INDIAN IT

SECTOR:

ANALYSIS

SUBMITTED BY:
JERIN JOY
21FAIT B3
SIMS, PUNE
SWOT Analysis:
IT Sector

Strengths Weaknesses
India is the leading sourcing
The cost of telecom and network
destination across the world,
infrastructure is much higher in
accounting for approximately 55%
India than in the US.
market share.
Decline in spending on IT projects
The sector attracted FDI inflow
by foreign companies, especially
worth US$ 62.47 billion between
U.S.
2000-2020

Opportunities
India’s IT industry is expected to
contribute 10% to India’s GDP by
2025.
The industry is expected grow to
US$ 350 billion by 2025.
Threats
Other IT destinations such as
China, Philippines and South
Africa could have an edge on the
cost factor.
US anti-outsourcing talks have put
a major strain in the Indian IT
sector
 BUYER SUPPLIER
BARGAINING BARGAINING
INDIAN IT INDUSTRY - THE BARGAINING
POWER OF THE
- SPECIALIZED BULK
SOFTWARE VENDORS
CUSTOMER IS HIGH. HAVE GOOD
BARGAINING MARGIN.

Porter's
- CUSTOMERS HAVE A
SIZABLE OPTION TO
CHOOSE FROM AS
EACH COMPANY GETS
- MEANWHILE,
HARDWARE SUPPLIERS
ARE NOT IN A POSITION

Five Forces SOMETHING DIFFERENT

ON THE TABLE.
TO DEMAND, DUE TO
THE SMALL SCALE.

Analysis COMPETITIVE
RIVALRY
THE INDUSTRY RIVALRY IS A
HIGH ESPICIALLY BETWEEN THE
HEAVY PLAYERS

One of the key contributors to India's

GDP is the services sector. Over the
years India has moved from an THREAT TO NEW THREAT OF
agricultural based economy to a
ENTRANTS SUBSTITUTES
service based economy.
- THREAT TO NEW - DUE TO ECONOMIC
ENTRANTS IS PRETTY SLOWDOWN, THERE IS
The service based sector contributes
LOW IN THE INDIAN IT HIGH CHANCES OF
to close to 55% to the GDP. This SERVICE LANDSCAPE. SUBSTITUTION.
sector has not only lifted the Indian
economy but has also attracted huge - 4-5 PLAYERS HAVE - MULTIPLE ASIAN
investments in form of FDIs and FIIs. HAVE BUILT THE COOMPANIES ARE ABLE
CAPABILITY TO DEAL TO PROVIDE THE WORK
And one of the key contributors to
WITH MULTI-MILLION AT A COST CHEAPER
the services sector is the Indian IT DOLLAR DEALS. THAN THE INDIANS.
Services sector.
Summary of IT/BPS sector- 2020:
1. Large contribution to the Indian economy:
• India’s IT industry contributed around 7.7% to the country’s GDP and is
expected to contribute 10% to India’s GDP by 2025.
• IT industry is fueling the growth of start-ups in India with presence of around
5,300 tech start-ups in India.

2. Strong growth opportunities:

• IT & BPM industry revenue was estimated at around US$ 191 billion in FY20
at 7.7% growth y-o-y and it is estimated that the size of the industry will grow
to US$ 350 billion by 2025.
• As there is an increasing focus on technology sector, IT industry will create
the maximum jobs in India in coming years.

3. Leading sourcing destination:

• India acquired a share of around 38% in the overall BPM sourcing market.
• India is the leading sourcing destination across the world, accounting for
approximately 55% market share of the US$ 185-190 billion global services
sourcing business in FY18.

4. Export and employment growth:

• Total export revenue of the industry is estimated to grow 8.1% y-o-y to US$
147 billion in FY20. IT & BPM sector accounted for the largest share in the
Indian services export at 45%.

5. Most lucrative sector for investments:

• The computer software and hardware sector in India attracted cumulative
foreign direct investment (FDI) inflow worth US$ 62.47 billion between April
2000 and September 2020. The sector ranked 2nd in FDI inflow as per the
data released by Department for Promotion of Industry and Internal Trade
(DPIIT).
Policy support offered by the Government:
• Tax exemption of three years in a block of seven years to start-ups under
‘Startup India’.
• Department of Telecom, Government of India and Ministry of
Communications, Government of Japan signed a MoU to enhance cooperation
in areas of 5G technologies, telecom security and submarine optical fiber
cable system.
• Simplified Other Service Provider (OSP) guidelines to improve the ease of
doing business in the IT Industry, Business Process Outsourcing (BPO) and IT
enabled Services.

Segments of India’s IT sector:

1. IT services
• Market Size: US$ 97 billion in FY20.
• Over 81% revenue comes from the export market.
• BFSI continues to be the key vertical for the IT sector.
• IT services accounted for about 50.50% of the IT & BPM market revenue in
India in FY20

2. Business Process Management

• Market size: US$ 38 billion in FY20. Market size of BPM industry to reach US$
54 billion by FY25.  About 87% revenue comes from the export market.
• BPM had a 19.79% share of the IT & BPM market revenue in India in FY20.

3. Software products and engineering services

• Market size: US$ 34.39 billion during FY19.
• Over 83.9% of revenue comes from export.
• It had around 19% revenue share in the Indian IT space in FY19

4. Hardware
• Market size: US$ 14.48 billion in FY19.
• The domestic market accounts for a significant share.
• Hardware exports from India was estimated to grow at 7- 8% in FY19.
Market size of Indian IT industry: