India is a preferred global destination for information technology (IT) and information technology enabled services (ITeS). The Indian IT-business process management (BPM) sector is estimated to expand at a compound annual growth rate (CAGR) of 9.5 per cent to reach US$ 300 billion by 2020. The sector increased at a CAGR of 25 per cent over 2000–13, 3–4 times higher than global IT-BPM spends.
Export of IT services accounted for 57.9 per cent of total IT exports in FY 13. Banking, financial services and insurance (BFSI) generated export revenue of around US$ 31 billion during FY 13, accounting for 41 per cent of total IT-BPM exports from India.
Demand from emerging countries is expected to show strong growth going forward. Tax holidays are also extended to the IT sector for software technology parks of India (STPI) and special economic zones (SEZs). Further, the country is providing procedural ease and single window clearance for setting up facilities. The country’s cost competitiveness in providing IT services, which is approximately 3–4 times cheaper than the US, continues to be its USP in the global sourcing market.
Disruptive technologies present an entire new gamut of opportunities for IT firms in India. India’s IT sector is gradually moving from linear models (rising headcount to increase revenue) to non-linear ones. In line with this, IT companies in India are focusing on new models such as platform-based BPM services and creation of intellectual property.