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IT & ITeS Industry in India

May, 2013

Introduction

The information technology (IT) and information technology enabled services (ITeS) industry has been one of the key driving forces fuelling India’s economic growth.

India is one of the fastest-growing IT services markets in the world, with three-quarters of large Indian enterprises planning to increase IT spending in 2013, with an average IT budget of US$ 12.2 million, according to a survey by Gartner.

The Indian IT-business process outsourcing (BPO) sector including the domestic and exports segments continue to grow from strength to strength, witnessing high levels of activity both onshore as well as offshore. The companies continue to move up the value-chain to offer higher end research and analytics services to their clients. India's leadership position in the global IT and BPO industries are based primarily on the following advantages.

Market Size

The Indian IT and ITES industry has continued to perform its role as the most consistent growth driver for the economy. Service, software exports and BPO remain the mainstay of the sector. Over the last five years, the IT and ITES industry has grown at a remarkable pace. A majority of the Fortune 500 and Global 2000 corporations are sourcing IT and ITES from India and it is the premier destination for the global sourcing of IT and ITES accounting for 55 per cent of the global market in offshore IT services and garnering 35 per cent of the ITES/BPO market.

India's IT and BPO sector exports are expected to grow by 12-14 per cent in FY14 to touch US$ 84 billion - US$ 87 billion, according to Nasscom.

The Indian IT infrastructure market is projected to grow by 9.7 per cent y-o-y to reach US$ 2.1 billion in 2013.

Nasscom has created a separate unit to drive its newfound enthusiasm for software products, and has set a target of US$ 10 billion in revenues from software products by 2020.

Investments

EMC Corporation's investment in India is expected to reach US$ 1.5 billion by 2014. The company started its journey in India with a modest investment of US$ 100 million in 2005.

Some of the major investments in the sector are as follows:

  • D-Link plans to set up a testing lab in India in the second half of this year to ensure better localisation, said Mr A P Chen, Chairman, D-Link
  • Hexaware Technologies has set up an onshore delivery centre in Texas, US. The centre is its third onshore delivery centre in the US
  • NIIT Technologies has won a multi-year contract from the Airports Authority of India (AAI) worth Rs 344 crore (US$ 61.84 million) for the implementation of Airport Operations Control Centres (AOCC)
  • The Software Technology Parks of India (STPI) plans to set up a data centre in Hyderabad. The centre will address the storage and cloud needs of small and medium enterprises (SME)
  • Wipro has signed an agreement to acquire a minority stake in Opera Solutions, a global big data and analytics company, for about US$ 30 million