IT

INDUSTRIES
IN INDIA
SUBMITTED BY:- SNEHAL U. WAKODIKAR
The Indian information technology (IT) industry has played a major role in placing
India on the international map. The industry is mainly governed by IT software and
facilities for instance System Integration, Software experiments, Custom Application
Development and Maintenance (CADM), network services and IT Solutions.
According to Nasscom's findings Indian IT-BPO industry expanded by 12% during
the Fiscal year 2009 and attained aggregate returns of US$ 71.6 billion. Out of the
derived revenue US$ 59.6 billion was solely earned by the software and services
division. Moreover, the industry witnessed an increase of around US$ 7 million in FY
2008-09 i.e. US$ 47.3 billion against US$ 40.9 billion accrued in FY 2008-09

IT Outsourcing in India
As per NASSCOM, IT exports in business process outsourcing (BPO) services
attained revenues of US$ 48 billion in FY 2008-09 and accounted for more than 77%
of the entire software and services income. Over the years India has been the most
favourable outsourcing hub for firm on a lookout to offshore their IT operations. The
factors behind India being a preferred destination are its reasonably priced labour,
favourable business ambiance and availability of expert workforce. Considering its
escalating growth, IBM has plans to increase its business process outsourcing
(BPO) functions in India besides employing 5,000 workforces to assist its growth.

In the next few years, the industry is all set to witness some multi-million dollar
agreements namely:

• A 5 year agreement between HCL Technologies and News Corp for

administering its information centers and IT services in UK. As per the
industry analysts, the pact is estimated to be in the range of US$ 200-US$
250 million
• US$ 50 million agreement between HCL Technologies and Meggitt, UK-based
security apparatus manufacturer, for offering engineering facilities.
• Global giant Walmart has short listed there Indian IT dealers namely
Cognizant Technology Solutions, UST Global and Infosys Technologies for a
contract worth US$ 600 million

India's domestic IT Market

India's domestic IT Market over the years has become one of the major driving
forces of the industry. The domestic IT infrastructure is developing contexts of
technology and intensity of penetration.

In the FY 2008-09, the domestic IT sector attained revenues worth US$ 24.3 billion
as compared to US$ 23.1 billion in FY 2007-08, registering a growth of 5.4%.
Moreover, the increasing demand for IT services and goods by India Inc has
strengthened the expansion of the domestic market with agreements worth rising up
extraordinarily to US$ 100 million. By the FY 2012, the domestic sector is estimated
to expand to US$ 1.7 billion against the existing from US$ 1 billion.

Government initiative in India's domestic IT Market

 • The Indian government has established a National Taskforce on IT with an
aim of formatting a durable National IT Policy for India
• Endorsement of the IT Act, which offers an authorized structure to assist
electronic trade and electronic operations.

Major investments in India's domestic IT Market

• According to Andhra Pradesh Government the state's SEZs and Software

Technology Parks of India (STPI) will witness an investment of US$ 3.27
billion in the next few years.
• VMware Inc, San Francisco-based IT firm is looking forward to invest US$
100 million by 2010 in India.
• EMC Corporation's total Indian assets is expected to reach US$ 2 billion by
2014

Future of Indian IT Industry

The Indian IT sector persists to be one of the flourishing sectors of Indian financial
system indicating a speedy expansion in the coming years. As per NASSCOM, the
Indian IT exports are anticipated to attain US$ 175 billion by 2020 out of which the
domestic sector will account for US$ 50 billion in earnings.

In total the export and domestic IT sector are expected to attain profits amounting to
US$ 225 billion along with new prospects from BRIC nations and Japan for its
outsourcing operations.

Last Updated on 15 March 2010

Software Companies in India

• Aditya Technologies Pvt Ltd

• Asset Infotech Ltd
• Atari Informatics Ltd
• Baan Info Systems India P Ltd
• HCL Infosystems Ltd
• Hexaware Technologies Ltd
• Iflex Solutions Ltd
• Igate Global Solutions Ltd
• Infosys Technologies Ltd
• Larsen & Toubro Ltd
• Mastek Ltd
• NIIT Ltd
• IBM India
• Aftek
• Nucleus Software
• Vakrangee Softwares
• Cybertech Systems
• Eonour Technologies Ltd
• Patni Computer Systems (P) Ltd
• Polaris Software Lab Ltd

• B-commerce Infosystems Pvt Ltd

• Cerulean Information Tech. Pvt Ltd
• CMC Ltd
• CMS Computers
• HCL Corporation Ltd
• Satyam Computer Services Ltd
• Tata Consultancy Services
• Tata Infotech Ltd
• Wipro Ltd
• Cranes Software
• Geometric Software Solution
• Computech International
• Encore Software
• DSQ Software
• Digital Globalsoft
• Danlaw Technologies
 India IT Software and Services Industry

US$ billion

Bolstered with such a significant, technically sound resource base, the

software industry has grown unimpeded. With a compounded annual growth
rate of more than 50% between 1992 and 2001, the Indian software sector
has expanded almost twice as quickly as the world-leading U.S. software
industry did during the same period, although from a smaller base.
India’s software industry statistics illustrate the massive strides achieved by
this sector and the opportunities the future holds. According to NASSCOM’s
estimates for the fiscal year 2000-01, the country’s software industry is worth
$8.26 billion, up from $100 million ten years ago. A study conducted by
renowned consultancy firm McKinsey and Co., for NASSCOM, has proven
why India is becoming the off-shore software development out-source’s
destination of choice. According to the NASSCOM-McKinsey study, the Indian
software industry is expected to gross US$50 billion in exports in 2008! This is
based on an average growth rate of 35 percent per year. The industry is well
placed to achieve this target.
 Software Export as a percentage of India’s Total Export

While the industry has been growing at above average growth rates, software
development activity is not confined to a few cities in India. Software development
hotspots, such as Bangalore, Hyderabad, Mumbai, Pune, Chennai, Calcutta, Delhi-
Noida-Gurgaon belt, Vadodara, Bhubaneswar, Ahmedabad, Goa, Chandigarh,
Trivandrum are all developing quickly. They boast state-of-the-art software facilities
and the presence of a large number of overseas vendors. A large part of India’s
success in the software sector is due to the crucial role played by the State of
Karnataka in promoting and providing a boost to IT. Karnataka has emerged as the
computer capital and center of high-tech industries, especially software. Bangalore
has for long been known as India’s answer to Silicon Valley, and this is the city
where most large software companies have set up shop and operate out of state-of-
the-art facilities. The Government of Karnataka has also been extremely positive
about the software and services marketplace and has helped create the relevant
telecom and policy infrastructure conducive to the growth of this sector.

The dynamic industrial policy declared in 1996, with comprehensive packages

of incentives and concessions, has ensured a productive ground for various
industries. The hardware and software industries have now brought about a
revolution of sorts under these schemes. Various institutions and computer training
centers have contributed to the large number of trained and talented professionals.

The City of Bangalore has positioned itself to help market the software industry. This
is also why Bangalore has been playing host to international-class conferences,
workshops and exhibitions devoted to the software cause.

In fact, the “Technopolis” of India will be holding one of the largest IT events this
year, for the fourth consecutive time — Bangalore IT.COM 2001, Conference and
Tradeshow.
Under one sprawling banner, over a short but intensive span of five days, Bangalore
will see over 500 IT and Telecom giants from all over the world. There will be over
75,000 business visitors, plus corporate buyers, decision
makers, visionaries and technology gurus converging from key international markets
across the U.S., Europe, India and Southeast Asia. This year’s Bangalore IT.COM
will also feature a unique “Global Buyer-Seller Meet”, a forum for generating
business leads, structured networking and pre-fixed meetings for international and
domestic outsourcing partners.

In addition, the visitors can experience Bangalore’s hi-tech climate. The city has the
highest number of engineering colleges in the world, almost 50 percent of the world’s
SEI CMM Level 5 companies, COPC/ISO recognized Customer Interaction Centers,
and over 103 R&D Institutions. It is, in fact, home to GE’s biggest R&D Center
outside the U.S.—the Jack Welch Technology Center, which hires over 200
PhDs/scientists every month! To top it all, Bangalore has just been ranked the fourth
best “Global hub of technological innovation” by none other than the United Nations.
The Indian Information Technology industry accounts for a 5.9% of the country's
GDP and export earnings as of 2009, while providing employment to a significant
number of its tertiary sector workforce. More than 2.3 million people are employed in
the sector either directly or indirectly, making it one of the biggest job creators in
India and a mainstay of the national economy. In March 2009, annual revenues from
outsourcing operations in India amounted to US$60 billion and this is expected to
increase to US$225 billion by 2020. The most prominent IT hub is IT capital
Bangalore. The other emerging destinations are Chennai, Hyderabad, Mumbai,
Pune, NCR, Jaipur and Kolkata. Technically proficient immigrants from India sought
jobs in the western world from the 1950s onwards as India's education system
produced more engineers than its industry could absorb. India's growing stature in
the information age enabled it to form close ties with both the United States of
America and the European Union.

India's IT Services industry was born in Mumbai in 1967 with the establishment of
Tata Group in partnership with Burroughs.[1] The first software export zone SEEPZ
was set up here way back in 1973, the old avatar of the modern day IT park. More
than 80 percent of the country's software exports happened out of SEEPZ in 80s.[2]

Each year India produces roughly 500,000 engineers in the country, out of them only
25% to 30% possessed both technical competency and English language skills,
although 12% of India's population can speak in English. India developed a number
of outsourcing companies specializing in customer support via Internet or telephone
connections. By 2009, India also has a total of 37,160,000 telephone lines in use, a
total of 506,040,000 mobile phone connections, a total of 81,000,000 Internet users
—comprising 7.0% of the country's population,and 7,570,000 people in the country
have access to broadband Internet— making it the 12th largest country in the world
in terms of broadband Internet users. Total fixed-line and wireless subscribers
reached 543.20 million as of November, 2009.

Formative years (till 1991)

The Indian Government acquired the EVS EM computers from the Soviet Union,
which were used in large companies and research laboratories. In 1968 Tata
Consultancy Services—established in SEEPZ, Mumbai[1] by the Tata Group—were
the country's largest software producers during the 1960s. As an outcome of the
various policies of Jawaharlal Nehru (office: 15 August 1947 – 27 May 1964) the
economically beleaguered country was able to build a large scientific workforce,
second in numbers only to that of the United States of America and the Soviet Union.
On 18 August 1951 the minister of education Maulana Abul Kalam Azad,
inaugurated the Indian Institute of Technology at Kharagpur in West Bengal.
Possibly modeled after the Massachusetts Institute of Technology these institutions
were conceived by a 22 member committee of scholars and entrepreneurs under the
chairmanship of N. R. Sarkar.
Relaxed immigration laws in the United States of America (1965) attracted a number
of skilled Indian professionals aiming for research. By 1960 as many as 10,000
Indians were estimated to have settled in the US. Kapur (2006)By the 1980s a
number of engineers from India were seeking employment in other countries. In
response, the Indian companies realigned wages to retain their experienced staff.

The United States’ technological lead was driven in no small part by the brain power
of brilliant immigrants, many of whom came from India. The inestimable contributions
of thousands of highly trained Indian migrants in every area of American scientific
and technological achievement culminated with the information technology revolution
most associated with California’s Silicon Valley in the 1980s and 1990s.[11]

The National Informatics Centre was established in March 1975. The inception of
The Computer Maintenance Company (CMC) followed in October 1976. Between
1977-1980 the country's Information Technology companies Tata Infotech, Patni
Computer Systems, and Wipro, had become visible. The 'microchip revolution' of the
1980s had convinced both Indira Gandhi and her successor Rajiv Gandhi that
electronics and telecommunications were vital to India's growth and development.
MTNL underwent technological improvements. Between 1986-1987, the Indian
government embarked upon the creation of three wide-area computer networking
schemes: INDONET (intended to serve the IBM mainframes in India), NICNET (the
network for India's National Informatics Centre), and the academic research oriented
Education and Research Network (ERNET).

1991–2001

Regulated VSAT links became visible in 1985. Desai (2006) describes the steps
taken to relax regulations on linking in 1991:

In 1991 the Department of Electronics broke this impasse, creating a corporation

called Software Technology Parks of India (STPI) that, being owned by the
government, could provide VSAT communications without breaching its monopoly.
STPI set up software technology parks in different cities, each of which provided
satellite links to be used by firms; the local link was a wireless radio link. In 1993 the
government began to allow individual companies their own dedicated links, which
allowed work done in India to be transmitted abroad directly. Indian firms soon
convinced their American customers that a satellite link was as reliable as a team of
programmers working in the clients’ office.

Videsh Sanchar Nigam Limited (VSNL) introduced Gateway Electronic Mail Service
in 1991, the 64 kbit/s leased line service in 1992, and commercial Internet access on
a visible scale in 1992. Election results were displayed via National Informatics
Centre's NICNET.

The Indian economy underwent economic reforms in 1991, leading to a new era of
globalization and international economic integration. Economic growth of over 6%
annually was seen between 1993-2002. The economic reforms were driven in part
by significant the internet usage in the country. The new administration under Atal
Bihari Vajpayee—which placed the development of Information Technology among
its top five priorities— formed the Indian National Task Force on Information
Technology and Software Development.

Wolcott & Goodman (2003) report on the role of the Indian National Task Force on
Information Technology and Software Development:

Within 90 days of its establishment, the Task Force produced an extensive

background report on the state of technology in India and an IT Action Plan with 108
recommendations. The Task Force could act quickly because it built upon the
experience and frustrations of state governments, central government agencies,
universities, and the software industry. Much of what it proposed was also consistent
with the thinking and recommendations of international bodies like the World Trade
Organization (WTO), International Telecommunications Union (ITU), and World
Bank. In addition, the Task Force incorporated the experiences of Singapore and
other nations, which implemented similar programs. It was less a task of invention
than of sparking action on a consensus that had already evolved within the
networking community and government.

The New Telecommunications Policy, 1999 (NTP 1999) helped further liberalize
India's telecommunications sector. The Information Technology Act 2000 created
legal procedures for electronic transactions and e-commerce.

Throughout the 1990s, another wave of Indian professionals entered the United
States. The number of Indian Americans reached 1.7 million by 2000. This
immigration consisted largely of highly educated technologically proficient workers.
Within the United States, Indians fared well in science, engineering, and
management. Graduates from the Indian Institutes of Technology (IIT) became
known for their technical skills. The success of Information Technology in India not
only had economic repercussions but also had far-reaching political consequences.
India's reputation both as a source and a destination for skilled workforce helped it
improve its relations with a number of world economies. The relationship between
economy and technology—valued in the western world—facilitated the growth of an
entrepreneurial class of immigrant Indians, which further helped aid in promoting
technology-driven growth.

2001–present
Infosys Media Centre in Bangalore.

Millenium Tower in Kolkata, Salt Lake Sector-5, a mojor IT hub in the city.

Tidel Park—one of the largest software parks in Asia—was set up on the July 4,
2000 in Chennai, to aid the growth of Information Technology in Tamil Nadu.

Cyber Towers at Hitech City in Hyderbad

Patni Knowledge Park, Airoli, Navi Mumbai

Cognizant's Delivery Center in Pune

India is now one of the biggest IT capitals in the modern world.

The economic effect of the technologically inclined services sector in India—

accounting for 40% of the country's GDP and 30% of export earnings as of 2006,
while employing only 25% of its workforce—is summarized by Sharma (2006):

The share of IT (mainly software) in total exports increased from 1 percent in 1990 to
18 percent in 2001. IT-enabled services such as backoffice operations, remote
maintenance, accounting, public call centers, medical transcription, insurance claims,
and other bulk processing are rapidly expanding. Indian companies such as TCS,
Wipro, and Infosys may yet become household names around the world.

Today, Bangalore is known as the Silicon Valley of India and contributes 33% of
Indian IT Exports. India's second and third largest software companies are head-
quartered in Bangalore, as are many of the global SEI-CMM Level 5 Companies.

And Mumbai too has its share of IT companies once that are established as well as
start-ups, and these include Reliance, TCS, Patni, LnT Infotech, i-Flex, WNS, Shine,
Naukri, Jobspert etc. and these IT and dot com companies are ruling the roost of
Mumbai's relatively high octane industry of Information Technology.

Such is the growth in investment and outsourcing, it was revealed that Cap Gemini
will soon have more staff in India than it does in its home market of France with
21,000 personnel+ in India.[12]

On 25 June 2002 India and the European Union agreed to bilateral cooperation in
the field of science and technology. A joint EU-India group of scholars was formed
on 23 November 2001 to further promote joint research and development. India
holds observer status at CERN while a joint India-EU Software Education and
Development Center is due at Bangalore.

India's IT industry (USD bn) [Source:NASSCOM]

Particulars FY 2004 FY 2005 FY 2006 FY 2007E

IT Services 10.4 13.5 17.8 23.7

- Exports 7.3 10.0 13.13 18.1

- Domestic 3.1 3.5 4.5 5.6

ITES-BPO 3.4 5.2 7.2 9.5

- Exports 3.1 4.6 6.3 8.3

- Domestic 0.3 0.6 0.9 1.2

Engineering services, R&D and Software

2.9 3.9 5.3 6.5
products

- Exports 2.5 3.1 4.0 4.9

- Domestic 0.4 0.7 1.3 1.6

Hardware 5.0 5.9 7.0 8.2

Total IT industry 21.6 28.4 37.4 47.8

- Exports 13.4 18.2 24.1 31.9

- Domestic 8.3 10.2 13.2 15.9

Top Seven IT Hubs in India

Ranking City/Region Description

Popularly known as the capital of the Silicon Valley of India is
1 Bangalore
currently leading in Information Technology Industries in India.
It is also called as India's second silicon valley. With better
2 Chennai infrastructure and manpower Chennai is likely to beat
Bangalore out of its title in the coming years.
Hyderabad which has good infrastructure and good
3 Hyderabad government support is also a good technology base in
India.tuated.
Pune, a major industrial town, hosts numerous multinational
and national software giants along with BPO and KPO firms.
4 Pune World class SEZs like Hinjawadi IT park and Magarpatta city
give Pune a distinct advantage. The city is a major educational
hub and churns out thousands of technocrats every year.
Kolkata which is slowly becoming a major IT hub in near
5 Kolkata future. Some of the well known technological corporations are
si
The National Capital Region of India comprising Delhi,
Gurgaon, Faridabad, Noida, Greater Noida and Ghaziabad are
6 NCR
having ambitious projects and are trying to do every possible
thing for this purpose.
Popularly known as the commercial, entertainment, financial
capital of India, This is one city that has seen tremendous
7 Mumbai growth in IT and BPO industry, it recored 63% growth in 2008.
[13]
TCS, Patni, LnT Infotech, I-Flex WNS and other companies
are headquartered here.