which is what foreign investors are interested in) has been accepted as a necessity by all parties including the Communist Party of India (Marxist). Thus, political instability in India, in practical terms, posed no risk to foreign direct investors because no policy framed by a past government has been reversed by any

successive government so far. You can find a comparison in Italy which has had some 45 governments in 50 years, yet overall economic policy remains unchanged. Even if political instability is to return in the future, chances of a reversal in economic policy are next to nil. As for terrorism, no terrorist outfit is strong enough to disturb the state. Except for Kashmir in the north and parts of the north-east, terrorist activity is either nonexistent or too weak to be of any significance. It would take an extreme stretching of the imagination to visualize a Bangladesh-type state-disrupting revolution in India or a Kuwait-type annexation of India by a foreign power. Hence, political risk in India is practically non-existent. Likewise the IT sector does not have any influence of political stability on industry. And if the govt. changes there is little effect on the industry of that political step.

US government has declared that companies that outsource IT work to locations other than US will not get tax benefits. They are doing this to save and create jobs for their own people, which is a negative sign for the Indian IT sector.

Government companies and PSUs have decided to outsource more and more work to Indian IT companies which is a positive sign for the Indian IT companies.

Terrorists attacks and wars have negative impact on the entire economy including the IT sector.

Promotion of IT - governmental incentives:

With the formation of a new ministry for IT, Government of India (GOI) has taken a major step towards promoting the domestic industry and achieving the full potential of the Indian IT entrepreneurs. Constraints have been comprehensively identified and steps taken to overcome them and also to provide incentives. Thus for example, venture capital has been the main source of finance for software industry around the world. However, majority of the software units in India is in the small and medium enterprise sector and there is a critical shortage of venture capital kind of support. In order to alleviate this situation and to promote Indian IT

industry, the Government of India has set up a National Task Force on IT and Software Development to examine the feasibility of strengthening the industry. The Task Force has already submitted its recommendations, which are under active consideration. Norms for the operations of venture capital funds have also been liberalized to boost the industry. The Government of India is also actively providing fiscal incentives and liberalizing norms for FDI and raising capital abroad. Recently, an IT committee was set up by the Ministry of Information Technology, Government of India, comprising Non Resident Indian (NRI) professionals from the United States to seek expertise and advice and also to step up U.S. investments in India's IT sector. The committee is chaired by Minister of Information Technology, Government of India, and the members include Secretary, Ministry of Information Technology and a large number of important Indian American IT entrepreneurs. The group will:

Monitor global IT developments and refine Indian IT policy to meet global requirements. Specifically, this will help angel investors, venture creators and incubation;

Promote the growth of human resource development in the IT sector with the aim of creating quality-based education;

Promote R&D in the sector by identifying thrust areas and drawing up a blueprint for action.

Indias most prized resource in in todays knowledge economy is its readily available technical work force. India has the second largest English-speaking scientific professionals in the world, second only to the U.S. It is estimated that India has over 4 million technical workers, over 1,832 educational institutions and polytechnics, which train more than 67,785 computer software professionals every year. Government of India is stepping up the number and quality of training facilities in the country to capitalize on this extraordinary human resource. It is the knowledge industry that will help take the Indian economy to a sustained higher rate of growth and the policy makers are fully aware of this.

6.2 ECONOMIC FACTORS

These includes factors affecting IT industry ranging from rising working pay, global recession, competition, contract availability and fee. Domestic IT spending grew by 20% and reached $20 billion in 2009. Currency fluctuations caused by the devaluation of the dollar has affected the industry during the last global recession. Real estate prices decline resulted in rental expenditure forcing customer to leave luxuries goods such as electronic and computers that need software to work. Recession cause low attribute rate due to job layouts and job cuts. India economic attraction has helped in convincing investors due to low cost advantage. With Indias global IT spending yet to decline due to entry of new IS companies and the cause of the recession. With clients industry faced with reduction of work force due to job layoffs and unsuitable balance sheet most companies have decided not to make much expenditure in purchase, but make optimum use of existing facilities to make profits. Most debtors with financial crisis have been granted more time to pay up causing large debt deficit. With the decline of banking and financial sectors, the revenue from there is expected to decline, hurting the bottom line of IT majors

DOMESTIC IT SPENDING: India's domestic IT market will grow around 14% this year, showing a minor decline as compared to last year's growth of 16-18%. Hence, it is expected that the country will see a minor decline in IT budget coming from its domestic market. "Compared to other countries, India is in a better position. Its domestic market is expected to grow around 14% this year. We also expect that IT spend in India will see a minor decline as compared to last year. There could be some 2-3% decline as compared to last year's budget," commented Arup Roy, senior research analyst at Gartner.

GLOBAL IT SPENDING: Indian enterprises spending on information communications and technology (ICT) in 2005 is expected to grow at more than twice the rate in the Asia Pacific region.

Enterprise spending in the Asia Pacific (APAC) on hardware next year will rise 6.3 per cent to $36.9bn, with software increasing 12.4 per cent to $5.6bn while telecom will grow 7.5 per cent to $132.5bn and IT services will gain 8.4 per cent to $33.6bn. In India, of the $22.88bn spend in 2005 on enterprise ICT, $3.34bn is the projected spend on hardware, an increase of 21.1 per cent over 2004; $0.52bn (16.4 per cent increase) on software; $16.7bn (15.5 per cent increase) on telecom and $2.32bn (18.3 per cent increase) on IT services. India will remain the highest growth market for telecommunications with around 35 million new subscribers in 2005, an 18 per cent increase from 2004, with the growth occurring in selected technologies mainly mobile. This accounts for almost one fourth of the new subscribers forecasted in Asia Pacific. Consumer segment is rapidly gaining importance, driven by adoption of mobile services. This is reflected in their increased contribution towards spending for telecommunication services, from 35 per cent in 2002 to 43 per cent in 2005. By 2008 the consumer segment will account for more than half of telecommunications spending, the report said. Gartner also said that open source and offshore IT services will continue to grow, while it warned global IT vendors to take emerging competition from China seriously with at least three Chinese IT companies becoming significant global competitors by 2010. The growth in offshore BPO services outpaces the growth in global sourcing of IT services. Offshore component of global BPO services spend is expected to grow from $3 billion (2.4 per cent of total markets spend of $124 billion in 2004) to $24 billion (15 per cent of the total markets spend of $161 billion in 2007).

REAL STATES PRICES: Decline in real estate prices has resulted reducing the rental expenditure thus the industry will grow if the real estate price goes down.

ATTRITION: Almost every sector in India is facing high rates of attrition these days. A recent study revealed that employees leave either because of compensation reasons or due to better growth opportunities. According to NASSCOM, Indian IT-ITES industry recorded US$ 39.6 billion in revenues in 2006-07. The revenue of US$ 49-50 billion has been projected in 2007-08 at a growth rate of 24-27 per cent. The IT industry's contribution to GDP was 4.8 per cent in 2005-06

Though the IT/ITES sector is booming, it is constantly facing high attrition rates of 25% - 30%. Even the big brands are also facing the same problem. Below are the details of attrition rates of various players in IT sector. According to the survey conducted by BES and Data Quest, Sierra Atlantic recorded highest attrition rate (29%) followed by Kanbay with 25% and Accel Frontline with 20 per cent.

ECONOMIC ATTRACTION: There is a lot of economic attraction towards IT sector due to the low cost advantage and other factors. India, with its low cost advantage and emergence of several private players, represents the fastest growing market. Further the geographical location of India serves it the advantage of being exactly halfway round the world from the US west coast, which is another reason why India is preferred destination of many big brands. Indias development and contribution in worlds information technology sector is of highest reputation. Cities like Bangalore have become the favorite(most preferred) destinations of all the big banners like HSBC, Dell, Microsoft, GE, Hewlett Packard, and several Indian multi national firms like Infosys Technologies, Wipro, and Microland who have set up their offices in the city. It is because the city offers good infrastructure, with large floor space and great telecom facilities. This can be judged on the basis of the high growth statistics of India and the changing outlook of the companies towards India. It is because of this growth many popular brands that have not yet build up there rigid offices in the country are making it fast to have a destination in India too. For example, Sun Microsystems, a global IT major, announced in Bangalore to double the present workforce of the company's Sun India Engineering Center (IEC) from the present 1000 to 2000 in the next two years time. IEC, which is the largest R&D center for Sun outside the US, would also focus on developing products in India to suit the needs of the Indian market, which would be benchmarked globally. Also, the presence of a large number of Indians, especially engineers, in the US gave India an easy entry into the US software market.

6.3 SOCIAL FACTORS:

These are social factors affecting IT industry which ranges from employee right, language barriers, race nationality of company or other issues. English language being widely spoken in India has help in fostering the industrys relationship and interaction in India and on the global stage. India is one of the few countries to have an increasing share of working population, since there is great availability of both skilled and unskilled labour force. Great number of institute and universities offer IT course creating room for availability of IT professional at lower cost since there is job competition. India has to produces great numbers of IT professional each year to meet its demand. India continue to produce IT professionals each year, this has help industry for IT professionals inwards. Industries have to consider the type of services the software is meant for, age difference of users, life style of the different countries of supply. It should be noted that there will always be difference in client behaviours which is supported by the fact that different customers have different taste.

SOCIAL ISSUES: Should Industry be concern with the issue of global warming? Yes it is affected by many government laws regarding it like in china, where company with great amount of carbon emission are charge great amount of tax. Likewise being a major player in the global IT market Infosys has introduces measure to help in the reduction of carbon emission by trying to reduce its water consumption, electricity utilization, carbon emission and partnering with other companies in troubleshooting this global dilemma.

EDUCATION There are large number of universities and institutes in India offering IT education. And there are large numbers of students which everyear passed these courses and join the IT industry. The Indian labor is not only cheap but is technically skilled too to the world class level. It is due to the Indian Education System that includes in its course curriculum the practical knowledge of the latest technology that is developed in world along with the fluency in English Language that imparts compatibility in an Indian technician to communicate and work throughout the world.

CAREER PROSPECTS In the year 2006-07, the industry hired approximately 3, 80,000 people. Out of these, the ITeS sector hired 2, 00,000 people and the rest were taken by IT sector. The recruitment trends of some IT giants are given below: TCS- 35,000 Infosys30,000 Wipro-28,000 Satyam-20,000 Some of the areas of specialization in the IT Industry areDesigning Research and Development in Peripheral Integration Product Quality Control and Reliability Testing Computer Manufacturing Maintenance Service System Developing /Programming /Software Engineering Networking Application Programming EDP/ E- Commerce Enterprise Resource Planning (ERP) Database Warehousing and Management Operating jobs, Computer operators, Data Entry

WORKING AGE POPULATION:Working age population also affects the industry a lot because every person has different value, lifestyle, attitude, and also the satisfaction level.

6.4 TECHNOLOGICAL FACTORS:

TELEPHONY Cellular mobile telephony tariffs in India are the lowest in the world. A comparison of Indian cellular tariffs vis--vis the tariffs prevailing in comparative emerging economies in South America & Asia-Pacific region, clearly brings out the affordability of Indian cellular mobile telephone services. The airtime tariffs have plunged by over 75% in the last three years alone. According to the TRAI, the average monthly rental and airtime being realized for cellular services stands at Rs. 202 and Rs. 1.99 per minute respectively. Prepaid services have been introduced by all operators at an extremely affordable tariff of Rs. 300 per month. Roaming charges have been cut by 70% down from Rs.10 to Rs.3 in early 2002 and now to as low as Rs. 1.50 by several service providers.

INTERNET India had as on September 2008 45.3 million active internet users. This is an internationally accepted benchmark for enumerating internet users. Urban users continue to dominate internet use contributing to 42 million of the 45 million odd users. In September last 2007, the number of active internet users in urban India was 32 million showing a year on year growth of a little more than 30 per cent.

NEW IT TECHNOLOGY: With the evolution of SOA and semantic web services, enterprise solution heeds to the limitations of conventional enterprise systems by providing data convergence and concept reutilization with intelligence. Web2.O represents the next transition in the evolution of web applications; they promise to restore the richness, interactivity and usability lacking in many web applications. As with any technological transition, for an enterprise this implies that there are new opportunities to be explored and new challenges to be negotiated. To maximize the benefits of Web2.O, an enterprise should assess. SOA has benefited enterprises with benefits such as standardized patterns, interoperability, centralized

governance, easy integration etc. Almost all industry domains have benefited from SOA strategy in order to build more flexible and malleable IT architecture involving re-usable services. On the other hand, Web 2.0 practices like communities and folksonomy are much centered around end-users. They involve frequent communication among large consumers dispersed all around the world over the Internet. They have become extremely popular among internet users. This brings the interesting idea of bringing enterprise products i.e. services and consumer-savvy applications from Web 2.0 together.

CAD: Computer-aided design (CAD) is the use of a wide range of computer-based tools that assist engineers, architects and other design professionals in their design activities. It is the main geometry authoring tool within the Product Lifecycle Management process and involves both software and sometimes special-purpose hardware. Current packages range from 2D vector based drafting systems to 3D solid and surface modellers. CAD is sometimes translated as "computer-assisted", "computer-aided drafting", or a similar phrase. Related acronyms are CADD, which stands for "computer-aided design and drafting", CAID for Computer-aided Industrial Design and CAAD, for "computer-aided architectural design". All these terms are essentially synonymous, but there are a few subtle differences in meaning and application. CAD was originally the three letter acronym for "Computer Aided drafting" as in the early days CAD was really a replacement for the traditional drafting board. But now is the term is often interchanged with "Computer Aided Design" to reflect the fact that modern CAD tools do much more than just drafting. Current Computer-Aided Design software packages range from 2D vector-based drafting systems to 3D solid and [[Freeform surface mo |surface]] modellers. Modern CAD packages can also frequently allow rotations in three dimensions, allowing viewing of a designed object from any desired angle, even from the inside looking out. Some CAD software is capable of dynamic mathematic modeling, in which case it may be marketed as CADD computer-aided design and drafting. CAD is used in the design of tools and machinery and in the drafting and design of all types of buildings, from small residential types (houses) to the largest commercial and industrial structures (hospitals and factories).

CAD is mainly used for detailed engineering of 3D models and/or 2D drawings of physical components, but it is also used throughout the engineering process from conceptual design and layout of products, through strength and dynamic analysis of assemblies to definition of manufacturing methods of components. It can also be used to design objects. CAD has become an especially important technology within the scope of computeraided technologies, with benefits such as lower product development costs and a greatly shortened design cycle. CAD enables designers to lay out and develop work on screen, print it out and save it for future editing, saving time on their drawings. The people that work in this field are called: Designers, CAD Monkeys, Automotive Design Engineers and Digital Innovation Engineers. Computer-aided design is also a common work activity for the traditional engineering professions

Software technologies A CAD model of a mouse originally software for Computer-Aided Design systems was developed with computer languages such as Fortran, but with the advancement of object-oriented programming methods this has radically changed. Typical modern parametric feature based modeler and freeform surface systems are built around a number of key C (programming language) modules with their own APIs. A CAD system can be seen as built up from the interaction of a graphical user interface (GUI) with NURBS geometry and/or boundary representation (B-rep) data via a geometric modeling kernel. A geometry constraint engine may also be employed to manage the associative relationships between geometry, such as wireframe geometry in a sketch or components in an assembly. Unexpected capabilities of these associative relationships have led to a new form of prototyping called digital prototyping. In contrast to physical prototypes, which entail manufacturing time and in the design

Hardware and OS technologies Today, CAD systems exist for all the major platforms - CAD systems like QCad, NX provide multiplatform support including Windows, Linux, UNIX and Mac OS X; ArchiCAD and Vectorworks work on both Windows and Mac OS X, but not on Linux; and, for example, AutoCAD works on Windows only. For more information on OS compatibility, see Comparison of CAD editors for AEC, Comparison of CAD editors

for CAM and Comparison of CAD editors for CAE. Catia V5 is supported on Sparc Solaris but not x86 Solaris, HPUX, and AIX, but not Linux. It has been announced that Catia V6 will only be supported on one proprietary operating system. Right now, no special hardware is required for most CAD software. However, some CAD systems can do graphically and computationally expensive tasks, so good graphics card, high speed (and possibly multiple) CPUs and large amounts of RAM are recommended. The human-machine interface is generally via a computer mouse but can also be via a pen and digitizing graphics tablet. Manipulation of the view of the model on the screen is also sometimes done with the use of a spacemouse/SpaceBall. Some systems also support stereoscopic glasses for viewing the 3D model.

The Effects of CAD Starting in the late 1980s, the development of readily affordable Computer-Aided Design programs that could be run on personal computers began a trend of massive downsizing in drafting departments in many small to mid-size companies. As a general rule, one CAD operator could readily replace at least three to five drafters using traditional methods.[citation needed] Additionally, many engineers began to do their own drafting work, further eliminating the need for traditional drafting departments. This trend mirrored that of the elimination of many office jobs traditionally performed by a secretary as word processors, spreadsheets, databases, etc. became standard software packages that "everyone" was expected to learn. Another consequence had been that since the latest advances were often quite expensive, small and even mid-size firms often could not compete against large firms who could use their computational edge for competitive purposes.[citation needed] Today, however, hardware and software costs have come down. Even highend packages work on less expensive platforms and some even support multiple platforms. The costs associated with CAD implementation now are more heavily weighted to the costs of training in the use of these high level tools, the cost of integrating a CAD/CAM/CAE PLM using enterprise across multi-CAD and multiplatform environments and the costs of modifying design work flows to exploit the full advantage of CAD tools There are many producers of the lower-end 2D systems, including a number of free and open source programs. These provide an approach to the drawing process

without all the fuss over scale and placement on the drawing sheet that accompanied hand drafting, since these can be adjusted as required during the creation of the final draft. 3D wireframe is basically an extension of 2D drafting. Each line has to be manually inserted into the drawing. The final product has no mass properties associated with it and cannot have features directly added to it, such as holes. The operator approaches these in a similar fashion to the 2D systems, although many 3D systems allow using the wireframe model to make the final engineering drawing views. 3D "dumb" solids (programs incorporating this technology include AutoCAD and Cadkey 19) are created in a way analogous to manipulations of real world objects. Basic three-dimensional geometric forms (prisms, cylinders, spheres, and so on) have solid volumes added or subtracted from them, as if assembling or cutting realworld objects. Two-dimensional projected views can easily be generated from the models. Basic 3D solids don't usually include tools to easily allow motion of components, set limits to their motion, or identify interference between components. 3D parametric solid modeling require the operator to use what is referred to as "design intent". The objects and features created are adjustable. Any future modifications will be simple, difficult, or nearly impossible, depending on how the original part was created. One must think of this as being a "perfect world" representation of the component. If a feature was intended to be located from the center of the part, the operator needs to locate it from the center of the model, not, perhaps, from a more convenient edge or an arbitrary point, as he could when using "dumb" solids. Parametric solids require the operator to consider the consequences of his actions carefully.

7. COMPETITIVE ANALYSIS PORTERS INDUSTRY FIVE FORCE MODEL FOR INDIAN IT

BARGAINING POWER OF SUPPLIERS AND CUSTOMERS

IT has always been a cost center in a business. Once the Y2K hype was over and we entered the new millennium, it became clearer that the buyers of IT consulting services had the upper hand, as opposed to the suppliers of these services. Consequently, the suppliers had to hire overseas, particularly in India, and succumbed to the off-shoring trend currently underway.

RIVALRY AMONG FIRMS

In an industry comprising of firms large and small, smaller firms tend to lower prices to increase market share, and ultimately larger firms follow. A good example is the IT (Information Technology) Consulting industry. When mid-sized Indian consulting firms like TCS and Wipro introduced off-shoring by charging lower prices per consultant, big IT consulting houses like IBM and Accenture had to hire IT professionals in India and charge similar prices per consultant. Other big IT consulting firms like EDS who had not been aggressively hiring in India could not compete as effectively in terms of pricing, because they did not enjoy the labor arbitrage which firms having a large number of consultants in India enjoyed. THREAT OF NEW ENTRANTS Highly competitive: Being highly competitive its difficult for smaller firms to enter into the IT sector. Low capital requirements: It requires low capital to start a new IT company.

8. PERFORMANCE ANALYSIS

TOP 3 PLAYERS IN INDIAN IT INDUSTRY

8.1 COMPARISON OF MARKET CAPITALIZATION

250000.00

MARKET CAPITALISATION ( Rs. Crore)

200000.00

150000.00

100000.00

50000.00

0.00 Series1

TCS 210056.49

Infosys 169365.40

Wipro 107387.90

COMPARISON OF NUMBER OF EMPLOYEES

200,000 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 Series1 TCS 186,914 Infosys 127,779 Wipro 119,491

Employees

COMPARISON OF REVENUE GENERATED

8.000

REVENUE ($ Billion)
7.000 6.000 5.000 4.000 3.000 2.000 1.000 0.000 Series1

TCS 6.669

Infosys 4.690

Wipro 6.030

9. FUTURE OUTLOOK

An industry whose revenue generation was valued at just half a billion dollars 20 years ago, is set to cross a milestone of USD 100 Billion this year (with $69 billion coming from exports and $32 billion from the domestic market), as reported by The Economic Times on March 7th, 2012. Over the last 20 years, the IT-BPO industry which was first a limited sector with a few companies is now one of the largest contributors to the Indian economy in terms of GDP (6.4% of Indian GDP) and the services sector in particular. According to NASSCOM,the Indian IT industry would grow by 16-18 per cent this year. In FY2009, the industry had grown in single digits. In FY2010, as the recovery started, the growth rate picked up and industry clocked a growth of about 18-19 per cent. This shows that Indian IT industry has matured and is able to withstand downturns in the overall economy.

The industry should show strong growth due to several factors:

1. First, Global Delivery Model (GDM) has become the de-facto model for delivery of IT services and India is the number one destination for providing IT services. India has mature, strong, world-class companies and strong delivery capabilities. The industry has the ability to educate and create the work force necessary to fuel this growth. Cost advantages of the industry will continue for the next few years.

2. Second, the industry can expand its markets into new geographies, new industry segments and new service lines.

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.

3. Third, the industry is expanding its addressable market by adding new services like Cloud based platform solutions, knowledge services, business analytics etc.

4. Fourth, industry is increasing its investments into R&D creating new Intellectual Property (IP) based solutions and products. Start-up activity is increasing and new businesses are being created.

5. Lastly, technology itself is evolving rapidly. Cloud, mobile, social and big data are some of the technologies that are spurring additional IT investments. These technologies can increase productivity, efficiency, usability and provide flexibility to the user and hence the investments.

In the future, we will see increased investments into technologies like pervasive computing and Internet of things where all kinds of devices and appliances will have intelligence built into them and will be connected to the Internet.

Investment into IT by Indian Industry will also increase. Globally, investment into IT is growing at around 4-5% annually, slightly above the GDP growth rate. In India, the investment into IT is growing at around 15-17% annually.

This is because we are under invested in IT and there is a need to catch up. Indian Industry is investing smartly, adopting newer technologies and newer business models or engagement models faster. Many of the engagements in India today are based on pay-for-use or subscription based models.

India is also leveraging mobile technology to reach the rural population and creating access to the benefits of technology for all.

Analysts are upbeat about the huge potential of growth in the Information Technology industry in India. The major areas of benefit that the future growth in the IT industry can generate for the Indian economy are Exports - The IT industry accounts for a major share in the exports from India 35% of the total exports. This is expected to grow further in coming years. The information technology industry is a major foreign exchange earner for the country. Employment - 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. The IT industry generated employment of 2.2 million by the end of 2008. 3 million jobs in the IT sector were added in 2011 alone. The Economics Times report dated March 14th 2012, stated that hiring activity would be robust across corporate India in the second quarter of the year, particularly in the services and financial sectors. The report said that net employment outlook for India stood at +44%, a rise of a percentage point against the first quarter of 2012 although there was a decline of 2% compared to the second quarter of 2011. Job opportunities would be the highest in the services sector at +59% and other industries like finance, insurance and real estate would see an employment of +51%, while the weakest outlook is reported by employers in the public administration and education at +38% sectors. "The dynamic outlook in the services sector is being fuelled by the IT industry's highly optimistic hiring plans, especially by India's technology giants, said Sanjay Pandit, MD of Manpower India.

CONCLUSION
In spite of few setbacks in 2011 such as the US Visa Bill (yet to be approved) which was essentially targeted towards the Indian Software exports, there is more reasons to be optimistic about the Indian IT industry its service cannot be substituted, atleast in the near future. Despite 2011 ending in a difficult economic environment, some geographic regions and services is expected to circumvent the situation in 2012. Global GDP, after growing by 2.7 per cent in 2011, is expected to grow 2.5 per cent in 2012, with developing economies growing thrice as fast as the developed economies.

Better economic conditions in the second half of the year signifying return of consumer confidence and renewal of business growth, is expected to drive IT spending going forward.

While the growth in IT-BPO spend is expected to be gradual over the next two-three years, global sourcing spend is seen to outpace this growth. IT outsourcing market is set to grow at a CAGR of about 8 per cent over 2011 to 2013, while BPO off shoring is expected to grow at a little over 7 per cent during the same period. While cost and talent still remain essential considerations for global sourcing, industry expertise and innovation is expected to drive future sourcing requirement.

References
http://timesofindia.indiatimes.com/tech/news/software-services/India-Incs-IT-spend-to-risein-2012/articleshow/12264221.cms http://www.nasscom.in/ http://www.indianembassy.org/indiainfo/india_it.html http://www.economywatch.com/business-and-economy/information-technologyindustry.html