MARKETING OF

SERVICES

GROUP ASSIGNMENT 1

TOPIC
ROLE OF IT INDUSTRY IN INDIA

SUBMITTED BY
ANANYA GHOSH - MBA/21-23/2

KIRTIRAJ SAHOO - MBA/21-23/10

PRABIN KUMAR JENA - MBA/21-23/15

SAI JYOTI MOHANTY - MBA/21-23/24

SUBHASHREE PATTANAYAK - MBA/21-23/34

 INTRODUCTION

The information technology industry in India comprises information

technology services and business process outsourcing.The share of the IT-BPM
sector in the GDP of India is 7.4% in FY 2022.The IT and BPM industries' revenue
is estimated at $227 billion in FY 2022.The domestic revenue of the IT industry is
estimated at $49 billion, and export revenue is estimated at $181 billion in FY
2022.The IT–BPM sector overall employs 5 million people as of March 2022.In
December 2022, Union Minister of State for Electronics and IT Rajeev
Chandrasekhar, in a written reply to a question in Rajya Sabha informed that IT
units registered with state-run Software Technology Parks of India (STPI)
and Special Economic Zones have exported software worth Rs 11.59 lakh crore in
2021-22.

In recent years, many IT workers use forged experience certificates to gain entry

into the Indian IT industry.These fake documents are provided by consultancies
that are mainly operating out of Hyderabad and Bangalore.IT professionals
frequently use proxy interviews to clear interviews, but the majority of the phoney
candidates are rejected during the interview round.A 2017 study of technical
support scams published at the NDSS Symposium found that, of the tech support
scams in which the IPs involved could be geolocated, 85% could be traced to
locations in India.Indian call centres are infamous for defrauding customers from
the US and Europe.Kolkata, Bangalore, Hyderabad, and Mumbai are the main
operating locations for these fraud call centres.

The Indian IT-BPM industry has the highest employee attrition rate.In recent years,
the industry has seen a surge in resignations at all levels.As a global outsourcing
hub, the Indian IT industry benefits from a lower cost of living and the consequent
cheaper labor.As the IT–BPM sector evolves, many are concerned that artificial
intelligence (AI) will drive significant automation and destroy jobs in the coming
years.The United States accounts for two-thirds of India's IT services exports.

The information technology sector includes all the companies offering IT-enabled
services (ITES), IT services, software products, e-commerce facilities, etc. In the
past decade, the role of the internet and computer has grown manifold in our lives.
Most people consume IT services in some form or the other. The COVID-19
pandemic further highlighted the contribution of the IT sector to the Indian
economy. With the shift to remote working, the IT sector enabled the other sectors
to operate from distance mode as well. New startups in the sector are opening up,
which boosts the economy as a whole.
 LATEST TREND IN IT INDUSTRY

The IT-BPM (Information technology and Business Process Management) sector

of India has a share of 9.3% of the country’s GDP, making it one of the biggest
sectors to contribute to India’s economic growth. The IT sector captures 56% of
the global outsourcing market.

The Software Technology Park of India (STPI) reported that IT companies

associated with it made software exports worth $16.29 billion in only the first
quarter of the financial year 2022. 

The National Association of Software and Service Companies (Nasscom) estimates

that the revenue of the Indian IT industry will reach $227 billion in 2022, which is
a massive increase from $196 billion in 2021.

The branch of the IT sector dealing with software products is projected to become
worth $100 billion by the financial year 2025. The Indian technology companies
are shifting their focus to international markets. There are plans to make
investments in the global markets so that their global delivery centres can increase
in number.

4.5 lakh employees were hired till February 2022 in the first quarter of 2022. This
has been the highest ever addition in any given year. There is significant
participation of women as out of the total new employees, 44% were women.

The Foreign Direct Investment (FDI) inflows in the IT sector (computer hardware
and software, to be precise) between April 2000-December 2021 stood at $81.31
billion (14.19% of the FDI inflows). The data from the Department for Promotion
of Industry and Internal Trade (DPIIT) proves that it was the second-largest sector
to have received such high FDI inflows.

Record investments of $36 billion were made in private-sector IT companies in the

financial year 2021 alone. In 2020, this number stood at $11 billion. Hence, the
investment increased more than three times in just a year, making this sector a
lucrative investment destination.
 Government Initiatives for the IT Sector

In the Union Budget 2022-23 announced by Finance Minister Nirmala Sitharaman,

$11.58 billion were allocated to the IT and telecom sector. This is equivalent to ₹
88,567.57 crores.

The Department of Telecom, the Government of India, and the Ministry of

Communications have signed a Memorandum of Understanding with the
Government of Japan. Under this, there would be increased cooperation in sectors
related to the development of 5G technologies, submarine optical fibre cable
systems, and telecom security.

Five new National Institute of Electronics & Information Technology (NIELIT)

Centres were inaugurated by the Government of India in September 2021. They
were inaugurated in North-eastern states where the development of the IT sector is
limited to boost the sector and also provide employment to the youth there.

In the same month, Phase II of the Visvesvaraya PhD Scheme was launched to
boost the research in the 42 sectors related to IT and ITES.

The GoI has well laid-out plans to develop the emerging blockchain, cloud
computing, and artificial intelligence technology in the country in the next few
years. There is also an increased focus on providing internet access to remote
areas, where people currently face major connectivity issues. 

5G is set to bring advancement to the country’s telecom infrastructure. Along with

the top private players in the sector, the government is working to make 5G
technology accessible in the country as soon as possible.

The hardware market is also set to develop under the government’s initiative of
Atmanirbhar Bharat. The government has launched several PLI schemes meant to
boost the development of computer hardware parts in the country. Currently, we
rely on Asian markets like China and Taiwan for computer hardware like chips.

During the COVID-19 pandemic, global trade suffered, and since the imports from
these Asian countries slowed down, it created a problem of chip shortage in the
entire world. India wants to be the pioneer of chip development technology, for
which it is empowering private players to set up hardware manufacturing plants in
the country itself.
 INDIAN IT INDUSTRY REVENUE

In the contemporary world economy, India is the largest exporter of IT. The
contribution of IT sector in India's GDP rose from 1.2% in 1998 to 10% in 2019.
Exports dominate the Indian IT industry and constitute about 79% of the industry's
total revenue. However, the domestic market is also significant, with robust
revenue growth.
The industry's share of total Indian exports (merchandise plus services) increased
from less than 4% in FY1998 to about 25% in FY2012. The technologically-
inclined services sector in India accounts for 40% of the country's GDP and 30%
of export earnings as of 2006, while employing only 25% of its workforce.The
"Top Five Indian IT Services Providers" are Tata Consultancy
Services, Infosys, Wipro, Tech Mahindra, and HCL Technologies.
The IT and BPM industry's revenue is estimated at US$194 billion in FY 2021, an
increase of 2.3% YoY.The domestic revenue of the IT industry is estimated at
US$45 billion and export revenue is estimated at US$150 billion in FY 2021.The
IT industry employed almost 2.8 million employees in FY 2021.The IT–BPM
sector overall employs 4.5 million people as of March 2021.
In 2022, companies within the sector faced significant employee attrition and
intense competition in hirings.Indian IT revenues grow fastest in a decade to $227
billion in COVID-19 pandemic hit FY22. The IT–BPM sector overall employs 5
million people as of March 2022. NASSCOM in its Strategic Review predicted
that the IT industry can achieve the ambitious target of being a US$ 350 billion by
FY26 growing at a rate of 11-14 per cent.

Indian IT and BPM industry's revenues

in US$ (as of FY22)

Export revenues 178 billion

Domestic revenues 49 billion

Total IT Revenues 227 billion

Total direct employees in IT sector: 50 lakh

 Employment of the IT-BPM industry in India
The Indian information technology and business process management industry was
estimated to have over 4.8 million employees during financial year 2022. The
South Asian country is the largest offshoring destination for IT companies across
the globe. The IT-BPM sector has gradually grown in recent years, accounting for
more than 30 percent of the global outsourced BPM market. In financial year
2022, the IT sector's contribution to India's GDP was 7.4 percent.
In financial year 2022, the market size of the IT-BPM industry was estimated to
reach around 177 billion U.S. dollars. The export market of the Indian IT-BPM
industry was more than five times the size of the domestic market. The
biggest importer of India’s IT-BPM services was the United States. Furthermore,
the growth trend of the export market was evidently higher than the domestic
market during the presented period. E-commerce revenue in the IT-BPM
sector across the nation also witnessed steady growth in the last few years.The
Indian IT-BPM industry is likely to witness consistent growth in the future.
Tapping into new advancements in robotics and artificial intelligence, the industry
seeks to continue helping clients build successful businesses, propelled by a large
export market.

IT SERVICE EXPORT

Indian technology exports are set to reach $178 billion (excl. hardware exports), a
growth of ~17.02% and an addition of ~$26 billion over FY2021:
 IT services: At $95 billion, it continues to lead in terms of market share and is also
likely to be the best performing segment of FY2021, a y-o-y growth of 18%.
 BPM: At $39 billion and a growth rate of 14 % y-o-y, this sector too is
accelerating it shift to platform solutions (BPaaS to grow 4X vis-à-vis traditional
BPM). Growth drivers include automation-led services in F&A and HR, increased
adoption of RPA and analytics.
 ER&D: Led by increasing softwarization of equipment & devices (“software-led
products”) and cloudification, this segment is being driven by cloud engineering,
services around data monetization and digital engineering. Historically, this
segment has been recording the fastest growth rate; however, for FY2021, it is
likely to see a drop in growth rate (17% y-o-y) to touch $36 billion
 Software products: Rise in demand for collaborative applications, application
platforms, security software, system & service management software, and content
workflow & management applications will lead to a 34% growth of this segment to
$7 billion.
 CONCLUSION

In 1998, the IT sector contributed merely 1.8% to India’s GDP. Today, it stands at
over 9% and will soon go to double digits. The importance of the IT sector is also
that it employs millions of people. Major tech companies like Wipro, Infosys,
TATA, Reliance, etc., hire young professionals in large numbers. The IT sector has
a fair share in the Indian export market also. The USA is the single largest country
where our IT products and services are exported. The IT sector will play one of the
biggest roles in realising India’s goal of becoming a $5 trillion economy.

Digital will continue to drive the IT industry agenda for year 2023. Companies
must holistically assess their weakness and strengthen their digital and governance
capabilities. Cloud, Artificial intelligence, Platform Engineering, Automation, and
Cybersecurity will drive the agenda for many CXOs globally. Strategic execution
becomes very critical in an uncertain environment where the attrition, inflation,
skill shortage, higher wages and shrinking demand are inevitable.

While digital cannot address or reverse the macro-economic challenges, it can

definitely bring agility, momentum and push the growth agenda for every business
in every industry. It is perfect time for companies to go digital with all its muscles
and energies.