Millennium Post

Indian IT raring to scoop global trillion $ industry

The global economic slowdown is continuing, though a silver lining has appeared with this situation appearing to be weakening amidst reports of some countries picking up the recovery pace through a variety of measures and other efforts. India is among these countries with its strengths lying in its diversity of industry that reaches out to the global markets successfully.  As the knowledge hub of the world, India is one of the countries where — in the knowledge millennium — the ever-evolving dynamics of Information and Computer Technology is expected to change the world of manufacturing, sourcing, delivering and competing. This is expected to be an era where technology will be the key driver of sustainable growth. Organisations that innovate, generate and adapt to new technologies are likely to emerge as leaders, and it has become imperative that business operations are directed towards constant upgradation and improvement at all levels, according to the Electronics and Computer Software Export Promotion Council (ESC).

The Indian IT-ITES industry is on a high momentum path with rapid growth, consolidation and a move up in the value chain — in terms of products and services — defining the sectors. It has been revealed that India continues to offer and deliver the best ‘bundle’ of benefits sought from global sourcing. With significant potential still untapped, it is expected that the global sourcing phenomenon will continue to expand in scope, scale and geographic coverage.

The consistent growth in export of IT services can be largely attributed to the comparative cost advantage to the developed economies in outsourcing from India along with the pro-active policies and strategies of Government both at central and state levels. The strengths of the Indian IT industry lie in: it being one of the largest pool of technically qualified high-class IT manpower, enormous skilled human resource, wide range of services, high credibility and rich experience of working with large global companies, expertise on a wide variety of platforms, and accommodating nature of India It human resource.

The India software industry now represents one of the most successful business models that have managed to sustain high growth and competitiveness as it offers cost-effectiveness, world class quality, high reliability, speedy deliveries and use of state-of-the-art technologies. Today, Indian software companies offer a wide variety of software packages and solutions in different fields such as multimedia, telecom, e-commerce, Internet, networking, enabled software services, data warehousing, offshore development, virtual software organizations, software development on the net, interactive architecture/integration, remote maintenance, system integration, e-commerce solutions and services, software products and packages.  Indian companies have specialized in providing solutions for wide-ranging applications including BPO/ KPO/LPO, banking, insurance, tourism, construction, manufacturing, and tradition and retailing.

India today enjoys a comfortable position to meet global requirements because of: manpower being English-speaking and IT savvy, costs reduction upto 50 per cent, lower infrastructure costs, favourable time lag (12 hours with USA and five hours with Europe), overnight turnarounds possible, comparatively low rate of attrition, resources with experience of industrial, financial and legal systems, strong domestic IT services industry to support IT-led BPO, and largest pool of SEI CMM companies worldwide.

Meanwhile, Indian IT exports continue its dream run of capturing the remotest corners of the earth by providing total solutions in a host of sectors of the economy. Today, India’s competency in IT –more significant in computer software and information technology enabled-services — is recognized globally. Indian ICT exports to global economies are estimated to be around $85 billion during the period April 2012 to March 2013, while, according to the ESC’s reckoning, computer software and services are estimated to be $75 billion. The electronic hardware exports have continued to show a stable growth and are estimated to be to the tune of $8.88 billion. Indian business intelligence (BI) software revenue had been targeted to reach a massive $113 million in 2013 — an increase of 16 per cent over 2012 revenue of $98.1 million — and even more beyond.

This has been necessitated by software and service providers increasing their expenditure due to their immediate needs. In recent times, software development and information technology enabled services (ITeS) including business process outsourcing (BPO),  knowledge process outsourcing services (KPO) industry in India has emerged as one of the most dynamic and vibrant sectors in India’s economy. From a small beginning in the early 80s, it has now grown into a broad-based comprehensive industry. Today, besides its competence in IT being recognized globally, India is the global leader in the outsourcing industry with half the world’s back office being located here. Indian outsourcing revenues at $58 billion in 2011 accounted for over 50 per cent of the global offshore market share, according to a report.

Today, the world recognizes India as a source of high quality IT manpower. Nearly 35 per cent of worldwide SEI CMM level 5 certified companies are Indian. Over 300 Indian computer software and services have already obtained ISO 9000 or CMM level 2 certification and it is because of this high quality of Indian IT sector that the majority of multinational companies in IT have either their software development or research centre in India. One-third of the e-commerce start-ups in the Silicon Valley continue to be led by Indians. Over half of the Fortune 500 companies are outsourcing their software requirements to India.

The Indian IT Services and ITES sector employs over 2.97 million knowledge professionals, besides another nine million ‘indirect’ employees. Almost all major IT players in the world have set up subsidiaries or collaborations in India due to the major attraction being ‘abundance of technically-qualified and cheap software manpower.’  However, the present day is witnessing an acute shortage of qualified and trained manpower due to spiraling salaries and frequent ‘job-hopping’ culture. Today, India has seven Indian Institute of Technologies (IITs) and over 300 regional engineering colleges/private colleges imparting IT education. While a study showed that 5,000 people are needed annually to meet the growth targets of the software industry, total production from education and training institutions is only about a third of this figure.

Union Commerce and Industry Minister Anand Sharma has stated that global exports of computer software had increased significantly and now reached $75 billion in 2012-13. Apart from providing a visible momentum to India’s software exports for all tiers of software companies in India, these mega events highlight the finest global congregations of IT experts and entrepreneurs alongside understanding of the global IT market, its characteristics, challenges and opportunities to establish linkages, forge strategic alliances, partnerships, technology transfers, joint ventures and mergers, besides foraying into the world IT markets of North America, Europe, Africa, Asia Pacific, Middle East, Far East and CIS countries through showcasing their best products and services to visiting potential buyers from these countries.

Saleh Mohammed, a business consultant from Eritrea and based in Germany, was down in India as part of a nine-member German delegation during an IT Show recently, said he came to India to buy IT products and services dealing with data warehousing and all aspects of ERP (enterprises eesources planning) since he specialised in this sector. ‘We plan on using this for other companies as we provide services in this regard,’ he told Millennium Post while noting that he was looking for new developments in the area of ERP. Indian IT is offering solutions to manufacturing and service industry, e-governance models and healthcare institutions alongside contributing to social development activities, besides the enormous scope of further expansion into new global territories and verticals.

Dr Debretsion Gebremichael, Deputy Prime Minister for Finance & Economic Cluster and Minister of Communications & IT, Ethiopia, said Africa represented a huge market that is advancing by ‘leaps and bounds’ in the IT sector including mobile technology that drew about 6.8 billion subscribers alongside online services in the continent. Even as the Government of Ethiopia was focusing on strengthening its IT and agriculture sectors, the opportunities for investment in these are enormous with even plans for building an IT Village, he said while urging the global IT industry to work on addressing the problems of the Telecom Industry.

Describing the current global slowdown as a critical period in smart sourcing for buyers and effective
business development for software companies, Electronic and Computer Software Export Promotion Council (ESC) Chairman Vinod Sharma said the Council aimed at strengthening India’s brand image in the global IT arena and assisting the Indian IT fraternity in enhancing their IT export base globally.

With the world of IT fast evolving and posing new challenges and opportunities globally, it is essential that the Indian IT Industry explores new and emerging global markets for building strong business relations since it is providing a powerful impetus to world business growth, noted J K Dadoo, Joint Secretary in the Ministry of Commerce and Industry.  Dadoo said that Maths and Science are strong subjects in India which can assist other countries in this regard. Global economies, especially Latin America, Africa, CIS and the ASEAN region can look to sourcing innovative IT products & services from the Indian IT fraternity, especially in Mobile Application Services, e-governance, SAAS etc.

Despite the economic sluggishness globally, India is witnessing positive growth in terms of rupee and dollar, and with 400 delivery centres in 52 countries (including 10 companies listed on the Stock Exchanges), the setting up of SEZs has helped in carrying this forward, he said that even despite a prevailing ‘fear’ and hesitation among government organizations to use Cloud computing connectivity, the Government is a large buyer of IT products and services due to the huge opportunities in its use. It is expected that the IT industry (which is Rs 100 billion in the domestic market) will reach Rs 300 billion by 2020, he said.

India accounts for 10% of world IT-ITES output

India’s Gross Domestic Product (GDP) at current prices is estimated to be $1,855.67 billion, of which computer software/ services production is estimated at $94.38 billion during 2012-13. During the year 2012-13, India’s domestic computer software/ services market was estimated at $19.389 billion, registering a growth of 21.86 per cent over the 2011-12 figure. Out of the total production of computer software/ services, 79.46 per cent is exported and only 20.54 per cent is consumed by the domestic market. Export of computer software/ services (including ITES/ BPO) registered a growth of 24.04 per cent in 2012-13 at $75 billion, compared to $68.021 billion in 2011-12 Export of IT Software/ services registered growth at 27.54 per cent to $56.85 billion during 2013-13 over $50.14 billion in 2011-12. India today, with its English-speaking skilled manpower, high quality of services, very high productivity and a conducive policy environment with strong government support, is the most preferred destination for ITES.

The world software and services market — estimated at $960 billion — is dominated by the USA with a share of 39 per cent, followed by Japan (12 per cent) with India’s share standing at 9.8 per cent during 2012-13. India has been exporting computer software/ services to over 151 countries during the past five years with the USA being the top destination with a share of over 58.25 per cent of its export services ($43.69 billion) in 2012-13.  The UK remains the second top destination for such Indian exports with a share of 19.59 per  cent, with Singapore being third followed by Australia and Germany. The other major countries for India’s software exports during 2012-13 were the Netherlands, the United Arab Emirates, Japan, Canada and Mauritius. Together, the top 10 client countries accounts for 90.44 per cent of India’s total software and services export. The remaining 141 countries account for a share of 9.56 per cent.
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