IT and ITeS

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October, 2019

India is the world's largest sourcing destination, accounting for approximately 55 per cent of the US$ 185-190 billion market in 2017-18. India’s highly qualified talent pool of technical graduates is one of the largest in the world and the country has a low-cost advantage by being 5-6 times inexpensive than US. India is the second-fastest digitising economy amongst 17 leading economies of the world.

The cloud market in India is expected to grow three-fold to Rs 49,621 crore (US$ 7.1 billion) by 2022 with the help of Growing adoption of Big Data, analytics, artificial intelligence and Internet of Things (IoT), according to Cloud Next Wave of Growth in India report.

At Rs 9,57,493 crore (US$ 137 billion) in 2018-19. India ‘s IT sector market is projected to reach Rs 6,98,900 crore (US$100 billion) by 2025.

Export revenue from digital segment forms about 20 per cent of the industry’s total export revenue.

India’s IT industry contributed around 7.7 per cent to the country’s GDP and is expected to contribute 10 per cent of India’s GDP by 2025.

India’s IT-BPM sector is expected to expand to US$ 350 billion by 2025 and BPM is expected to account for Rs 3,49,450-3,84,395 crore (US$ 50-55 billion) out of the total revenue. IT BPM industry revenues was estimated at around Rs 12,37,053 crore (US$ 177 billion) in FY2018-19 with a growth rate of 6.1 per cent. Moreover, revenue from the digital segment is expected to form 38 per cent of the total industry revenue by 2025 whereas, digital economy is estimated to reach Rs 69,89,000 crore (US$ 1 trillion) by 2025. In 2019, IT-BPM industry export revenue has crossed US$ 137 billion with the growth of 7-9 per cent.

IT industry employs nearly 3.97 million people in India of which 105,000 were added in FY18. The industry added around 105,000 jobs in FY18 and is expected to add over 250,000 new jobs in 2019. Hardware exports from India are expected to grow at 7-8 per cent in FY19. The export sector crossed Rs 9,57,493 crore (US$ 137 billion) of revenues and marginally grew at the rate of 7-9 per cent in FY19.

The computer software and hardware sector in India attracted cumulative Foreign Direct Investment (FDI) inflows worth Rs 2,60,200 crore (US$ 37.23 billion) between April 2000 and March 2019 and ranks second in inflow of FDI, as per data released by the Department for Promotion of Industry and Internal Trade (DPIIT).

PE investments in the sector stood at US$ 3.6 billion in Q3 2019 and venture capital (VC) investments in the IT & ITeS sector stood at US$ 67 million during Q3 2019.

The Government of India has extended tax holidays to the IT sector for software technology parks of India (STPI) and Special Economic Zones (SEZs). As of May 2019, there were 273 approved SEZs across the country out of which 136 are exporting SEZs.

Further, the country is providing procedural ease and single window clearance for setting up facilities. On May 2019, the Ministry of Electronics and Information Technology (MeitY) launched the MeitY Startup Hub (MSH) portal.

Also, the government has identified information technology as one of the 12 champion service sectors for which an action plan is being developed. It is setting up a Rs 5,000 crore (US$ 745.82 million) fund for realising the potential of these champion service sectors.

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