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

Indian IT & BPM Industry Analysis

    Last updated on Mar, 19 2021

India is the world's largest sourcing destination with largest qualified talent pool of technical graduates in the world. The country has the low-cost advantage, being 5-6 times inexpensive than the US. India is the second-fastest digitising economy among 17 leading economies in the world.

According to Cloud Next Wave of Growth in India report, India’s cloud market is expected to grow three-fold to Rs. 49,621 crore (US$ 7.1 billion) by 2022, driven by the demand for Big Data, Data Analytics, Artificial Intelligence (AI) and Internet of Things (IoT).

India’s IT industry contributed around 7.7% to country’s GDP (Gross Domestic Product) and is expected to contribute 10% to India’s GDP by 2025. As of FY20, the IT industry employed 4.3 million people. In FY20, the sector added 205,000 jobs, up from 185,000 jobs added in FY19. Total number of employees grew to 1.02 million cumulatively for four Indian IT majors (including TCS, Infosys, Wipro, HCL Tech) as on December 31, 2019. Indian IT industry employed 205,000 new hires and had 884,000 digitally skilled talent in 2019.

IT & BPM industry revenue was estimated at around US$ 191 billion in FY20 at 7.7% growth y-o-y and is estimated that it will grow to US$ 350 billion by 2025. Moreover, revenue from the digital segment is expected to form 38% of the total industry revenue by 2025. Digital economy is estimated to reach Rs. 69,89,000 crore (US$ 1 trillion) by 2025. The domestic revenue of the IT industry was estimated at US$ 44 billion and export revenue was estimated at US$ 147 billion in FY20.

Artificial Intelligence (AI) is expected to boost India's annual growth rate by 1.3% by 2035, as per NITI Aayog. A substantial increase in AI by Indian firms can result in a 2.5% increase in India’s Gross Domestic Product (GDP) in the immediate term.

The computer software and hardware sector in India attracted cumulative foreign direct investment (FDI) inflow worth US$ 45.97 billion between April 2000 and June 2020. The sector ranked 2nd in FDI inflows as per the data released by Department for Promotion of Industry and Internal Trade (DPIIT).

PE (Private Equity) investment in the sector stood at US$ 11.8 billion across 493 deals in 2019. Venture Capital (VC) investment in the IT & BPM sector stood at US$ 67.0 million during Q3FY19.

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 February 2020, there were 421 approved SEZs across the country, with 276 of them from IT & BPM and 145 as 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 IT 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.

Indian IT & BPM Industry Report (January, 2021)
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Click to access the IT & BPM Industry Archived Report

IT & BPM India

Sector-wise breakup of export revenue FY15E
IT Sector Employment Distribution in India

 

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