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IT & ITeS

November, 2011

IT & ITeS in India - Brief Introduction

Over the past few years, the Indian information technology (IT) and IT enabled Services (ITeS) industry has been on a steady growth trajectory. The IT industry, alone, has played a pivotal role in placing India on the world map as a major knowledge-based economy and outsourcing hub. The major sub-segment, that entails Business Process Outsourcing (BPO), is re-inventing itself and experiencing a paradigm shift from being a volume-oriented proposition to a value-oriented proposition by expanding its scope of services and providing substantial high-end solutions in the areas of Data Analytics, Legal Process Outsourcing, etc.

The number of internet users in India crossed the 100-million mark in September 2011, growing 13 per cent over last year's figure of 87 million, according to the latest report of the Internet and Mobile Association of India (IAMAI) co-prepared with research firm IMRB. The study anticipates India's internet population to grow to 121 million by December 2011. Further, the country's broadband subscriber base stood at 12.69 million in August 2011, according to data released by the Telecom Regulatory Authority of India (TRAI).

Competitive Landscape

After personal computers (PCs) and laptops, tablets are mushrooming as a major competitive avenue wherein vendors are striving hard to launch more affordable devices for the Indian market. Second quarter of 2011experienced the release of the iPad2 in India in less than 50 days after its US launch while Samsung is scouting for 40 per cent share of the Indian tablet market in 2011.

In the enterprise software segment, US giant Oracle claims to cater around 7,000 clients across the Indian government and private sectors; recent wins being Punjab National Bank (PNB) - India's second-largest public sector bank and Hindustan Petroleum Corporation (HPCL) - another Indian public sector organ. Meanwhile, Indian IT companies like Wipro, Infosys, TCS, HCL and Mahindra Satyam are developing their technologies to entail cloud computing applications and solutions for various segments ranging from financial services and banking to manufacturing.

IT & ITeS - Key Developments and Investments

Between April 2000 and August 2011, the computer software and hardware sector received cumulative foreign direct investment (FDI) of US$ 10,787 million, according to the Department of Industrial Policy and Promotion (DIPP).

  • Monster India has launched an online campus hiring initiative - 'Monster College' – wherein it will collaborate with educational institutions across India and connect them with over 20,000 employers for campus placements.
  • Investor Relations Global Rankings (IRGR), a New York-based organisation, has ranked Technology giant Infosys as the country's best company for corporate governance practices, financial disclosure procedures, IR website and online annual report. There were more than 80 companies that registered themselves for the rankings.
  • Tower infrastructure company Indus Tower is looking for a partner to provide end-to-end IT solutions and Indian tech-biggies like Infosys, IBM and Wipro are in discussions with the former for the same. The contract, potentially in the range of Rs 2,430-2,916 crore (US$ 500-US$ 600 million), would involve areas such as infrastructure management, application development and other related managed services and would span for 8-10 years. Indus Tower, a joint venture firm between Bharti Group, Idea Cellular and Vodafone Essar, owns 110,000 towers and operates 16 out of the 22 telecom circles.
  • Google, with its partner web hosting firm HostGator, has announced that it will offer free web domain names to small and medium businesses (SMBs) in India in order to boost internet usage in Asia's third largest economy. The company will maintain the websites for a year without any charges and at the end of the first year, users will be asked to pay a nominal fee if they wish to renew their domain name. India is shelter to around 8 million SMBs of which about 400,000 have a website and 100,000 have active online presence, said Google. Hence, the market poses a great potential for growth.