Information Technology

The information technology (IT) industry has become of the most robust industries in the world. IT, more than any other industry or economic facet, has an increased productivity, particularly in the developed world, and therefore is a key driver of global economic growth. Economies of scale and insatiable demand from both consumers and enterprises characterize this rapidly growing sector. The Information Technology Association of America (ITAA) explains 'information technology' as encompassing all possible aspects of information systems based on computers. Both software development and the hardware involved in the IT industry include everything from computer systems, to the design, implementation, study and development of IT and management systems.

Owing to its easy accessibility and the wide range of IT products available, the demand for IT services has increased substantially over the years. The IT sector has emerged as a major global source of both growth and employment.

Features of the IT Industry at a Glance Economies of scale for the information technology industry are high. The marginal cost of each unit of additional software or hardware is insignificant compared to the value addition that results from it. Unlike other common industries, the IT industry is knowledge-based. Efficient utilization of skilled labor forces in the IT sector can help an economy achieve a rapid pace of economic growth. The IT industry helps many other sectors in the growth process of the economy including the services and manufacturing sectors.

The role of the IT Industry The IT industry can serve as a medium of e-governance, as it assures easy accessibility to information. The use of information technology in the service sector improves operational efficiency and adds to transparency. It also serves as a medium of skill formation.

A wide variety of services come under the domain of the information technology industry. Some of these services are as follows:
Systems

architecture Database design and development Networking Application development Testing Documentation Maintenance and hosting Operational support Security services

Information Technology (IT) industry in India

Information Technology (IT) industry in India is one of the fastest growing industries. Indian IT industry has built up valuable brand equity for itself in the global markets. IT industry in India comprises of software industry and information technology enabled services (ITES), which also includes business process outsourcing (BPO) industry. India is considered as a pioneer in software development and a favorite destination for ITenabled services. The origin of IT industry in India can be traced to 1974, when the mainframe manufacturer, Burroughs, asked its India sales agent, Tata Consultancy Services (TCS), to export programmers for installing system software for a U.S. client. The IT industry originated under unfavorable conditions. Local markets were absent and government policy toward private enterprise was hostile. The industry was begun by Bombaybased conglomerates which entered the business by supplying programmers to global IT firms located overseas.

Market Values at Initial stage in India During that time Indian economy was state-controlled and the state remained hostile to the software industry through the 1970s. Import tariffs were high (135% on hardware and 100% on software) and software was not considered an "industry", so that exporters were ineligible for bank finance. Government policy towards IT sector changed when Rajiv Gandhi became Prime Minister in 1984. His New Computer Policy (NCP-1984) consisted of a package of reduced import tariffs on hardware and software (reduced to 60%), recognition of software exports as a "delicensed industry", i.e., henceforth eligible for bank finance and freed from license-permit raj, permission for foreign firms to set up wholly-owned, export-dedicated units and a project to set up a chain of software parks that would offer infrastructure at below-market costs. These policies laid the foundation for the development of a world-class IT industry in India. Today, Indian IT companies such as Tata Consultancy Services (TCS), Wipro, Infosys, HCL are renowned in the global market for their IT prowess.

major factors which played a key role in India's emergence of IT Indian Education System The Indian education system places strong emphasis on mathematics and science, resulting in a large number of science and engineering graduates. Mastery over quantitative concepts coupled with English proficiency has resulted in a skill set that has enabled India to reap the benefits of the current international demand for IT. High Quality Human Resource Indian programmers are known for their strong technical and analytical skills and their willingness to accommodate clients. India also has one of the largest pools of Englishspeaking professionals. Competitive Costs The cost of software development and other services in India is very competitive as compared to the West. Infrastructure Scenario Indian IT industry has also gained immensely from the availability of a robust infrastructure (telecom, power and roads) in the country.

India is now one of the biggest IT capitals in the modern world. The economic effect of the technologically inclined services sector in Indiaaccounting for 40% of the country's GDP and 30% of export earnings as of 2006, while employing only 25% of its workforceis summarized by Sharma (2006): 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 SEICMM Level 5 Companies. Mumbai too has its share of IT companies that are India's first and largest, like TCS and well established like Reliance , Patni, LnT Infotech, i-Flex, WNS, Shine, Naukri, Jobspert etc. are head-quartered in Mumbai. 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.

INDIA'S IT INDUSTRY (USD BN)

Particulars
IT Services - Exports - Domestic ITES-BPO - Exports - Domestic Engineering services, R&D and Software products - Exports - Domestic

FY 2004
10.4 7.3 3.1 3.4 3.1 0.3 2.9 2.5 0.4

FY 2005
13.5 10 3.5 5.2 4.6 0.6 3.9 3.1 0.7

FY 2006
17.8 13.13 4.5 7.2 6.3 0.9 5.3 4 1.3

FY 2007
23.5 18 5.5 9.5 8.4 1.1 6.5 4.9 1.6

FY 2008
31 23.1 7.9 12.5 10.9 1.6 8.6 6.4 2.4

Hardware
- Exports - Domestic Total IT industry (including hardware)

5
0.5 4.4 21.6

5.9
0.5 5.1 28.4

7
0.6 6.5 37.4

8.5
0.5 8 48

12
0.5 11.5 64

TOP 10 IT HUBS IN INDIA

Ranking City 1 Bangalore Description Popularly known as the capital of the Silicon Valley of India is currently leading in Information Technology Industries in India. It is the Second largest exporter of Software next to Bangalore. It has the largest operations for Indias top software company TCS, Infosys ( has worlds largest development center with 25,000 employers in Mahindra world city at Maraimalainagar, and many centers in IT corridor), and other software companies like Wipro, CTS, Patni, L&T infotech and many companies have major operations in IT corridor, Ambattur and other places in Chennai

Chennai

Hyderabad Hyderabad called as Cyberabad, which has good infrastructure and good government support is also a good technology base in India.The Government of AP Has built a separate township for IT Industry called the HITEC City.

4 5

Pune NCR

Pune, a major industrial point in India. The National Capital Region of India comprising Delhi, Gurgaon, Faridabad, Noida, Greater Noida and Ghaziabad are having ambitious projects and are trying to do every possible thing for this purpose.

Mumbai

Popularly known as the commercial, entertainment, financial capital of India, This is one city that has seen tremendous growth in IT and BPO industry, it recorded 63% growth in 2008.TCS, Patni, LnT Infotech, I-Flex WNS and other companies are headquartered here.

Kolkata

Kolkata is a major IT hub in eastern India. All major IT companies are present here. The city has tremendous potential for growth in this sector with upcoming areas like Rajarhat.

Trivandrum

Trivandrum, the capital of kerala is a green metropolis and tier I city. GOK provides a good platform for IT devolopment in the city with India's largest IT park Technopark and dedicated Technocity SEZs.

9 10

Bhubaneswar Bhubaneshwar largest city of Orissa exports more than 1500 crores. Jaipur This rapidly growing industrial hub houses a lot of IT/ITES and BPO giants. Genpact, Connexions IT services, Deutsche Bank and EXL BPO, Infosyss, Tech Mahindra, and Wipro are here. There are plans to build the largest IT SEZ in India by Mahindra under the Mahindra World City.

IT AND ECONOMIC DEVELOPMENT

The IT has potential to raise the long-term growth prospects through increased productivity in almost every sector of the economy. The resurgence of the American economy since 1995 is a classic example of the same. IT can play an important role in economic development in a broader sense, beyond just economic growth. Obviously, this depends on comparative advantage in providing IT products and services, global demand for these products and services, development of a robust domestic market, positive spillovers to rest of the domestic economy, and impact on governance.

IT, in some sense, is a general-purpose technology (The idea of general purpose technology was introduced by Bresnahan and Trajtenberg (1995)). It can influence the national economy in a number of ways. It can create employment opportunities, reduce illiteracy, provide universal health service, and deliver good governance (through e-governance). IT can not only help the emerging sector such a s ITES,biotechnology, pharmaceutical research, nanotechnology, etc., but also it is crucial for the development of strategically important sectors such as defense and intelligence, space research and development, weather forecasting, and transportation. The information technology can play a major role in overall economic development of the country. India has a comparative advantage in the global IT sector at least in terms of cost. With large pool of workers having software and language skills, it is in a position to move toward producing higher value-added good and services.

Conclusion
The main aim of this paper has been to assess the possible role of IT in broad-based economic development of India. From the analysis, it is clear that the IT has potential of not only accelerating the growth in the Indian economy but also promoting the broad-based economic development. To realize the same, besides standard policy initiatives such as improving infrastructure, strengthening training and education system, and introducing flexible labor laws that affect every sector of the economy including the IT sector, the government needs to take specific measures to promote IT use and to make it accessible to every section of the society.