CLUB XQUIZIT
Presents
INDUSTRY GYAAN
INFORMATION TECHNOLOGY
INDUSTRY
Contents
IT INDUSTRY OVERVIEW IN INDIA ........................................................................................................... 3
CATEGORIES OF IT FIRMS........................................................................................................................ 5
MARKET SIZE ........................................................................................................................................... 7
MARKET SEGMENTS ................................................................................................................................ 8
MARKET PLAYERS .................................................................................................................................... 9
REASONS FOR THE GROWTH OF IT IN INDIA ........................................................................................ 11
FDI IN INDIAN IT INDUSTRY................................................................................................................... 12
IMPACT OF COVID 19 ON IT INDUSTRY................................................................................................. 13
OPPORTUNITIES FOR INDIAN IT ORGANISATIONS................................................................................ 15
CHALLENGES FOR INDIAN IT ORGANISATIONS ..................................................................................... 16
STEPS FORWARD FOR THE FUTURE OF THE IT INDUSTRY .................................................................... 17
KEY TRENDS OF 2022 ............................................................................................................................ 18
REFERENCES .......................................................................................................................................... 19
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IT INDUSTRY OVERVIEW IN INDIA
•
The Information Technology and enabled services has been one of the key driving forces
fuelling the world’s economic growth. The IT sector includes IT services, Business Process
Management, Software products & engineering services and hardware. IT outsourcing is
the strategic use of external service suppliers to efficiently provide IT-related business
process, application service and infrastructure solutions for end-to-end business outcomes
which were conventionally handled by internal resources.
•
Information technology is playing an important role in India today & has transformed
India’s image as a land of innovative entrepreneurs. The IT sector in India is generating 2.5
million direct employments. India is now one of the biggest IT capitals of the modern world
and all the major players in the world IT sector are present in the country.
•
In FY22, the Technology industry employed over 450,000 employees to reach a total direct
employment of 5 million, and contributed 51% to overall services exports. With their
primary focus as digital, the tech industry undertook over 290 M&As. Over 280,000
employees were re-skilled and made digital skilled in FY22. At 30-32% of industry
revenue, digital revenues grew five times the rate of overall services growth.
•
According to National Association of Software and Service Companies (NASSCOM), the
Indian IT industry’s revenue touched US$ 227 billion in FY22, a 15.5% YoY growth.
Gartner forecasts that India's IT expenditure would rise from an estimated US$ 81.89
billion in 2021 to US$ 101.8 billion in 2022.
•
According to a report published by Microsoft, consultancy firm Bain & Co, and industry
body Internet and Mobile Association of India (IAMAI), India produces 16% of the entire
world’s AI talent pool – the third highest in the world.
•
In FY22, the IT sector hired 4.45 lakh additional people, increasing the total number of
workers to 50 lakhs.
•
The computer software and hardware sector in India attracted cumulative foreign direct
investment (FDI) inflows worth US$ 85.51 billion between April 2000-March 2022.
•
SAP India and Microsoft have announced the introduction of TechSaksham, a collaborative
skilling initiative aimed at enabling young women (from underprivileged regions) to pursue
careers in technology. 62,000 women students will be trained in artificial intelligence (AI),
cloud computing, web design and digital marketing.
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•
Infosys announced that it has set up an Automotive Digital Technology and
Innovation Centre in Stuttgart, Germany. Automotive IT infrastructure professionals
stationed in Germany will transfer from Daimler AG to the new Digital Technology and
Innovation Centre as part of Infosys' relationship with Daimler.
•
Bangalore based edtech start-up ‘BygC’ launched India’s first upskilling focused
community platform for young graduates and people seeking jobs in the BFSI sector. Tech
Mahindra Foundation and Wipro GE Healthcare have also joined forces to offer skilling
and upskilling courses to students and healthcare technicians.
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CATEGORIES OF IT FIRMS
Some of the services that IT companies provide have found mention in the section above on
categories of firms. But here’s a list of services that are most sought after:
•
Low-Level Managed IT Services-Most small businesses contract managed IT services.
The most basic are low-level services offered by pure-play managed service providers
(MSPs). These services usually consist of software installation and integration of existing
infrastructure with a new system.
•
Mid-Level Managed IT Services-If you require something more substantial than the
above, consider mid-level managed IT services. These come from a value-added MSP. At
this level, you may also receive some IT planning. Value-added MSPs often offer
scalability planning, which allows you to adapt the service to your changing needs as
your business grows.
•
High-Level Managed IT Services- For greater demands, there are high-level managed
IT services. Along with everything included in a mid-level service, you’ll receive support
for your network, data analytics, and communications. If necessary, the provider can give
you access to a mobile networking system that is accessible from anywhere. You can also
receive in-depth planning at this level.
•
On-Demand IT-An alternative to using an MSP is to receive services on demand. This
allows you to pay on an as-needed basis rather than spend a set amount each month. It can
be a good option for businesses who would prefer to avoid long-term contracts.
•
Hardware Support -In particular, there are some types of IT services that it makes more
sense to outsource on demand. Hardware support usually falls under this category, as it
tends to involve repairs to equipment like computers, laptops, and printers. You can also
use hardware services to get rid of outdated equipment.
•
Software Services-When you outsource software services, the provider will make sure
that your licenses are always current and that your company is complying with end-user
agreements. Contracting these services can actually save you money, especially if you’ve
been in business for a long time. For instance, the provider can locate licenses that you’re
still paying for but not using.
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•
Network Management- Network services begin with the configuration of
infrastructure at your location, including setting up servers, installing firewalls, and
connecting printers. The provider may also implement security measures to prevent
unauthorized logins and to apply two-factor authentication. Some additional services
include making any necessary upgrades to your network and even repairing hardware
related to the network.
•
IT Communications- Communications covers a broad range of services — from data to
voice and video calls. An IT provider can configure your communication systems,
maintain your equipment, and even develop a personalized program just for your
company. Some communications services you may like to receive support for include
Video conferencing, Voice over internet protocol (VoIP), Chatbots, Cloud Services
•
Help Desk- A help desk allows employees to seek support with any IT problem they face,
no matter if it’s hardware or software related. It’s useful to outsource a help desk if you
have no in-house IT professionals. However, you can minimize the need for this service
by providing employees with sufficient training on the tools they need to use.
•
Cybersecurity-The most important IT service of all is cybersecurity. Whereas many of
the above services cover cybersecurity to some degree, if you are at particular risk from
an attack (such as if your company works with sensitive information), it’s worthwhile
receiving this service from a specialist.
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MARKET SIZE
❑ India is the leading sourcing destination across the world, accounting for approximately
55% market share of the US$ 200-250 billion global services sourcing business in 201920.
❑ According to National Association of Software and Service Companies (NASSCOM), the
Indian IT industry’s revenue touched US$ 227 billion in FY22, a 15.5% YoY growth.
❑ According to Gartner estimates, IT spending in India is expected to increase to US$ 101.8
billion in 2022 from an estimated US$ 81.89 billion in 2021.
❑ Indian software product industry is expected to reach US$ 100 billion by 2025. Indian
companies are focusing to invest internationally to expand their global footprint and
enhance their global delivery centers.
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MARKET SEGMENTS
•
IT Services – Include outsourcing of project-oriented services.
•
Business Process Management – BPM includes two dimensions, ie, Horizontal specific
and Vertical specific.
•
Software Products and Engineering Services – Include system software, enterprise
applications, vertical applications and embedded systems.
•
Hardware – Include all the hardware parts of the system.
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MARKET PLAYERS
•
TCS- Tata Consulting Services Ltd. was founded in 1968 by a division of Tata Sons
Limited Tata Consultancy Services Limited (TCS) is the famous Indian Information
technology (IT) services, consulting and business Solutions Company headquartered in
Mumbai. TCS operates in 46 countries throughout the world. TCS is the largest Indian
company by market capital and is the biggest India-based IT services company .TCS is now
placed among the "Big 4" most valuable IT services brands worldwide.
•
Mindtree- Mindtree Limited is an international Information Technology consulting and
implementation company that delivers business solutions through global software
development. The Company offers services in the areas of agile analytics and information
management application development and maintenance business process management
business technology consulting cloud digital business independent testing infrastructure
management services mobility product engineering and SAP services.
•
Infosys- Infosys Ltd is a global technology services firm that defines designs and delivers
information technology (IT)-enabled business solutions to their clients. The company
provides end-to-end business solutions that leverage technology for their clients including
technical consulting design development product engineering maintenance systems
integration
package-enabled
consulting
and
management services.
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implementation
and
infrastructure
•
HCL- HCL Technologies Ltd is a leading global IT services company that helps
global enterprises re-imagine and transform their businesses through Digital technology
transformation. The company is primarily engaged in providing a range of software
services business process outsourcing and infrastructure services.
•
Tech Mahindra-Tech Mahindra Limited is a leading provider of digital transformation
consulting and business re-engineering services and solutions and is a part of the USD 21
Billion Mahindra Group. The Company is a leading provider of consulting-led integrated
portfolio services to customers which are telecom equipment manufacturers telecom
service providers and IT Infrastructure service providers business process outsourcing
service providers as well as enterprise solutions services (BFSI retail & logistics
manufacturing E&U and healthcare life sciences etc.) of Information Technology (IT) and
IT-enabled services (ITe-S) delivered through a network of multiple locations around the
globe.
•
Wipro-Wipro Ltd is India's one of the leading tech-companies providing IT Services
including Business Process Outsourcing (BPO) services globally. The company is the first
PCMM Level 5 and SEI CMM Level 5 certified IT Services Company globally. In the
Indian market they are a leader in providing IT Solutions and Services for the corporate
segment in India offering System Integration Network Integration Software Solutions and
IT Services.
•
L&T Infotech-Larsen & Toubro Infotech Limited (L&T Infotech) is a global technology
consulting and digital solutions companies helping more than 300 clients succeed in a
converging world. It provides the winning edge to the clients by leveraging Business-to-IT
Connect and deeply committed people. L&T Infotech has global presence which includes
23 software development centres and 44 sales offices.
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REASONS FOR THE GROWTH OF IT IN INDIA
•
Supportive government policies- The Government of India (GoI) has taken various
initiatives to promote Information Technology and Information Technology enabled
Services (IT/ ITeS) sector in the country. Some of the initiatives are Software Technology
parks of India (STP) Scheme, Special Economic Zones (SEZs) and Next Generation
Incubation Scheme (NGIS).
•
Rapid introduction of IT technologies in major sectors such as telecom, BFSI and more- IT
has become a major part of all the sectors including telecom, BFSI, consultancy, etc.
•
Availability of technically skilled manpower- The employees have started undergoing skill
development and they are able to comply and qualify for most of the IT industry standards.
The availability of such people has increased over the years which will definitely contribute
towards the growth of the IT sector.
•
Adoption of new technologies like cloud computing, Artificial Intelligence, Big Data, etcIndustry 4.0 technologies provide critical perspectives for future innovation and business
growth. Technologies like Artificial Intelligence (AI), Internet of Things (IoT), Big data,
Machine Learning (ML), and other advanced upcoming technologies are being used to
implement Industry4.0.
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FDI IN INDIAN IT INDUSTRY
India has emerged as the world’s largest BPM destination with the IT-BPM sector having a
staggering share of 45% in the total Indian services export. The sector is the largest employer
within the private sector, employing 4.1 million people. It is, therefore, not surprising that the
government has eased foreign investment policies in order to encourage more FDI in the IT
sector in India.
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IMPACT OF COVID 19 ON IT INDUSTRY
•
Pandemic impact -Most companies already have business continuity plans, but those may
not fully address the fast-moving and unknown variables of an outbreak like COVID-19.
Typical contingency plans are intended to ensure operational effectiveness following
events like natural disasters, cyber incidents and power outages, among others. They don’t
generally take into account the widespread quarantines, extended school closures and added
travel restrictions that may occur in the case of a global health emergency.
•
Social impact - As the entire corporate India is compelled to work from home owing to the
COVID-19 epidemic and adjust to a new style of working life, the Indian IT Industry is in
a similar situation. In the past, several IT workers have used remote working to solve
problems because they are frequently expected to work from different parts of the globe for
their various projects, the IT industry pioneered remote working solutions. Technologies
such as videoconferencing, internet telephony, and instant messengers have aided in
lessening the impact to a certain extent.
•
Cash flow impact -As the majority of industries remain in lockdown, their cash flows have
been seriously impacted, leaving them with little choice but to limit funding to the most
critical regions, while non-essential activities take a back seat. A large number of ongoing
IT contracts have been put on hold and future project awards have been delayed until the
cash flow situation improves. It is also predicted that the scope of work and price points
will be reduced until normal operations resume. Salary is the most significant expense
component in the consulting industry. Reduced cash flow as a result of customer payment
delays has a direct influence on payroll costs. Delays in payroll payments may cause
employee dissatisfaction, which could influence the quality of customer relationship
management and deliverables.
•
Supply chain impact –The bulk of supply chains rely significantly on Chinese
manufacturers, with China topping the list of nations with the biggest industrial production.
However, given the ambiguity surrounding China's participation in the COVID-19
epidemic, firms have recognized the importance of having a varied supplier base. As a
result, other countries should have more opportunity to become alternative supply chain
destinations for these companies. This opens up the possibility of Indian suppliers playing
a larger role in the global supply chain in the future. The IT industry is likely to play a
significant part in this by giving expertise on how to streamline processes. Due to its
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demography and abundant natural resources, India is anticipated to be the most
attractive location for some of the world's major MNCs looking for an alternative to China.
This is a chance for India's consulting industry to profit and assist businesses in achieving
their objectives.
•
Business impact: In the current situation, traditional Indian business houses have been hit
the hardest and are experiencing difficulties managing their operations and financial flows.
Many of these issues will persist after the COVID-19 era. Traditional business houses'
management has begun to see the necessity to improve and build robust systems in order
to deal with similar problems in the future. These enterprises may turn to advisory services
for assistance in turning around their businesses and effectively adapting to a changing,
technology-driven world. In the post-COVID-19 age, organizations will most likely focus
on their main business activities and search for possibilities to rethink their business model.
Companies may choose to spin off or sell non-core company divisions, or outsource noncore elements of the firm, in order to eliminate redundancies and reduce operational costs.
This would undoubtedly present an opportunity for the Indian IT industry in terms of
greater M&A activity and providing corporations with the outsourced services they require.
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OPPORTUNITIES FOR INDIAN IT ORGANISATIONS
•
Relaxation in FDI restrictions: The reduction in foreign direct investment restrictions and
improved structuring of tax laws helped attract investment from international players to
India. This, in turn, created a higher demand for IT services to understand India’s market.
•
Increasing Industrialization: Heavy investment of the government and private players in
the petrochemical, power, and metallurgical industries create a demand for consultancy
services to provide adequate knowledge for the smooth establishment and operations of
such sectors.
•
Government Initiatives: The Government of India (GoI) has taken various initiatives to
promote Information Technology and Information Technology enabled Services (IT/ ITeS)
sector in the country. Some of the initiatives are Software Technology parks of India (STP)
Scheme, Special Economic Zones (SEZs) and Next Generation Incubation Scheme (NGIS).
•
Increasing startup culture: Shift in the mindset of the youth from being a job seeker to
an entrepreneur has created a growing startup culture in the economy. This creates a
demand for all kinds of services like strategy, management, operations, and IT to
understand the market and its needs and provide efficient solutions to fulfil those needs.
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CHALLENGES FOR INDIAN IT ORGANISATIONS
Keeping in mind the differences of the domestic market in India with respect to the Global
market, the major challenges Indian IT Industry usually faces are:
•
Competition and differentiation: The biggest challenge for the Indian IT firms is to
compete with the global players in the market. There is lack of skills in IndiA which
makes it difficult to compete with global players.
•
Adoption of New Organizational design: With increasing globalization of IT firms,
Indian IT sectors need to adopt nea w organizational designs that best suit their contexts
and identities.
•
Outsourcing to India acts as a challenge as well as a driver: Though outsourcing
assists development and globalization, many Indian IT firms find that it restrains their
growth in the outsourced regions.
•
Managing the Knowledge Flows: The firms have the challenge to leverage the
organizational knowledge efficiently so that there would be a proper balance between the
utilization of existing knowledge and the creation of new knowledge.
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STEPS FORWARD FOR THE FUTURE OF THE IT INDUSTRY
The COVID-19 pandemic has left its impact across industries, including the global
management IT industry, which is heavily hit. Recent research reveals that India is expected to
have a digital economy of $1 Trillion by 2025. As businesses adapt to the new post COVID19 reality, here are some steps firms can take to realign their business strategies:
•
India’s digitally skilled pool has grown over the period and accounted for around 75 percent
of global digital talent. India’s four large IT companies (TCS, Infosys, Wipro, HCL Tech)
have employed more than one million employees. New IT-based technologies such as
telemedicine, remote monitoring, etc. are expanding and boosting the demand in the digital
economy.
•
The rollout of fifth-generation (5G) communication technology, growing adoption of
artificial intelligence, Big Data analytics, cloud computing and the Internet of Things (IoT)
will further expand the size of the IT industry in India. As the size of India’s digital
economy is increasing, IT companies are establishing their centers in tier II and tier III
cities which will further enhance the growth and reduce the existing disparities.
•
The IT industry has steadily augmented and accelerated the growth of India. This Industry
absorbs a large pool of Indian skilled human resources which makes the country a global
IT hub. The IT Industry has been instrumental in transforming the whole Indian economic
and governance landscape. India’s IT industry is gaining footsteps in new disruptive
technologies and will play a leading role in the ongoing fourth industrial revolution
globally.
•
The Atmanirbhar Bharat initiative of the current government is bringing big change in the
IT sector. Earlier, the Hardware sector was somehow neglected. Now, focus is also on
building hardware manufacturing in India. The biggest step is to start manufacturing
integrated chips (IC’s) in India, TATA has taken up initiative under atma nirbhar bharat
and the first manufacturing plant is being set up in Tamilnadu.
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KEY TRENDS OF 2022
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REFERENCES
•
https://www.indianchamber.org/sectors/it-ites/
•
https://www.investindia.gov.in/sector/it-bpm
•
https://www.televisory.com/blogs/-/blogs/overview-of-indian-it-and-it-enabled-serviceindustry-and-impact-of-covid-19
•
https://www.ibef.org/industry/indian-it-and-ites-industry-analysispresentation#:~:text=In%202020%2C%20the%20IT%20sector,%2C%20a%2015.5%25%
20YoY%20growth.
•
https://myva360.com/blog/the-11-main-types-of-it-services
•
https://www.google.com/search?q=MARKET+SEGMENTS+OF+IT+INDUSTRY&sxsrf
=ALiCzsbCOuixScQl9_ci_p5Dgq4w_yYV4Q:1662113527260&source=lnms&tbm=isch
&sa=X&ved=2ahUKEwjlmvmy7_X5AhWpwosBHUNRAp0Q_AUoAnoECAEQBA&cs
hid=1662113623103089&biw=1366&bih=615&dpr=1#imgrc=Zf9N6ny4mPnNVM
•
https://cpt.hitbullseye.com/about-tcs.php
•
https://www.business-standard.com/company/mindtree-20581/information/companyhistory
•
https://taxguru.in/corporate-law/govt-initiatives-promote-information-technologyindustry-services.html
•
https://www.pwc.com/us/en/library/covid-19/coronavirus-technology-impact.html
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