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Indian IT, ITes & BPM Industry Analysis

March, 2018

India is the world's largest sourcing destination, accounting for approximately 55 per cent of the US$ 173-178 billion market in 2016-17. The country's cost competitiveness in providing Information Technology (IT) services, which is approximately 3-4 times cheaper than the US, continues to be its Unique Selling Proposition (USP) in the global sourcing market.

The sector ranks 3rd in India’s total Foreign Direct Investment (FDI) share and has received US$ 29.825 billion of FDI inflows between April 2000 and December 2017.

India’s highly qualified talent pool of technical graduates is one of the largest in the world and is available at a cost saving of 60-70 per cent to source countries. This large pool of qualified skilled workforce has enabled Indian IT companies to help clients save US$ 200 billion in the last five years.

Revenue of India’s IT industry reached US$ 154 billion and exports stood at US$ 117 billion in 2016-17. The industry’s revenue and exports are expected to rise to US$ 167 billion and US$ 126 billion in FY18, respectively. The Business Process Management (BPM) segment accounted for 22.22 per cent of the total IT exports during FY17. India’s IT-BPM sector is expected to expand to US$ 350 billion by 2025 and BPM is expected to account for US$ 50-55 billion out of the total revenue.

The Government of India has extended tax holidays 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. Under Union Budget 2018-19, the government has announced setting up of a national level programme that will enable efforts in Artificial Intelligence (AI) and will help in leveraging AI technology for development works in the country.

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