March 3, 2011 in Investment Sectors by admin
INFORMATION TECHNOLOGY
Information technology and electronics are still the fastest growing segment in India, both in terms of production and exports. With complete delicensing of the electronics industry with the exception of aerospace and defence electronics, and alongwith the liberalization in foreign investment and export-import policies of the entire economy, this sector is not only attracting significant attention as an enormous market but also as a potential production base by international companies.
High offshore component of delivery and superior execution in multi-location delivery continue to be key differentiators. Broad-based industry structure includes- IT led by large Indian firms, BPO by a mix of Indian and MNC third-party providers and captives, reflects the depth of the supply-base. While the larger players continue to lead growth, gradually increasing their share in the industry aggregate; several high-performing Small and Medium Enterprises (SMEs) also stand out.
With a large pool of skilled manpower-chartered accountants, doctors, MBAs, lawyers, research analysts-India would be able to add value to the global KPO business and its high-end processes like valuation research, investment research, patent filing, legal and insurance claims processing, online teaching, media content supply, among others. Skilled manpower and multi lingual capabilities combined with the advantages of lower costs can help the country to emerge as a frontrunner in KPO, globally. Increasing adoption of technology in the domestic industries is already beginning to reflect in their enhanced performance and competitiveness.
As a proportion of national GDP, the sector revenues have grown from 1.2 per cent in FY1998 to an estimated 5.8 per cent in FY2009. Net value-added by this sector, to the economy, is estimated at 3.5-4.1 per cent for FY2009.
The Indian IT-BPO sector has built a strong reputation for its high standards of service quality and information security – which has been acknowledged globally and has helped enhance buyer confidence. The industry continues its drive to set global benchmarks in quality and information security through a combination of provider and industry-level initiatives and at strengthening the overall frameworks, creating greater awareness and facilitating wider adoption of standards and best practices. The Data Security Council of India (DSCI) was launched in 2007 to institutionalize efforts to further enhance the information security environment in India.
Indian IT-BPO grew by 12 per cent in FY 2009 to reach US$ 71.7 billion in aggregate revenue. Software and services exports (includes exports of IT services, BPO, Engineering Services and R&D and Software products) reached US$ 47 billion, contributing nearly 66 per cent to the overall IT-BPO revenue aggregate. IT-BPO exports (including hardware exports) reached US$ 47.3 billion in FY 2009 as against US$ 40.9 billion in FY 2008, a growth of 16 per cent.
-In FY 2009, domestic market (including hardware) grew at nearly 19 per cent in INR terms to reach US$ 24.3 billion; domestic software and services market reached US$ 12.5 billion.
-Technology adoption in the domestic market also reported steady gains in FY 2009. This segment is expected to reach US$ 24.3 billion in FY 2009, reporting healthy growth across all key segments.
-Domestic IT services spends are estimated to grow 20 per cent to touch US$ 8.3 billion and are showing strong signs of increasing sophistication as building enterprise IT infrastructures and applications, networking and communication become key priorities for India Inc.
-Software and BPO spending growth in the domestic market is being supported by increasing adoption. While the software product segment registered a growth of 15 per cent (US$ 2.3 billion), domestic BPO segment recorded the fastest growth of about 40 per cent to reach US$ 1.9 billion.
-Hardware segment reached US$ 11.8 billion in FY 2009, a growth of 17 per cent over FY 2008.
Growth across all the segments of IT services, BPO, Software, hardware products and engineering services, is reinforcing India’s leadership as the key sourcing location for a wide range of technology related services with increasing traction in RIM & application management and widening service portfolios. For investment purpose IT is one of the most attractive sector of India.
