ICFAI UNIVERSITY

TRIPURA
PROJECT ON
“Contribution of IT Sector in Indian Economy”
SUBMITTED BY:-
NAME ID NO
 BISHAL ROY :- 23IUT0160012
 SUMIT DEBNATH :- 23IUT0160009
 SHUBRA NIL DATTA :- 23IUT0160011
 JOYDIP GHOSH :- 23IUT0160082
 JOYSHREE PAUL :- 23IUT0160008
 MELODY KAIPENG :- 23IUT0160076
 ANKIT DEBBARMA :- 23IUT0160089
 SUSMITA PAUL :- 23IUT0160088
 BIKI THAPPA :- 23IUT0160015
 SHOUBIK DAS :- 23IUT0160035
PROGRAME:- MBA 1st YEAR
SUBJECT :- Macroeconomics and Business Environment (INM552)
SUBMITTED TO :-
DR. PRADIP CHOUHAN
DEPARTMENT OF FACULTY COMMERCE AND MANAGEMENT

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 CONTRIBUTION OF IT SECTOR IN INDIAN ECONOMY
 INTRODUCTION
- IT (Information Technology) industry is one of the fastest growing industries in India and
includes the software industry and Information Technology Enabled Services (ITES), which
also includes the Business Process Outsourcing (BPO) industry. India has a niche position for
itself as a software developer and a desirable destination for its services.
The IT sector has become one of the most significant growth catalysts for the Indian economy.
In addition to fuelling India’s economy, this industry is also positively influencing the lives of
its people through an active direct and indirect contribution to the various socio-economic
parameters such as employment, standard of living and diversity among others.
The IT sector has become one of the most significant growth catalysts for the Indian economy.
In addition to fuelling India’s economy, this industry is also positively influencing the lives of
its people through an active direct and indirect contribution to the various socio-economic
parameters such as employment, standard of living and diversity among others.
The Indian Information Technology industry accounts for a 5.19% of the country's GDP
and export earnings as of 2009, while providing employment to a significant number of its
territory sector workforce. More than 2.5 million people are employed in the sector either
directly or indirectly, making it one of the biggest job creators in India, In 2010-11, annual
revenues from IT sector is estimated to have grown over US$ 76 billion compared to China
with $35.76 billion and Philippines with $8.85 billion. India's outsourcing industry is expected
to increase to US$225 billion by 2020. The annual growth rate of the Indian domestic IT-ITES
market growth rate is expected to reduce down from an average of 24% recorded during 2003-
08 to 14.6% over the next five-years to 2013.
The information technology (I.T.) industry in India comprises information technology services
and business process outsourcing. The share of the IT-BPM sector in the GDP of India is 7.4%
in FY 2022. The IT and BPM industries' revenue is estimated at US$ 245 billion in FY 2023.
The domestic revenue of the IT industry is estimated at $51 billion, and export revenue is
estimated at $194 billion in FY 2023. The IT–BPM sector overall employs 5.4 million people
as of March 2023.

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  Direct Contribution to the Indian Economy
- The Indian IT industry has grown almost tenfold in previous decade. Domestic software has
grown at 46 per cent while software exports have grown at 62 percent over the last 5 years.
The current and evolving role of IT/ITES industry in India’s economy is well established. The
sector is proving to be the major growth pole within the services sector, which in turn drives
several economic indicators of growth in the country. A few key indicators of direct
contribution are:
Growing share of the country's GDP: The sector's contribution to the country's GDP has been
steadily increasing from a share of 1.2% in FY98 to 5.2%in FY07
Boosting the foreign exchange reserve of the country: Export earnings inFY08 stood at
approximately USD 40.0 billion with a growth of 36%.
Employment generation: Direct employment in the sector is expected to be2.0 million by end
of FY08, growing at a CAGR of 26% in the last decade, making it the largest employer in
the organized private sector of the country.

Additional employment generation: The indirect employment generated, at the rate

of 4 additional jobs created in the economy for every 1 job created in the sec-tor, is even
more socially relevant as nearly 75% of the workforce employed in those additional jobs
are SSC/HSC or less educated.

 Industry Trends of IT Sector

- 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.

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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.

 Indian IT Revenues
- In the contemporary world economy, India is the largest exporter of IT. The contribution of
the IT sector in India's GDP rose from 1.2% in 1998 to 7% 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.

 Evolution of IT Sector in India

- The IT and BPM industry's revenue is estimated at US$194 billion in FY 2021, an increase
of 2.3% . 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.[18] The IT–BPM sector overall employs 5.4 million people as
of March 2023

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In 2022, companies within the sector faced significant employee attrition and intense
competition in hirings. Indian IT revenues grow fastest in a decade to $227 billion in COVID-
19 pandemic -hit FY22. NASSCOM in its Strategic Review predicted that the IT industry can
achieve the ambitious target of being a US$ 350 billion by FY26 growing at a rate of 11-14
percent.

 IT Sector and the GDP

- The IT companies have increased their contribution to India’s GDP from 1.2% in 1998 to
almost 8% in 2018 and 7.7% of India’s GDP in 2020 amidst the COVID-19 situation.
According to the Software Technology Park of India (STPI), software exports by the IT
companies stood at a whopping 1.20 Lakh crore (US$16.29 billion) in the 1st quarter of
financial year 22 (FY22). The Information Technology and business service industry’s revenue
is at approximately US$6.96B in the first half of the year 2021 and an increase of 6.4% Year
of Year . The export revenue of the IT companies is at approximately US$150B in FY21.
According to Gartner, IT companies spending is estimated to reach US$93B in 2021 with 7.3%
YoY Growth in India and further increase to US$98.5B in 2022. The IT and BPM industry
together have greater than 4.5 million workers as of FY21.

 IT Industry Boosting India’s Growth

- The role of IT in India’s economic development has expanded rapidly with an exponential
growth rate after the economic reform of 1991-92. Indian IT companies have set up thousands
of centers within India and around 80 countries across the globe. The majority of global
corporations are sourcing IT-ITES from the Indian IT sector. Since it accounts for
approximately 55 percent of the world service sourcing market (US$ 200-250 billion) in 2019-
20. The market size (particularly export) of the IT industry has expanded manifold from
approximately $67 billion in 2008-09 to 191 billion US dollars in 2019-20. The revenue is
further anticipated to grow in the next coming years with an accelerating growth rate and is
projected to reach 350 billion US dollars by 2025.
In addition, the notable feature of India’s IT industry is that along with its expansion in terms
of market size, it is also incrementally adding a considerable share to India’s gross domestic
product (GDP). Consequently, improving the growth and development of the country. From a
minuscule 0.4 percent in 1991-92, the IT industry contributed around 8% in 2017-18 to the
total GDP of India. This share is projected to increase to 10% by 2025.
India’s technology services industry can achieve $300-350 billion in annual revenue by 2025
if it can exploit the fast-emerging business potential in cloud, artificial intelligence (AI), cyber
security and other emerging technologies, according to a report by industry body Nasscom

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The report said domestic tech services could accelerate growth by 2-4% over the next five years
as industries worldwide continue to see rapid adoption of digitalization to make a faster
recovery from the covid-induced disruptions.

 INFOSYS
- One notable Indian IT company that significantly boosted India's economy is
Infosys. Founded in 1981 by Narayana Murthy and a group of six engineers,
Infosys played a pivotal role in the growth of India's IT sector and its global
recognition as a powerhouse in software services. Infosys has contributed to the
Indian economy in several ways:

1. Job Creation :- Infosys has been a major job creator in India. By providing
employment opportunities to thousands of engineers and professionals, it has
helped reduce unemployment and improve living standards for many families.

2. Revenue Generation :- The company has consistently generated substantial

revenue through its software development, consulting, and outsourcing services.
This revenue has contributed significantly to India's GDP and tax revenues.

3. Foreign Exchange Earnings :- Infosys earns a significant portion of its

revenue from exports. By providing high-quality IT services to clients around
the world, it has helped bring foreign exchange into the country, contributing to
India's foreign reserves.

4. Technology Innovation :- Infosys has been at the forefront of technological

innovation in India. By investing in research and development and fostering a
culture of innovation, it has helped position India as a hub for cutting-edge
technology solutions.

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5. Global Recognition :- Infosys has put India on the map as a leading
destination for IT services. Its success has attracted attention from international
investors and clients, leading to further growth and investment in the Indian IT
sector.

Overall, Infosys's success has had a multiplier effect on India's economy,

stimulating growth in related industries and inspiring the emergence of other
successful IT companies in the country.
Patni Computer, the company from which the Infosys co-founders hailed, was
acquired by iGATE Corp. in 2011 and later bought by Capgemini, the founders
could not have foreseen that by 31 March, 2022, Infosys would have a revenue
of $16.3 billion and over 314,000 employees.

To celebrate its four decades in the industry, Infosys will have a discussion on
Wednesday between its co-founders and CEO Salil Parekh on the present and
future of India’s IT sector, which contributed to 9% of India’s gross domestic
product (GDP) last year and accounted for more than half of all services
exports.

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- According to the graph we can find INFOSYS growth from 2013 to 2022 FY
In 2013 company yearly revenue was 38980 crores from that onward in 2014
The growth increased to 46917 crores which is really booster to the economy.
Infosys In 2015 yearly revenue was 50637 crores
Infosys In 2016 yearly revenue was 56992 crores
Infosys In 2017 yearly revenue was 62351 crores
Infosys In 2018 yearly revenue was 65960 crores
Infosys In 2019 yearly revenue was 75959 crores
Infosys In 2020 yearly revenue was 81747 crores
Infosys In 2021 yearly revenue was 88379 crores
Infosys In 2022 yearly revenue was 107164 crores

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 GDP Contribution Of It Sector In Indian Economy

1.Direct Contribution :- The IT sector comprises various segments such as

software development, IT services, BPO, ITES, hardware manufacturing, and e-
commerce. Collectively, these segments directly contribute to India's GDP
through revenue generation, taxes, and investments.

2. Indirect Contribution :- Beyond its direct impact, the IT sector also fuels
growth in other industries by enhancing productivity, efficiency, and
innovation. For instance, the adoption of IT solutions in sectors like banking,
healthcare, education, and government services leads to indirect contributions to
GDP through improved service delivery and cost savings.

5. Investment and Innovation :- The IT sector attracts both domestic and

foreign investments, fostering innovation, research, and development.
Investments in infrastructure, technology parks, and startup ecosystems
contribute to the sector's growth and competitiveness.

6. Global Competitiveness :- India's IT sector competes globally, offering cost-

effective and high-quality services to clients worldwide. Its competitiveness
enhances the country's reputation as a preferred destination for outsourcing and
offshoring, further boosting its GDP contribution.

7. Government Initiatives :- Various government policies and initiatives

support the growth of the IT sector, such as incentives for software exports, tax
benefits for research and development, and infrastructure development
programs. These initiatives create an enabling environment for the sector to
thrive and expand its contribution to the economy.

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