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IT & ITeS: Nov 2012

November, 2012

The Indian information technology (IT) and business process outsourcing (BPO) sector (including hardware) is estimated to have generated US$ 101 billion in revenue during FY12 as compared to US$ 88.1 billion in FY11, registering a growth rate of 14.4 per cent. As a proportion of India's gross domestic product (GDP), the contribution of IT sector has risen from 1.2 per cent in 1998 to 7.5 per cent in 2012.

Indian firms have become multi-national companies (MNCs) with delivery centres across the globe and employs around 2.8 million people directly and around 8.9 million indirectly. The industry is well diversified across verticals like BFSI, telecom and retail. Indian market offers a strong pool of young and experienced professionals.

Total exports from the IT-BPO sector stands at US$ 69 billion during the year 2012. IT services' exports has been the major contributor to the exports market of India with exports of over 58 per cent of the total IT exports during 2011. BPO commands a share of around 23.2 per cent of the total exports from India.

The US has traditionally been the biggest importer of Indian IT exports and during 2012, over 60 per cent of Indian IT-BPO exports were absorbed by the US. Non US-UK countries accounted for 22 per cent of the total IT-BPO exports during FY12. Demand from emerging countries is expected to show strong growth going forward. Tax holidays are extended to IT sector. Further, special economic zone (SEZ) scheme since 2005 is helping IT companies with single window approval mechanism and tax benefits. Growing Indian economy is boosting the local demand of IT products. Besides, India is providing procedural ease and single window clearance for setting up facilities. The domestic market is expected to cross US$ 50 billion by 2020.

India has the opportunity to tap the growing offshoring market with its cost advantage, expertise and huge talent pool.

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