Overview
IT & ITeS Overview
India is the largest and fastest growing Information Technology and IT enabled services sourcing destination across the world. Contributing approximately 55% market share (US $185-190 Billion) to Global Services Sourcing Business in 2017-18, India continues to grow at a faster pace as compared to overall IT-BPM Industry of the world.
Indian IT exports has reached US$ 126 Billion in FY18, while domestic revenues recorded at US$ 41 billion making the total revenues reached to US$167 Billion in 2017-18. Indian IT and BPM Sector is expected to grow to US$ 350 billion by 2025, in which Business Processing Management (BPM) is expected to contribute US$ 50-55 Billion in total revenues.
Availability of highly qualified talent pool at lower rates helps in cutting the cost for about 60-70 % to source countries. This large pool of qualified skilled workforce has enabled Indian IT companies to help clients save US$ 200 billion in the last five years. Due to huge contribution of IT and ITes Services in the growth of Indian Economy, Government has recognized IT and ITes Services as an important Champion Service for promotion and development.
Sector Wise Breakup of Indian IT Market (US$ Bn) FY18
Source: NASSCOM
Market size of Domestic IT industry in India (USD)
Source: Nasscom, TechSci Research: E-Estimates
IT & ITES Sector
Trends
- India ranks third among global start-up ecosystems with more than 5,200 start-ups.
- India’s IT-BPM industry is set to grow nearly 8% in FY2018 from USD 154 billion in FY2017 to USD 167 billion in FY2018, an addition of USD 12 billion
- The global digital transformation market size is expected to rise at a CAGR of 18.56 per cent from US$ 1.2 trillion in 2017 to US$ 2 trillion in 2020
- Indian IT & ITeS companies have set up over 700 offshore global delivery centres in about 80 countries across the world.
- Indian IT and BPM industry is expected to grow to US$ 350 billion by 2025 and BPM is expected to account for US$ 50-55 billion out of the total revenue.
- The new digital technologies like social media, mobility, analytics, and cloud computing (SMAC) has permanently changed the way Indian IT firms do business. The internet industry in India is likely to double to reach US$ 250 billion by 2020, growing to 7.5 per cent of gross domestic product (GDP)
References - Data and reports available in the public domain including Ministries Annual Reports and Data Statistics, IBEF Sectoral Reports, Department of Industrial Policy and Promotion (DIPP), RBI Handbook of Statistics on Indian Economy, Media & Industry Reports, Press Information Bureau (PIB), Union Budget 2018-19
Disclaimer - This information has been collected through secondary research and is available in the public domain. We are not responsible for any errors in the same.
Geographical Reach
United States has been the biggest destination for Indian IT Exports followed by United Kingdom, Europe and Asia Pacific regions. Due to higher cost of IT professionals in United States and UK Region, most of the companies prefer to outsource IT services which helps then in cutting costs by 50-70%. However, Europe as one of the fastest growing IT markets is expected to have higher inclination towards offshoring from Indian Firms.
- Data for the FY2018 shows that USA, UK and EU collectively account for 90% of the total IT & ITeS exports from India.
- Apart from USA, UK and Europe, new opportunities are growing from other countries like Middle East countries, Japan, China as well as Africa.
- India’s Consistent IT Service at low cost has differentiated Indian IT sector from Global competition.
Source: Nasscom, Department of Electronics and IT Annual Report
Sector Contribution to Economy
Contribution to Exports & GDP
- IT-BPM sector accounts for largest share in total Indian services export (>45%).
- IT - BPM sector constitutes ~7.9% of India's GDP
- Revenue of India’s IT industry reached US$ 167 billion and exports stood at US$ 126 billion in 2017-18. Indian IT & BPM industry is expected to grow to USD 300 billion by 2020.
- The Business Process Outsourcing (BPO) segment accounted for 23 percent of the total IT-BPM exports during FY18.
- Export revenue from digital segment forms about 20 per cent of the industry’s total export revenue. Total export revenue of the industry is expected to grow 7-9 percent year-on-year to US$ 135-137 billion in FY19.
- Revenue from digital is expected to comprise 38 percent of the forecasted US$ 350 billion industry revenue by 2025
Contribution in FDI & Employment
- The computer software and hardware sector rank second in India’s total Foreign Direct Investment (FDI) share and has received US$ 30.82 billion of FDI inflows between April 2000 and March 2018
- IT-BPM is the largest private sector employer - delivering 3.7 million jobs.
- Total PE/VC investments in FY17 in IT services were observed to be US$ 7 billion, which increased at a CAGR of 27.25 per cent from US$ 0.8 billion in FY08.
- Total number of PE/VC investment deals reached 322 in FY17. During April-December 2017, 245 PE/VC deals were undertaken in the IT-BPM sector.
Source: Venture Intelligence, Nasscom, PWC Moneytree report
Source: Nasscom, Make in India, TechSci Research (2017-18)
Sector Composition
Source: IBEF IT & ITES Report, 2018
Policies and Government Initiatives
Several policy initiatives have been taken by the government in the past years to boost IT and ITes Services from India which includes-
Digital India program to boost India’s economy on digital grounds. Government has successfully launched Broadband Highways, E-Governance to reform government working through technology, Electronics Manufacturing with targets of Net zero imports, E-Kranti for electronic delivery of Services, Public Internet Access Programmes, etc. Through Digital India, Government of India exploring new opportunities in various sectors like BPO service from home, digital healthcare and agriculture to achieve the target of making India a US$ 1 trillion digital economy.
NITI Aayog is going to set up a national level program that will promote Artificial Intelligence for development works of the country.
Other important initiatives include-
- Establishment of BPO Promotion and Common Services Centres to help create digital inclusion especially in rural areas through India BPO Promotion Scheme (IBPS).
- Smart Cities and E-Governance to push digital talent through Skill India, drive towards a cashless economy.
- Start-Up India to promote Software applications in India through innovation.
- Phased Manufacturing Programme (PMP) to promote manufacturing of Cellular Mobile Phones in India.
- The National Optical Fibre Network (NOFN) to connect all the 250,000 Gram panchayats.
- 500,000 Wi-Fi hotspots to provide internet connectivity to over 5 million Rural Citizens.