IT sector

IT SECTOR - AN OVERVIEW

The computer systems design and related services industry is among the economy's larges largestt and fastes fastestt source sourcess of employ employmen mentt growth growth.. Employ Employment ment increa increased sed by 616,000 over the 1994-2004 period, posting a staggering 8.0-percent annual growth rate. The projected 2004-14 employment increase of 453,000 translates into 1.6 million jobs, and represents a relatively slower annual growth rate of 3.4 percent as productivity increases and offshore outsourcing take their toll. ("Industry output and employment projections to 2014" by Jay M. Berman, Bureau of Labor Statistics) However, the main growth catalyst for this industry is expected to be the persistent evolution of technology and business' constant effort to absorb and integrate these resources to enhance their productivity and expand e xpand their market opportunities. Employment of computer and information systems managers is expected to grow between 18 to 26 percent for all occupations through the year 2014. (Career Guide to Industries 2006-07)

The Indian IT sector is growing rapidly and it has ha s already made its presence felt in all parts of the world. IT has a major role in strengthening the economic and technical foundations of India. Indian professionals p rofessionals are setting up examples of their proficiency in IT, IT, in India as well as abroad. abroad .

The sector can be classified into 4 broad categories - IT Services, Engineering Services, ITES-BPO Services, E Business

IT Services can further be categorized into Information Services (IS) outsourcing,

packaged software support and installation, systems integration, processing services, hardware support and installation and IT training and education.

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Engineering Services include Industrial Design, Mechanical Design, Electronic

System Design (including Chip/Board and Embedded Software Design), Design Validation Testing, Industrialization and Prototyping.

IT Enabled Services are services that use telecom networks or the Internet. For

example, Remote Maintenance, Back Office Operations, Data Processing, Call Centers, Business Process Outsourcing, etc.

E Business (electronic business) is carrying out business on the Internet; it includes

buying and selling, serving customers and collaborating co llaborating with business partners.

Major Trends

Trends in Hiring

The bar chart shows that the recruitment of engineers and IT professionals in the industry is growing at the Compound Annual Rate of 14.5% approximately. approximately.

In the FY06, the direct employment in the IT-ITES IT-ITES sector was 1.3 million people and the indirect employment was 3 million approximately. approximately.







Trends in Salary Hikes Along with abundant growth opportunities, oppo rtunities, IT sector is one of the highest paying sectors. The average increase in salary in IT sector across the levels was around 16% and the average increase in the ITeS BPO sector across the levels was in between 16%-18% Requisites for balanced salaries End to poaching Review of compensation according to the skills Developing talent in-house Entry of talented freshers in the industry

IT: Success Factors

Increasing number of skilled professionals in IT. IT. The demographic factor. Approximately 60% of the population of India lies in the age

group of 15-65. More than half of the population of India is below the age

of 25. So in the future, the number of working people is going to be more than the number of dependants. The vast academic infrastructure of India. In the year 2006, Total Total Enrollment in colleges was 9.3 million and India produced 441,000 Technical graduates. India has the second largest English-speaking workforce in the world.

The Indian IT Industry

The Information Technology (IT) sector in India holds the distinction of advancing the country into the new-age economy e conomy.. The growth momentum attained by b y the overall economy since the late 1990s 1 990s to a great extent can be owed to the IT sector, well supported by a liberalized policy regime with reduction in telecommunication cost and import duties on hardware and software. Perceptible is the transformation







has grown significantly from 1.2% in 1999-2000 to around 4.8% in FY06, and has been estimated to cross 5% in FY07. The sector has been growing at an annual rate of 28% per annum since FY01. Indian IT companies have globally established their superiority in terms of cost advantage, availability of skilled manpower and the quality of services. They have been enhancing their global service delivery capabilities through a combination of organic and inorganic growth initiatives. Global giants like Microsoft, SAP, Oracle, Lenovo have already established their captive centers in India. These companies recognize the advantage India offers and the fact that it is among the fastest growing IT markets in the Asia-Pacific region.

Sector structure/Market size

The Indian information technology industry has played a key role in putting India on the global map. Thanks to the success of the IT industry, industry, India is now a power to reckon with. According to the National Association of Software and Service Companies (NASSCOM), the apex body bod y for software services in India, the revenue of the information technology sector has risen from 1.2 per cent of the gross domestic product (GDP) in FY 1997-98 to an estimated e stimated 5.8 per cent in FY 2008-09. India's IT growth in the world is primarily dominated by IT software and services such as Custom Application Development and Maintenance (CADM), System Integration, IT Consulting, Application Management, Infrastructure Management Services, Software testing, Service-oriented architecture and Web services. The government expects the exports turnover to touch US$ 80 billion by 2011, growing at an annual rate of 30 per cent per p er annum, from the earlier few million







As per NASSCOM's latest findings: •

Indian IT-BPO IT-BPO sector grew by 12 per cent ce nt in FY 2009 to reach US$ 71.7 71 .7 billion in aggregate revenue (including hardware). Of this, the software and services segment accounted for US$ 59.6 billion.

•

IT-BPO exports (including hardware exports) grew by 16 per cent from US$ 40.9 billion in FY 2007-08 to US$ 47.3 billion in FY 2008-09.

Moreover, according to a study by Springboard Research, the Indian IT services market is estimated to remain the fastest growing in the Asia-Pacific region with a CAGR of 18.6 per cent. Despite the uncertainty in the global economy eco nomy,, the top three IT majors— Infosys, TCS and Wipro—have seen revenue growth from all important sources of income: from the North American and European regions, in the financial services vertical and from application maintenance and an d development (ADM) offerings between fiscal years 2008 and 2009.

India’s IT Industry (US$ bn)







Outsourcing

A research by Gartner forecasts India as the undisputed leader in the outsourcing space in the year 2008. India's most prized resource is its readily available technical work force. India has the second largest English-speaking scientific professionals in the world, second only to the US. It is estimated that India has over 4 million technical workers, over 1,832 educational institutions and polytechnics, which train more than 67,785 computer co mputer software professionals every year. year. The enormous base of skilled manpower is a major draw for global customers. According to NASSCOM software and services exports (including exports of IT services, BPO, engineering services and R&D and software products) reached US$ 47 billion in FY 2008-09, contributing nearly 78 per cent to the total software and









Domestic Markets

India's domestic market has also become a force to reckon with, as the existing e xisting IT infrastructure evolves both in terms of technology and depth of penetration. According to NASSCOM, domestic IT market (including hardware) reached US$ 24.3 billion in FY 2008-09 as against US$ 23.1 billion in FY 2007-08, a growth of 5.3 per cent. India Inc's demand for IT services and products has ha s bolstered growth in the domestic sector with deal sizes going up remarkably re markably and contracts worth US$ 50 million-US$ 100 million up for grabs. Such growth in the software and services sector has been achieved because of spectacular growths in some segments. According to research firm Gartner, India's personal computer (PC) market is likely to grow by b y 13.7 per cent to 11.1 million units in 2009, aided by b y a surge in demand for laptops. The laptop market is expected to grow by 37 per cent in 2009 to 3.69 million units and constitute a third of the total PC market. Rural Penetration







•

The government set up the National Taskforce on Information Technology and Software Development with the objective ob jective of framing a long term National IT Policy for the country.

•

Enactment of the Information Technology Technology Act, which provides a legal framework to facilitate electronic commerce and electronic transactions.

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The government-led National e-Governance Program, has played an important role in increasing internet penetration in rural India.

Road Ahead

The Indian information technology sector continues to be one of the sunshine sectors of the Indian economy showing rapid growth and promise. According to a report prepared by McKinsey for NASSCOM, the exports component of the Indian industry is expected to reach US$ 175 billion in revenue by 2020. The domestic component will contribute US$ 50 billion in revenue by 2020. Together, the export and domestic markets are likely to bring b ring in US$ 225 billion in revenue, revenu e, as new opportunities emerge in areas such as public sector and healthcare, and as geographies including BRIC and Japan opt for greater outsourcing.

Scope of IT Industry in India







companies have brought down the employee attrition rates, thereby providing more stability to the employees and increasing their job commitment.

Many financial institutions are providing funds for the expansion o f IT and ITeS ITeS businesses. In order to support IT and ITES, the Indian Government is also taking many steps. For example: 1. The Govt. has provided incentives including tax holiday up to 2010 and competitive duty structures. 2. The Govt. is trying to reduce the international communication cost. 3. It is providing infrastructure support through organizations such as software technology parks. All these factors collectively create a number of opp ortunities in the IT sector. sector.

Future of Information Technology

IT will continue to gain momentum; telecom and wireless will follow the trend. The immense expansion in networking technologies is expected to continue into the next decade also. IT will bring about a drastic improvement in the quality of life as it impacts application domains and a nd global competitiveness. Technologies that are emerging are Data Warehousing and Data Mining. They involve collecting data to













5.

IBM

6.

Satyam

7.

HCL

8.

Patni

9.

Polaris

10.

Cisco

11

KPIT Cummins

12

Kanbay

13

Microsoft

14

Dell

15

Larsen and Toubro

16

Compare InfoBase

17

Accenture

18

I-Flex Solutions

19

Cognizant

20

Sapient

21

Mphasis

SWOT ANALYSIS









Strengths •

Highly skilled human resource

•

Low wage structure

•

Quality of work

•

Initiatives taken by the

Weaknesses

• Absence of practical knowledge • Dearth of suitable suitable candidates • Less Research and Development

Government (setting up Hi-Tech Hi-Tech

•

Parks and implementation of e-

• Contribution of IT sector to India’s GDP

governance projects)

is still rather small.

Many global players have set-up operations in India like Microsoft, Oracle, Adobe, etc.

•

Following Quality Standards such as ISO 9000, SEI CMM etc.

•

English-speaking professionals Cost competitiveness

• Employee salaries in IT sector are increasing tremendously. tremendously. Low wages benefit will soon come to an end.







IT sector

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