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IT enabled Services

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August, 2012


The Indian Information Technology (IT) and Information Technology enabled Services (ITeS) sectors go hand-in-hand in every aspect. The industry has not only transformed India's image on the global platform, but also fuelled economic growth by energising higher education sector (especially in engineering and computer science). The industry has employed almost 10 million Indians and hence, has contributed a lot to social transformation in the country.

Furthermore, Indian firms, across all other sectors, largely depend on the IT & ITeS service providers to make their business processes most efficient and streamlined. Indian manufacturing sector has the highest IT spending followed by automotive, chemicals and consumer products industries.

With global BFSI (banking, financial services, insurance) clients accounting for over 40 per cent of Indian IT vendors' revenues, the industry is poised to go beyond US$ 100 billion mark in 2012. Moreover, industry body Nasscom predicts that the ITeS industry will bring in around US$ 225 billion by 2020, wherein 80 per cent of the growth would come from the presently untapped sectors and regions.

Key Developments and Investments

Between April 2000 and May 2012, the computer software and hardware sector attracted cumulative foreign direct investment (FDI) of US$ 11,262 million, according to the Department of Industrial Policy and Promotion (DIPP).

Certain other developments pertaining to the sector are discussed below-

  • HMEL, a joint venture (JV) between Hindustan Petroleum Corporation Ltd (HPCL) and Mittal Energy Investment Pte Ltd., Singapore, has installed a new IBM analytics-based software to manage its financial and operations information in a better way. The new solution has been designed to help HMEL analyse important business processes including planned versus actual investments, production, key performance indicators, among others and give an integrated view of data.
  • InMobi, the Bangalore-based mobile advertising network firm, has acquired UK-based mobile application management and distribution company Metaflow, for an undisclosed amount. With the acquisition, InMobi intends to enhance its distribution and monetisation of content for its business partners. Metaflow will augment InMobi's developer-oriented efforts and its entire team will be absorbed by the latter.
  • Online travel firm is planning to launch its initial public offer (IPO) on the American stock exchange in FY 14. The company intends to inorganically expand its hotel and holiday space in the US market, which is mature enough in terms of e-commerce. On the domestic front, Yatra is considering offline route to strengthen its presence. It plans to open 100 franchisee stores in tier-II and tier-III cities as 95 per cent of its holiday packages are sold through retail outlets and call centres.

Cloud Computing in India

Cloud computing is the most contemporary technology developed on the IT & ITeS landscape. A public cloud is a proposition that allows service providers to make their offerings (like applications, software solutions, data storage packages, etc.) accessible to the general public over the internet. Most of such services entail pay-as-you-use model. The total Indian market for cloud computing (both public and private) has been pegged at US$ 860 million - US$ 912 million in 2011, according to an independent research firm Zinnov Management Consulting.

Zinnov's study, focussed on 'Public Cloud Opportunity in India', states that Indian public cloud computing market is projected to grow to US$ 685 million by 2014. The report further states that the public cloud, which is anticipated to expand by 55 per cent compounded annual growth rate (CAGR), would become an obvious choice for new IT investments, especially in the small and medium business (SMB) segment.

Cloud computing, as a concept, is at a very nascent stage in India and hence, provides a great potential for future growth. Global and domestic cloud space has many Indian start-ups and 20 per cent of the total Indian public cloud market is acknowledged by Indian firms. Industry experts believe that with such strong demand and supply forces, it would not be surprising if cloud accounts for more than 20 per cent of the total Indian IT spend in the years to come.