Trade Analytics
IT & ITes
The IT-business process management (BPM) sector in India is estimated to expand at a CAGR of 9.5 per cent to US$ 300 billion by 2020.

IT & ITeS Industry in India

Latest update: March, 2017

India's IT market size growing

  • India’s technology and BPM sector (including hardware) is likely to generate revenues of US$ 160 billion during FY16 compared to US$ 146.5 billion in FY15, implying a growth rate of 9.2 per cent
  • The contribution of the IT sector to India’s GDP rose to approximately 9.5 per cent in FY15 from 1.2 per cent in FY98
  • TCS is the market leader, accounting for about 10.4 per cent of India’s total IT & ITeS sector revenue in FY16
  • The top five IT firms contribute over 25 per cent to the total industry revenue, indicating the market is fairly competitive

Last Updated: March, 2017



India is the world's largest sourcing destination for the information technology (IT) industry, accounting for approximately 67 per cent of the US$ 124-130 billion market. The industry employs about 10 million workforces. More importantly, the industry has led the economic transformation of the country and altered the perception of India in the global economy. India's cost competitiveness in providing IT services, which is approximately 3-4 times cheaper than the US, continues to be the mainstay of its Unique Selling Proposition (USP) in the global sourcing market. However, India is also gaining prominence in terms of intellectual capital with several global IT firms setting up their innovation centres in India.

The IT industry has also created significant demand in the Indian education sector, especially for engineering and computer science. The Indian IT and ITeS industry is divided into four major segments – IT services, Business Process Management (BPM), software products and engineering services, and hardware.

Market Size

The Indian IT sector is expected to grow at a rate of 12-14 per cent for FY2016-17 in constant currency terms. The sector is also expected triple its current annual revenue to reach US$ 350 billion by FY 2025#.

Employees from 12 Indian start-ups, such as Flipkart, Snapdeal, Makemytrip, Naukri, Ola, and others, have gone on to form 700 start-ups on their own, thus expanding the Indian start-up ecosystem.! India ranks third among global start-up ecosystems with more than 4,200 start-ups##.

Total spending on IT by banking and security firms in India is expected to grow 8.6 per cent year-on-year to US$ 7.8 billion by 2017.!!

India’s internet economy is expected to touch Rs 10 trillion (US$ 146.72 billion) by 2018, accounting for 5 per cent of the country’s GDP###.

The public cloud services market in India is slated to grow 35.9 per cent to reach US$ 1.3 billion according to IT consultancy, Gartner. Increased penetration of internet (including in rural areas) and rapid emergence of e-commerce are the main drivers for continued growth of data centre co-location and hosting market in India. The Indian Healthcare Information Technology (IT) market is valued at US$ 1 billion currently and is expected to grow 1.5 times by 2020^^. India's business to business (B2B) e-commerce market is expected to reach US$ 700 billion by 2020 whereas the business to consumer (B2C) e-commerce market is expected to reach US$ 102 billion by 2020^^^.

Cross-border online shopping by Indians is expected to increase 85 per cent in 2017, and total online spending is projected to rise 31 per cent to Rs 8.75 lakh crore (US$ 128 billion) by 2018.!!!

Post the government’s announcement of demonetisation of specific currency denominations, digital payment platforms such as Paytm, MobiKwik, Oxigen witnessed a sharp spike in user transactions, app downloads and merchant enquiries, thereby indicating a greater demand towards digital payments by consumers.

India ranks among the top five countries in terms of digitalisation maturity as per Accenture’s Platform Readiness Index, and is expected to be among the top countries with the opportunity to grow and scale up digital platforms by 2020.1

Investments/ Developments

Indian IT's core competencies and strengths have attracted significant investments from major countries. The computer software and hardware sector in India attracted cumulative Foreign Direct Investment (FDI) inflows worth US$ 22.83 billion between April 2000 and December 2016, according to data released by the Department of Industrial Policy and Promotion (DIPP).

Leading Indian IT firms like Infosys, Wipro, TCS and Tech Mahindra, are diversifying their offerings and showcasing leading ideas in blockchain, artificial intelligence to clients using innovation hubs, research and development centres, in order to create differentiated offerings.

Some of the major developments in the Indian IT and ITeS sector are as follows:

  • Bengaluru-based fintech company ZestMoney, owned by Camden Town Technologies Pvt. Ltd, has raised US$ 6.5 million in a series A round of funding led by Naspers-owned PayU; and will invest the funds in technology and product development.
  • Google plans to set up its first data centre in India in the city of Mumbai by 2017, to improve its services to local customers wanting to host their applications on the internet, and to compete effectively with the likes of Amazon and Microsoft,
  • Sagoon Inc, a social network and e-commerce start-up, has filed mini-initial public offering (IPO) papers with the US Securities and Exchange Commission (SEC), to raise around US$ 20 million, which will be used to set up a campus in India, expand its team in India, the US and Nepal, and support marketing and branding and other general purposes.
  • SAP SE, in partnership with the Associated Chambers of Commerce of India (ASSOCHAM), has rolled out a knowledge sharing resource centre which will serve as a one-stop portal for businesses looking to adopt or migrate to technology that will make them future ready for the biggest taxation reform of goods and services tax (GST).
  • Freshdesk, one of first companies from India to offer Software-as-a-Service (SaaS) to global companies, has raised US$ 55 million in the latest round of funding led by Sequoia Capital India and existing investor Accel Partners, estimating to value the company at US$ 700 million.
  • Warburg Pincus LLC, the US-based private equity firm, plans to invest around US$ 75 million in series C round of funding to buy a significant stake in Capital Float, an online credit platform.
  • Helpshift Inc, which makes customer support software for mobile apps, announced raising US$ 2 million from Cisco Investments, in addition to working with Cisco to integrate its in-app customer support with Cisco’s contact centre solutions.
  • Knowlarity Communications Pvt Ltd, a cloud telephony provider, has announced raising US$ 20 million from multiple investors such as Dubai-based private equity investor Delta Partners, existing investors Sequoia Capital Funds and Mayfield Fund, apart from venture-debt from Blacksoil and Trifecta Capital.
  • Flipkart, India's largest e-commerce marketplace, has re-entered the private label business by launching Smart Buy, the first of two new private labels, with a view to boost earnings and fill gaps in its product selection.
  • Fitpass, a Delhi-based revolutionary app which offers access to gyms and health clubs membership, has raised US$ 1 million in seed funding from investors in Mumbai, Delhi, and Bengaluru.
  • Apple’s supplier and assembler, Taiwan-based Winstron, will set up an iPhone assembly facility in Peenya, Bengaluru’s industrial hub, thus making India the third country across the world to have an assembly unit for Apple’s iPhone.
  • Kratikal Tech Pvt Ltd, a cyber-security start-up, has raised around US$ 500,000 in seed round of funding led by Mr Amajit Gupta, former director of Microsoft India, which will be used for product development and building training modules.
  • International Finance Corporation (IFC) plans to invest US$ 10 million as equity in Bengaluru-based Zinka Logistics Pvt Ltd, which provides a technology platform called Blackbuck for long-haul trucking market in India, estimated at US$ 70 billion.
  • Paytm’s online marketplace unit raised US$ 200 million in a funding round led by a US$ 177 million investment to be made by Alibaba Group Holding Ltd, and balance by SAIF Partners.
  • Intel Corporation plans to invest in Digital India related solutions such as India stack, Unique Identification (UID), e-government 2.0 and other government initiatives, and scale up operations of its data centre group (DCG), as per Mr Prakash Mallya, Director DCG, Asia for Intel Corporation.
  • Reliance Industries Ltd (RIL) plans to set up entrepreneurship hubs in key cities and towns, and a Rs 5,000 crore (US$ 748 million) fund, under the name of Jio Digital India Startup Fund, to invest in technology based startups.
  • Gurgaon-based digital wallet start-up MobiKwik, which is owned and operated by One MobiKwik Systems Private Limited, has raised US$ 40 million from Nasdaq-listed firm Net1, a South African payments technology company.
  • Orange Business Services, the business services arm of Orange Group, has launched a state data centre for Himachal Pradesh government, which will be the first data centre in India to be designed using 'green' data centre concepts that minimise power requirements and increase power utilisation efficiency.
  • PurpleTalk Inc, a US based mobile solutions company, has invested US$ 1 million in Nukkad Shops, a Hyderabad based uber-local commerce platform that helps neighbourhood retail stores take their businesses online through a mobile app.
  • KartRocket, a Delhi based e-commerce enabler has completed its US$ 8 million funding round by raising US$ 2 million from a Japanese investor, which will be used to enhance Kraftly, a mobile-first online-to-offline marketplace targeting small sellers, individuals and home-based entrepreneurs in India in product categories such as apparel and accessories.
  • Xpressbees, an e-commerce logistics firm operated by Busybees Logistics Solutions Private Limited, has raised US$ 12.5 million in a Series A funding, led by its existing investors SAIF Partners, IDG Ventures, Vertex Ventures and Valiant Capital, which will be used to strengthen technology initiatives and processes of the firm.
  • Housejoy, an online home services provider, has raised Rs 150 crore (US$ 22 million) in a Series B round of funding led by Amazon, and which also includes new investors such as Vertex Ventures, Qualcomm and Ru-Net Technology Partners.
  • Nasscom Foundation, a non-profit organisation which is a part of Nasscom, has partnered with SAP India to establish 25 National Digital Literacy Mission (NDLM) centres in 12 cities across India, as a part of Government of India's Digital India initiative.

Government Initiatives

In the Union Budget 2017-18, the Government of India announced the following key proposals:

  • The Government of India has allocated Rs 10,000 crore (US$ 1.5 billion) for BharatNet project under which it aims to provide high speed broadband to more than 150,000 gram panchayats by 2017-18.
  • Prime Minister of India, Mr Narendra Modi, has launched the Bharat Interface for Money (BHIM) app, an Aadhaar-based mobile payment application that will allow users to make digital payments without having to use a credit or debit card. The app has already reached the mark of 10 million downloads.

Some of the major initiatives taken by the government to promote IT and ITeS sector in India are as follows:

  • Mr Ravi Shankar Prasad, Union Minister of Law & Justice and Information Technology, has launched a free Doordarshan DTH channel called DigiShala, which will help people understand the use of unified payments interface (UPI), USSD, aadhaar-enabled payments system, electronic wallets, debit and credit cards, thereby promoting various modes of digital payments.
  • The Government of India plans to revamp the United Payment Interface (UPI) and Unstructured Supplementary Service Data (USSD), to make it easier for consumers to transact digitally either with or without an Internet connection with the aim of strengthening its push towards making India a digital economy.
  • The Telecom Regulatory Authority of India (TRAI) will soon release consultation papers ahead of framing regulations and standards for the rollout of fifth-generation (5G) networks and Internet of Things (IoT) in India.
  • The Government of Gujarat has signed 89 MoUs worth Rs 16,000 crore (US$ 2.3 billion) in the IT sector, during Vibrant Gujarat Global Summit-2017.
  • The Government of Telangana has signed an agreement with network solutions giant Cisco Systems Incorporation, to cooperate on a host of technology initiatives, including Smart Cities, Internet of Things, cybersecurity, education digitisation of monuments.
  • The Railway Ministry plans to give a digital push to the India Railways by introducing bar-coded tickets, Global Positioning System (GPS) based information systems inside coaches, integration of all facilities dealing with ticketing issues, Wi-Fi facilities at the stations, super-fast long-route train service for unreserved passengers among other developments, which will help to increase the passenger traffic.
  • The Pune Smart City Development Corporation (PSCDCL) has signed a memorandum of understanding (MOU) with the European Business and Technology Centre (EBTC), which will allow it to gain access to real-time knowledge of technologies, solutions and best practices from Europe.
  • The Human Resource Development (HRD) Ministry has entered into a partnership with private companies, including Tata Motors Ltd, Tata Consultancy Services Ltd and real-estate firm Hubtown Ltd, to open three Indian Institutes of Information Technology (IIITs), through public-private partnership (PPP), at Nagpur, Ranchi and Pune.
  • Government of India is planning to develop five incubation centres for IoT start-ups, as a part of Prime Minister Mr Narendra Modi's Digital India and Startup India campaign, with at least two centres to be set up in rural areas to develop solutions for smart agriculture.
  • The Government of India has launched the Digital India program to provide several government services to the people using IT and to integrate the government departments and the people of India. The adoption of key technologies across sectors spurred by the 'Digital India Initiative' could help boost India's Gross Domestic Product (GDP) by US$ 550 billion to US$ 1 trillion by 2025@@.
  • India and the US have agreed to jointly explore opportunities for collaboration on implementing India's ambitious Rs 1.13 trillion (US$ 16.58 billion) ‘Digital India Initiative’. The two sides also agreed to hold the US-India Information and Communication Technology (ICT) Working Group in India later this year.

Road Ahead

India is the topmost offshoring destination for IT companies across the world. Having proven its capabilities in delivering both on-shore and off-shore services to global clients, emerging technologies now offer an entire new gamut of opportunities for top IT firms in India. Social, Mobility, Analytics and Cloud (SMAC) are collectively expected to offer a US$ 1 trillion opportunity. Cloud represents the largest opportunity under SMAC, increasing at a CAGR of approximately 30 per cent to around US$ 650-700 billion by 2020. The social media is the second most lucrative segment for IT firms, offering a US$ 250 billion market opportunity by 2020. The Indian e-commerce segment is US$ 12 billion in size and is witnessing strong growth and thereby offers another attractive avenue for IT companies to develop products and services to cater to the high growth consumer segment.

Exchange Rate Used: INR 1 = US$ 0.015 as on February 9, 2017

References: Media Reports, Press Information Bureau (PIB), Department of Industrial Policy and Promotion (DIPP) statistics, Department of Information and Technology, Union Budget 2017-18

Notes: # - As per National Association of Software and Services Companies (NASSCOM), ## - as per a report by NASSCOM and Zinnov Management Consulting Pvt Ltd titled "Start-up India - Momentous Rise of the Indian Start-up Ecosystem", ### - According to a report by the Boston Consulting Group (BCG) and Internet and Mobile Association of India (IAMAI), ^^ - As per IT industry body National Association of Software and Services Companies (NASSCOM), 1 - as per the report ‘Five Ways to Win with Digital Platforms’, created by Accenture in collaboration with G20 Young Entrepreneurs’ Alliance, ^^^ - as per a report by the Confederation of Indian Industry and Deloitte Touche Tohmatsu India LLP, @ - as per a study by Assocham-PricewaterhouseCoopers, @@ - as per research firm McKinsey, ! - As per data from Tracxn, !! - As per Gartner, !!! – As per PayPal report

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

IT & ITeS India

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


Brand India Pharma


India has the fastest internet traffic growth globally and is expected to have 348 million users by 2017, up from 138 million in 2012.

+ More >

Brand India Pharma

IBEF Publications

IBEF Publication

India Now Magazine

India Now Business and Economy


+ More Publications >

IBEF Publication

Blog – Perspectives on India More

Powered by the Who's Who of India

author_Anu_P._Mathai_photo_1_-_mobile_photo_1.jpg Benchmarking Indian leather products across the world
Anu P. Mathai, IES, Chief Executive Officer, IBEF

India’s leather industry has moved progressively, transforming from a raw material supplier to a value-added product exporter over the past few decades. The country...

author_saurav-ghosh3.jpg Economic Liberation of Panchayats
Saurav Ghosh, Social Entrepreneur

Panchayats, hidden in plain sight, may just be the answer to improving agriculture productivity in India...

author_Anu_P._Mathai_photo_1_-_mobile_photo_1.jpg Brand India makes its presence felt at Arab Health 2017
Anu P. Mathai, IES, Chief Executive Officer, IBEF

Over 100 Indian companies participated at Arab Health 2017, the largest healthcare exhibition & medical congress in the Middle East and the second largest in the worl...

author_Rahul-Garg.png GST a game changer for manufacturing industry: Are you ready?
Rahul Garg, Founder & CEO, Moglix

GST, the “most significant tax reform” so far in India is poised to enable India Inc to operate under a one-country one market philosophy. One of the biggest ...

author_Anu_P._Mathai_photo_1_-_mobile_photo_1.jpg Government e-Marketplace: A GeM for modern procurement
Anu P. Mathai, IES, Chief Executive Officer, IBEF

The Government of India has laid special emphasis on the reforms required in its public procurement process. In a major step that aims to transform the way in which procu...

author_Rohit-Poddar1.jpg How the government announcement will boost interest of consumers in the real estate sector
Rohit Poddar, Managing Director, Poddar Housing & Development Ltd.

The provisions of the erstwhile Rajiv Awas Yojana (RAY) scheme weren’t the brightest idea because practical implementation, in scale, was not feasible, and hence it...

ideas More


Cutlery You Can Eat
Narayana Peesapaty, a former researcher at the International Water Management Institute of Hyderabad, has created an innovative edible cutlery, mainly made out of sorghum. The basic idea behind the innovation - replace plastic spoons – struck Narayana during a flight, upon observing fellow passengers..


Join now. Enjoy FREE subscriptions downloads, updates and more.


Already a member?
Login / Retrieve Password