India’s IT

Industry

Presented By:
- Jaykrishna Verma [171123]
- Kishan Singh [171125]
- Vaibhav Gala [171160]
- Vishal Singh [171165]
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• India’s IT industry contributed around 7.7 per cent to

the country’s GDP
• IT industry employs nearly 3.97 million people in India
• The IT-BPM sector in India expanded at a CAGR of
10.71 per cent to US$ 167 billion in FY18E from US$ 74
billion in FY10, which is 3–4 times higher than the
global IT-BPM growth. It is estimated that the size of
the industry will grow to US$ 350 billion by 2025.
OVERVIEW • India is the leading sourcing destination across the
world, accounting for approximately 55 per cent
market share of the US$ 185-190 billion global services
sourcing business in 2017-18.
• Indian IT exports are projected to grow at 7-8 per cent
in 2017-18. IT-BPM sector accounts for largest share in
total Indian services export, which is 45 per cent.
• Source: NASSCOM, DIPP, Aranca Research
 IT & ITES SECTOR
51 19.2
% %
IT Services Business Process
Management
Market Size: US$ 86 billion
Market size: US$ 32 billion
during FY18.
during FY18.
Over 81 per cent of
Around 87 per cent of
revenue comes from the
revenue comes from the
export market.
export market.
BFSI continues to be the Market size of BPM
major vertical of the IT industry to reach US$ 54
sector billion by FY25.
3
20 9.3
% %
Software products
and engineering Hardware
services
Market size: US$ 33 billion Market size: US$ 15.4
during FY18. billion in FY18.
Over 83.9 per cent of The domestic market
revenue comes from accounts for a significant
exports. share.
The software products
segment grew 10.5 per
cent in FY17.
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• IT BPM industry revenues (excluding hardware) was

estimated at around US$ 154 billion in FY 2016-17 and
grew to US$ 167 billion in FY 2017-18.
• The contribution of the IT sector to India’s GDP stood at
7.9 per cent in 2017-18.
• The top 5 IT firms contribute over 25 per cent to the total
industry revenue Rs 8.4 lakh crore (US$ 131.11 billion) as of
2017, indicating the market is fairly competitive.
INDIA’S IT • The domestic revenue of the IT industry is estimated at
US$ 41 billion and export revenue is estimated at US$ 126
MARKET billion in FY 18.
• Export revenue of the IT industry grew to US$ 126 billion
in FY18 from US$ 117 billion in FY17. It is further expected
to increase 7-9 per cent y-o-y to US$ 135-137 billion in
FY19.
• The market size of India’s IT-BPM sector is expected to
grow to US$ 350 billion by 2025 and BPM is expected to
account for US$ 50-55 billion out of the total revenue.
MARKET SIZE OF IT INDUSTRY IN INDIA (US$ BILLION)
5

180

160

140

120

100 126
117 Export
105
80 98.5
87 Domestic
69 76
60 59
50
40

20 34 35 37 41
29 32 32 32
24
0
FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 Fy 18
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• US has traditionally been the biggest importer of

Indian IT exports; over 62 per cent of Indian IT-BPM
exports were absorbed by the US during FY18.
• Non US-UK countries accounted for just 21 per cent of
total Indian IT-BPM exports during FY18.
IMPORTER OF • As of FY18, US and UK are the leading customer
markets with a combined share of nearly 80 per cent .
IT SERVICES However, there is growing demand from APAC, Latin
America and Middle East Asia.
• Being the low cost exporter of IT services, India is
going to attract more markets in other regions in the
same manner it tapped US markets
IT-BPM SECTOR DOMINATED BY LARGE PLAYERS

7
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S.W.O.T. ANALYSIS
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• Highly skilled human resource

• Low wage structure
• Initiatives taken by the Government (setting up Hi-Tech Parks
and implementation of e-governance projects)
• Cost competitiveness
STRENGTH • Quality telecommunications infrastructure
• Indian time zone (24 x 7 services to the global customers).
Time difference between India and America is approximately
12 hours, which is beneficial for outsourcing of work.
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• Dearth of suitable candidates

• Less Research and Development
• The cost of telecom and network infrastructure is much
WEAKNESS higher in India than in the US.
• Cultural difference
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• High quality IT education market

• Increasing number of working age people
• India ‘s well developed soft infrastructure
• Upcoming International Players in the market
• BRIC would provide US$ 380–420 billion opportunity by

OPPORTUNITY 2020
• Over 50 cities already have basic infrastructure and human
resource to support the global sourcing and business
services industry. Some cities are expected to emerge as
regional hubs supporting domestic companies
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• Lack of data security systems Countries like China and

Philippines with qualified workforce making efforts to
overcome the English language barrier
• IT development concentrated in a few cities only.
• Workers in British Telecom have protested against
THREAT outsourcing of work to Indian BPO companies.
• Other ITES destinations such as China, Philippines and South
Africa could have an edge on the cost factor.
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COMPETITIVE ANALYSIS
• A major factor underlying the boom in IT service outsourcing is the need for
MNCs to remain globally competitive by relocating labor-intensive operations
overseas to low-wage countries.
• Indian software industry is dotted with numerous players however, the large
firms with more than USD 1 billion of annual revenue are TCS, Infosys
Technologies, Wipro Technologies, HCL Technologies, and Tech Mahindra.
• Product differentiation is low as most players offer similar services, which can be
taken to be homogenous.
• In the past couple of years, the ‘cost advantage’ model has come under serious
threat with competition from the likes of China and Philippines.

• ‘As a result, the industry has started moving up the value chain towards
consulting and product development.
 PORTER FIVE FORCE 14

Threat of Rivalry among Bargaining power Bargaining power

Barriers to Entry
Substitutes: firms of Suppliers of Customers

MEDIUM HIGH SHIFT FROM HIGH TO LOW VERY HIGH

LOW
•Other Software locations •Commoditized offerings. •Due to slowdown, the •Large number of IT
•Low capital requirements.
such as Eastern Europe, •Low-cost, little job-cuts, the layoffs, and companies vying for IT
•Large value chain space
the Philippines and China differentiation positioning. bleak IT outlook. Projects
for small enterprises.
are emerging owing cost •High industry growth. •Demand and Supply of IT •Dependent on United
•MNCs are ramping up
advantage •Strong competitors. professionals no longer States and on BFSI sector
capacity and employee
•Medium to long term that favorable to in particular for majority of
strength
effect employees. its revenues

•Price is major •Availability of vast talent •For existing products and

differentiator not product pool – freshers and services, the clients

experienced. continue with the old

companies
ADVANTAGE
INDIA

15
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•Largest Pool of Technical Talent

•Comparatively high exchange value
•Young working population compared to the West
•Highly educated workforce fluent in English.
•High-end technological infrastructure to connect and
communicate with any part of the Globe
•Low salary compared to other countries.
•Government support for setting up companies
•Tax Holidays under STPI for 100% EOU (Export
Oriented Units)
•Forces driving the Industry
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TECHNOLOGY ADOPTION
2018 saw the Indian economy make significant headway in technology deployment.

Cloud-based transactions, artificial intelligence (AI), the Internet of Things (IoT), Big Data analytics,
augmented and virtual reality (AR and VR), and blockchain became buzzwords across the country.

Increased business agility and “democratization" of innovation along with organizations’

competitiveness.

The trend appear to be more apparent than in the area of artificial intelligence, where large software
companies are integrating AI capabilities into cloud-based enterprise software and bringing them to
the mass market.
 Big Data and analytics are other key areas where the
government has begun efforts

PUBLIC The country made a start toward a Unified Payments

SECTOR Interface (UPI) for payments and digital lockers

Government of India initiative to promote innovation and

entrepreneurship, prophesies, “Blockchain will be a big
opportunity in India.

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 Disruptive technologies such as Big Data, blockchain, AI,
and the IoT leveraging cloud computing to change the
face of business.

Biometrics that allow recognition by iris, voice, and face,

BANKING and enable wallet-free shopping with authenticated
payments will be increasingly deployed with cloud and
SECTOR mobile technologies

Applications of AI and ML are reckoned to find more

complex applications in chatbots

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 Automation at the hospital and service-provider level is
evident in hospital data centers, enterprise resource
planning (ERP) implementations, disaster recovery
centers, and backup facilities, as well as device-monitoring
dashboards

The “Internet of Nano Things” is another area to look

HEALTHCARE forward to, where connected Nano things are able to
store and transmit information from inside the human
SECTOR body, for research purposes.

Telemedicine, teleradiology, and teleconsultation, which

are currently in primitive forms, will become more
sophisticated in 2018

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 Industrial IoT and the digital twin concept used in driving
operational efficiencies

AR and VR will become more disruptive, and more

MANUFACTURING retailers will embrace these technologies to enhance
SECTOR customer adoption and experience.

Cloud-based technologies permeate into more areas.

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 Digital solutions based on AI, the IoT, blockchain, and robotics,
as well as a combination of these technologies, are slated to
fuel smart city projects
SMART CITY

AI and deep learning can power features such as intelligent

lighting, smart water, power management, smart traffic
management parking mechanisms, and many more.

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 Combining the strengths of cloud computing, the IoT, and
robotics to manage warehouse operations and track shipments
and deliveries in real time.
LOGISTICS

Automated storage and retrieval systems (ASRSs), radio

frequency identification (RFID), GPS, cloud, and mobile are
heavily in use to streamline operations.

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FUTURE TRENDS

• Artificial Intelligence(AI)- AI and the related area of cognitive computing is

forecast to reach close to $60 billion by 2021 with CAGR of 50% from 2016.
• Enabling streaming-entertainment providers -video content, social network
platforms for which ads to display, and e-commerce retailers to suggest
which products to buy, face recognition, driverless cars etc.
• Technologies, such as telemedicine, health, remote monitoring solutions and
clinical information systems, would continue to boost demand for IT service
across the globe.
• Emerging protectionist policies in the developed world are expected to
affect the Indian IT companies
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FUTURE TRENDS
26

• Adoption of the global delivery model. Setting up development centers in Latin

America, South East Asia, Eastern European countries to take advantage of low
cost and also cater to the local market.
• Social, Mobility, Analytics and Cloud (SMAC) are collectively expected to offer
greater opportunities. Cloud represents the largest opportunity under SMAC,
increasing at a CAGR of approximately 30 percent by 2020.
• Billing rates are expected to remain under pressure due to commoditization of
traditional services. Effective cost containment such as shifting more offshore
work , employee utilization, use of automation required.
• The Indian government’s ‘Digital India Initiative’ is a $ 1 trillion business
opportunity, offering great potential to the domestic IT/ICT sector.
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RECOMMENDATIONS
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• Better policy support for leveraging advanced technologies to strengthen the

innovation and India’s position as global software hub by promoting technology
startups and specialized skill set.

• Need of developing infrastructure which enables IT implementation in SME

sector which is major contributor of Indian economy growth.

• Consider new business models that capitalize on security as a differentiator of

products and utility.

• Reduce Operational Expenditure by Improving Risk Management

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RECOMMENDATIONS
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• Improve cooperation within and across industry segments and national borders
to improve threat intelligence and promote the application of good practices
• Proactively drive standardization through strong industry representation.
• Support cyber security and privacy certification schemes to improve customer
• confidence
• Expansion should be governed by “quality, not quantity.”
THANK
YOU