Indian Information Tecnology Industry Overview - October 2010
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The Information Technology (IT) Sector has been one of the hotshots of Indian economy. Remarkable transformation and growth of the economy has created opportunities both in exporting software and services and in the domestic market. The Indian IT & ITES Sector has grown considerably over the last decade to contribute over 6% of the country’s GDP. The revenue amassed by Indian information technology sector is estimated to have grown by over 5% to reach $73.1 billion in 2009-10. Growth in Indian information technology in the world market is primarily dominated by IT software and services, including system integration, IT consulting, application management, custom applications, infrastructure management, software testing and web development. Competitive factors such as skilled workers, adequate telecommunication networks, and an improving policy and regulatory environment have enabled both domestic and foreign firms to rapidly expand in the internationally competitive IT services sector. The Indian Software and Services export is estimated to grow at 5.5% and to generate export revenue of $49.7 billion in year 2009-10. The IT services exports is estimated to be $27.3 billion in 2009-10 as compared to US $ 25.8 billion in 2008-09, showing a growth of 5.8%. ITeS-BPO exports are estimated to grow from $11.7 billion in 2008-09 to $12.4 billion in 2009-10, a year-on-year growth of 6%. Though the United States & United Kingdom still remains the dominant market, accounting for about 79%, for the Indian IT-BPO industry, the Continental Europe and Asian markets are catching up as they witness higher growth in demand. In contrast, the IT hardware segment has lagged and has focused very largely on the domestic market, which remains heavily dependent on imports of components and finished IT goods. Government is actively pursuing measures to stimulate the growth of Electronics Hardware Manufacturing Industry in the country.
India is regarded as the premier destination for the global sourcing of IT-ITeS, accounting for almost 51% of the global sourcing market size of $94 billion in 2009. India now has a 62% share of the global technology services market (IT Services, Engineering Services and R&D) of about $58 billion and a 32% share of the Global Business Outsourcing Market of about $37 billion. With the BPO going strong for the past few years, the Knowledge Process Outsourcing (KPO), which may be called the highest level of the BPO, is still at a nascent stage of development in the country. It is expected that emergence of the KPO market will offer high-value services in off shoring and help the Indian ITeS Industry to climb the global value and knowledge chain.
The team at Ventures Middle East has brought a report a report on the Information Technology Industry in India 2010, which provides a comprehensive understanding of the entire market dynamics of the Information technology sector to assist players interested in assessing the market opportunities in this robust and dynamic market. Besides providing detailed analysis of the Indian Electronics & IT hardware and Software & Services Sectors, the report also conducts a scrutiny of the various political, economic, social, technological, legislative and environmental trends impacting the sector. It provides a complete technology road map on how the Indian IT sector has evolved over the years and detailed information about the policies and events. The key highlight of the report is that it presents a complete and coherent competitive overview of the Indian Information Technology. Along with a detailed profile of top players in the industry, the report further details various business models adopted by the leading players in the sector. This study is a critical guide to understanding the forces that produce the changes in the IT/ITeS Market and in making informed decisions on the industry.
The Information Technology (IT) Sector has been one of the hotshots of Indian economy. Remarkable transformation and growth of the economy has created opportunities both in exporting software and services and in the domestic market. The Indian IT & ITES Sector has grown considerably over the last decade to contribute over 6% of the country’s GDP. The revenue amassed by Indian information technology sector is estimated to have grown by over 5% to reach $73.1 billion in 2009-10. Growth in Indian information technology in the world market is primarily dominated by IT software and services, including system integration, IT consulting, application management, custom applications, infrastructure management, software testing and web development. Competitive factors such as skilled workers, adequate telecommunication networks, and an improving policy and regulatory environment have enabled both domestic and foreign firms to rapidly expand in the internationally competitive IT services sector. The Indian Software and Services export is estimated to grow at 5.5% and to generate export revenue of $49.7 billion in year 2009-10. The IT services exports is estimated to be $27.3 billion in 2009-10 as compared to US $ 25.8 billion in 2008-09, showing a growth of 5.8%. ITeS-BPO exports are estimated to grow from $11.7 billion in 2008-09 to $12.4 billion in 2009-10, a year-on-year growth of 6%. Though the United States & United Kingdom still remains the dominant market, accounting for about 79%, for the Indian IT-BPO industry, the Continental Europe and Asian markets are catching up as they witness higher growth in demand. In contrast, the IT hardware segment has lagged and has focused very largely on the domestic market, which remains heavily dependent on imports of components and finished IT goods. Government is actively pursuing measures to stimulate the growth of Electronics Hardware Manufacturing Industry in the country.
India is regarded as the premier destination for the global sourcing of IT-ITeS, accounting for almost 51% of the global sourcing market size of $94 billion in 2009. India now has a 62% share of the global technology services market (IT Services, Engineering Services and R&D) of about $58 billion and a 32% share of the Global Business Outsourcing Market of about $37 billion. With the BPO going strong for the past few years, the Knowledge Process Outsourcing (KPO), which may be called the highest level of the BPO, is still at a nascent stage of development in the country. It is expected that emergence of the KPO market will offer high-value services in off shoring and help the Indian ITeS Industry to climb the global value and knowledge chain.
The team at Ventures Middle East has brought a report a report on the Information Technology Industry in India 2010, which provides a comprehensive understanding of the entire market dynamics of the Information technology sector to assist players interested in assessing the market opportunities in this robust and dynamic market. Besides providing detailed analysis of the Indian Electronics & IT hardware and Software & Services Sectors, the report also conducts a scrutiny of the various political, economic, social, technological, legislative and environmental trends impacting the sector. It provides a complete technology road map on how the Indian IT sector has evolved over the years and detailed information about the policies and events. The key highlight of the report is that it presents a complete and coherent competitive overview of the Indian Information Technology. Along with a detailed profile of top players in the industry, the report further details various business models adopted by the leading players in the sector. This study is a critical guide to understanding the forces that produce the changes in the IT/ITeS Market and in making informed decisions on the industry.
EXECUTIVE SUMMARY
INTRODUCTION
AN OVERVIEW OF THE INFORMATION TECHNOLOGY INDUSTRY IN INDIA 2010
INFORMATION TECHNOLOGY SEGMENTS
Electronics and IT Hardware Sector Overview
Consumer Electronics
Computers
Electronic Components
Electronics Exports
Software & Service Sector Overview
Software and Services Exports & Revenues
Business models
IT Services
R&D Services and Software Products
Customer Interaction Services
Transaction Processing
Content Development
Knowledge Services (Non-IT)
Engineering Design
Sources of Revenues
IT-ITES Export Markets
IT-ITES Domestic Markets
Key Export Destinations
INDUSTRY OVERVIEW
Market trends
Arrival of 3G opens Enormous Opportunities for IT Vendors
Cost Concerns is stressing a key spotlight on IT Infrastructure Consolidation
Economic Pressures drives small and midsize businesses towards outsourcing and SaaS
Start-Ups and Smaller Firms Became More Important Accounts for IT vendors
Desktop Virtualization gains footing in Medium and Large Sized Enterprises
IT Outsourcing Remained a Catalyst to HR Retention and Cost Reductions during the Economic Squeeze
IT market for M&E in India is to grow by 30%
Online Advertising Market Gains Momentum
Public Sector Buoys IT Spending
Business development with existing Vendors and Geographic Expansion will Drive Strong Focus from India’s IT Channel Community
A breakout year for analytics solutions
Technology firms focused on India’s rural sector
Wave of Innovative New Payment Technologies is emerging
Government Projects will Fuel Smart Card Technologies
Convergence of Computing Platforms Accelerates
Online Developer Platforms and Communities
DELIVERY MODEL
Onsite Delivery Model
Offsite Delivery Model
Onsite/Offshore (Hybrid) Delivery Model
Offsite/Offshore delivery model
Global Delivery Model
AVAILABILITY OF HUMAN RESOURCES AND THEIR COSTING
GOVERNMENT SUPPORT
Foreign trade policy
Foreign Dire ct Investment policy for Information Technology
EXPORT PROMOTION SCHEMES, SOFTWARE TECHNOLOGY PARKS, TAX BREAKS
Export Promotion Schemes
Software Technology Parks (STP)
Special Economic Zone Scheme
Infrastructure and Available Support
COMPETITIVE OVERVIEW
Key domestic and international players in hardware/ IT services and BPO spectrum
Profiling Of Key Players
Business models adopted by competition
IT Majors banking on non-linear initiatives to boost growth
Infosys new engagement models
Wipro’s Dedicated Advisor agreement
Partner-driven sales model
Boost R&D Services Competition
Art-to-Part biz model
COMPETITIVE FORCES IN THE INDIAN INFORMATION TECHNOLOGY INDUSTRY
Threat of Entry & Barriers
Threat of Service Substitute
Power of Suppliers
Industry Competitors
Power of Customers
THE INDIAN ADVANTAGE
EMERGING TRENDS- PESTLE
Political Factors
Political Stability
Economical factors
Domestic IT Spending
Real Estate Prices
Attrition
Economic attractiveness
Social Factors
Technological Factors
Telephony & Internet
New IT Technologies
Legal Aspects and Policies
IT Act 2000
Indian Copyright Act
Income Tax
IT SEZ Requirements
Environmental Factors
ROAD AHEAD – TECHNOLOGY MAP
FUTURE OUTLOOK
LIST OF FIGURES
Figure 1: India IT-ITES Industry Growth Trend
Figure 2: Indian Information Technology Segments
Figure 3: Growth Trend of Electronics & IT-ITeS in India
Figure 4: India - Electronics & IT Hardware Production
Figure 5: Consumer Electronics Production in India
Figure 6: Computers Production in India
Figure 7: Electronics Components Production in India
Figure 8: India Electronics & IT Hardware Exports
Figure 9: India Software Exports
Figure 10: India BPO Revenues
Figure 11: Engineering Services, R&D and Software Products (US$ Bn)
Figure 12: Sourcing models
Figure 13: India IT Opportunities
Figure 14: Opportunity segments within IT services
Figure 15 India IT-ITES Export Trend
Figure 16: IT-ITES Domestic Market Revenues
Figure 17 Key Export Destinations
Figure 18: Public Sector IT Spending Share
Figure 19: IT Delivery Models
Figure 20: India IT Employment
Figure 21: Classification of Indian IT Companies
Figure 22: Net Income for the Key Players in the Indian IT-ITeS Market, 2009-10
Figure 23: Evolution of Indian IT Industry
INTRODUCTION
AN OVERVIEW OF THE INFORMATION TECHNOLOGY INDUSTRY IN INDIA 2010
INFORMATION TECHNOLOGY SEGMENTS
Electronics and IT Hardware Sector Overview
Consumer Electronics
Computers
Electronic Components
Electronics Exports
Software & Service Sector Overview
Software and Services Exports & Revenues
Business models
IT Services
R&D Services and Software Products
Customer Interaction Services
Transaction Processing
Content Development
Knowledge Services (Non-IT)
Engineering Design
Sources of Revenues
IT-ITES Export Markets
IT-ITES Domestic Markets
Key Export Destinations
INDUSTRY OVERVIEW
Market trends
Arrival of 3G opens Enormous Opportunities for IT Vendors
Cost Concerns is stressing a key spotlight on IT Infrastructure Consolidation
Economic Pressures drives small and midsize businesses towards outsourcing and SaaS
Start-Ups and Smaller Firms Became More Important Accounts for IT vendors
Desktop Virtualization gains footing in Medium and Large Sized Enterprises
IT Outsourcing Remained a Catalyst to HR Retention and Cost Reductions during the Economic Squeeze
IT market for M&E in India is to grow by 30%
Online Advertising Market Gains Momentum
Public Sector Buoys IT Spending
Business development with existing Vendors and Geographic Expansion will Drive Strong Focus from India’s IT Channel Community
A breakout year for analytics solutions
Technology firms focused on India’s rural sector
Wave of Innovative New Payment Technologies is emerging
Government Projects will Fuel Smart Card Technologies
Convergence of Computing Platforms Accelerates
Online Developer Platforms and Communities
DELIVERY MODEL
Onsite Delivery Model
Offsite Delivery Model
Onsite/Offshore (Hybrid) Delivery Model
Offsite/Offshore delivery model
Global Delivery Model
AVAILABILITY OF HUMAN RESOURCES AND THEIR COSTING
GOVERNMENT SUPPORT
Foreign trade policy
Foreign Dire ct Investment policy for Information Technology
EXPORT PROMOTION SCHEMES, SOFTWARE TECHNOLOGY PARKS, TAX BREAKS
Export Promotion Schemes
Software Technology Parks (STP)
Special Economic Zone Scheme
Infrastructure and Available Support
COMPETITIVE OVERVIEW
Key domestic and international players in hardware/ IT services and BPO spectrum
Profiling Of Key Players
Business models adopted by competition
IT Majors banking on non-linear initiatives to boost growth
Infosys new engagement models
Wipro’s Dedicated Advisor agreement
Partner-driven sales model
Boost R&D Services Competition
Art-to-Part biz model
COMPETITIVE FORCES IN THE INDIAN INFORMATION TECHNOLOGY INDUSTRY
Threat of Entry & Barriers
Threat of Service Substitute
Power of Suppliers
Industry Competitors
Power of Customers
THE INDIAN ADVANTAGE
EMERGING TRENDS- PESTLE
Political Factors
Political Stability
Economical factors
Domestic IT Spending
Real Estate Prices
Attrition
Economic attractiveness
Social Factors
Technological Factors
Telephony & Internet
New IT Technologies
Legal Aspects and Policies
IT Act 2000
Indian Copyright Act
Income Tax
IT SEZ Requirements
Environmental Factors
ROAD AHEAD – TECHNOLOGY MAP
FUTURE OUTLOOK
LIST OF FIGURES
Figure 1: India IT-ITES Industry Growth Trend
Figure 2: Indian Information Technology Segments
Figure 3: Growth Trend of Electronics & IT-ITeS in India
Figure 4: India - Electronics & IT Hardware Production
Figure 5: Consumer Electronics Production in India
Figure 6: Computers Production in India
Figure 7: Electronics Components Production in India
Figure 8: India Electronics & IT Hardware Exports
Figure 9: India Software Exports
Figure 10: India BPO Revenues
Figure 11: Engineering Services, R&D and Software Products (US$ Bn)
Figure 12: Sourcing models
Figure 13: India IT Opportunities
Figure 14: Opportunity segments within IT services
Figure 15 India IT-ITES Export Trend
Figure 16: IT-ITES Domestic Market Revenues
Figure 17 Key Export Destinations
Figure 18: Public Sector IT Spending Share
Figure 19: IT Delivery Models
Figure 20: India IT Employment
Figure 21: Classification of Indian IT Companies
Figure 22: Net Income for the Key Players in the Indian IT-ITeS Market, 2009-10
Figure 23: Evolution of Indian IT Industry
LIST OF TABLES
Table 1: India Domestic IT-ITeS Market Size
Table 2: Major IT Players in India
Table 1: India Domestic IT-ITeS Market Size
Table 2: Major IT Players in India
