Annexure I
Electronics and Computer Software Export Promotion Council
( ESC ) , New Delhi
IT Software & Services Industry in India – an Overview
Introduction
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. With a small beginning in early
Eighty’s, it has now grown into a broad based comprehensive industry.
The Government of India has announced promotion of IT as one of the five priorities
of the country. India has embarked on a policy agenda, which aims to restructure its
economy with enhanced global participation. The Foreign Direct Investment (FDI)
to supplement domestic investment for achieving a quantum jump in growth rate is
now an integral part of Government of India policy initiatives. Imparting greater
transparency to business procedures and integration with the global market place
are seen as the hallmark of new industrial, trade and fiscal policies.
Today, India’s competence in IT, more significantly in computer software and
information technology enabled services is recognised globally.
Indian IT firms and IT professionals have won world-wide recognition in terms of
their technical competence, domain knowledge, experience and expertise for
offering quality IT services, and their exposure to working on various platforms and
systems.
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Presence of Global IT players in India
There are a large number of multi-national IT enterprises operating in India in
sectors such as: Integrated Chip Design, System Software, Communication
Software, R&D Centres, Technology Support Sector, Captive Support Sector, BPO
Sector etc reaping the cost and quality advantages.
These multinationals include Siemens, Philips, Intel, Texas Instruments etc. (Chip
Design);
Siemens,
Motorola,
Lucent
Technologies,
Sony,
Nortel
etc.
(Communication Software); Microsoft, Oracle, Sun Microsystems, HP, Compaq etc.
(Systems Software); Google, Yahoo etc. (R&D Centres); Axa Business Services,
Swiss Shared Services, Siemens Shared Services etc. (BPO Sector); Accenture, DELL,
HSBC, GE Capital, Fidelity etc. (Captive Support Sector).
Spectrum of IT Services / ITES from India
India has already established her brand equity in the global IT market. Indian IT
software and services firms offer software products/packages; a wide spectrum of
IT services including system management and maintenance, consultancy services,
system integration, chip design, E-Goverence, E-Commerce, IT enabled services
covering banking/financial/insurance sector. Their IT enabled services also include
CAD/CAM, multimedia, animation work, BPO (Business Process Outsourcing)
assignments, Call centre related assignments, as well as Knowledge Process
Outsourcing (KPO) / Legal Process Outsourcing (LPO), medical lab, diagnostic and
dental services, medical transcription services, e-publishing including data
conversion or digitization, type-setting, copy-editing, content and design, graphics
etc.
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India’s Global IT Software Services Exports
The numbers in the following tables give the story:
TABLE-I
GROWTH IN EXPORTS OF
COMPUTER SOFTWARE & SERVICES (INCLUDING ITES)
2002-2003 TO 2007-2008
175000
175000
146000
150000
105000
125000
100000
75000
77300
US$ Mln.
58000
46500
50000
25000
33757
23718
9607
12609
43467
Rs. Cr.
17216
0
2002-03
2003-2004
2004-05
2005-06
2006-07
2007-08
YEAR
Annual Growth rate during 2001-02 to 2007-08
:
Rupee term
US$ term
=
=
30.35%
35.24%
MAJOR DESTINATIONS OF EXPORTS
FOR COMPUTER SOFTWARE / SERVICES
DURING 2007-2008
2.14%
1.60%
2.00%
2.50%
NORTH AMERICA (62.00)
2.00%
EUROPE (EU COUNT.) (26.50)
0.77%
26.50%
0.35%
0.14%
JAPAN, KOREA & F.E.(2.50)
SGP,HKG & S.A. (2.14)
MIDDLE EAST (1.60)
EUROPE (NON EU COUNT)(2.00)
AUSTRALIA & OCEANIC (2.00)
AFRICAN COUNTRIES (0.77)
LATIN AMERICA (0.35)
RUSSIA & C.I.S. COUNTRIES (0.14)
62.00%
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India’s IT Exports to EU countries
A peep at India’s exports to EU countries reveals that India’s export of IT software
and services during 2007-08 touched a level of US $ 11.518 billion i.e. 26.50 per cent
of India’s total IT software / services exports to the world market. India’s IT exports
to major EU countries during 2007-08 were as under:
India’s IT Export to EU Countries
TABLE – III
Country
United Kingdom
Netherlands
German F Rep
Belgium
Finland
France
Ireland
Sweden
Denmark
Spain
Italy
Austria
Greece
Portugal
Luxemburg
Others
Grand Total
Computer
Software/Services
2006-07
US$ Million
6474.53
580.65
526.20
319.32
283.95
240.71
223.60
156.48
107.73
67.62
32.82
14.40
6.14
3.31
1.13
75.86
Computer
Software/Services
2007-08
US$ Million
6668.59
916.17
1173.31
246.46
205.35
233.95
94.99
88.76
96.42
282.85
104.40
99.87
19.92
6.27
12.65
1269
9114.45
11518.88
Manpower and Costs
Over 1,20,000 IT professionals are being trained and added to the talent pool every
year as compared to 25,000 IT professionals in the USA. 62% of the Indian technical
work force has more than 4 years of experience; over 70% have engineering
degrees/ technical background. According to McKinsey Study, fully loaded
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costs for offshore work in India are 30-50% lower than those in the
USA or Europe.
Advantage India
India today enjoys a comfortable position to meet the global requirements because
of the following:
 Two million students graduate each year
 122,000 Engineers pass out every year
 Indian manpower is English speaking and IT savvy
 Cost reduction upto 50 per cent
 Wage differential
 Lower infrastructure costs
 Favourable time lag:12 hours with US & 5 hours with Europe
 Overnight turnarounds possible
 Comparatively low rate of attrition
 Resources with experience of industrial, financial and legal systems similar to
the west
 Strong domestic IT services industry to support IT led BPO
 Largest pool of SEI CMM companies worldwide
Quality Certified Companies
Quality Certification
 SEI-CMM Level 5 Certification
(68 % of the worldwide certified
companies are in India)
 Already acquired ISO 9000 or
SEI Level 2 or equivalent
certification
No. of Companies
80
(Total: 117)
300
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Central and State Government Initiatives to
Promote IT Production and Export from India
In order to promote domestic investment, foreign direct investment, transfer of
technology / process know-how, technical collaboration, joint venture etc in India
and export IT software products and services from India to the global market, both
Government of India and State Governments in India are offering a series of policy
packages including tax breaks, import duty concessions etc under various schemes
which include:

Export Oriented Units (EOUs) Scheme

Electronics Hardware Technology Parks (EHTPs)

Software Technology Parks (STPs)

Special Economic Zone (SEZ) Scheme
The aggregate domestic IT market demand curve is now in an upward swing, and
consequently, the Indian IT industry is gearing itself up and the flow of foreign
direct investors to India in the IT sector is increasing fast not only to take care of the
fast expanding Indian domestic IT market demand, but also to position themselves
strategically in the Indian sub-continent to foray into the emerging markets in the
Asia Pacific region, SAARC and Central Asian markets.
It is reported that the Indian telecom and IT sector is stated to witness investments
worth US$ 20 billion by 2010 with commitments of US$ 17 billion already available.
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