INFORMATION TECHNOLOGY FOR MANAGEMENT

TOPIC

SCENERIO OF IT INDUSTRIES IN INDIA

Submitted to-

Deepjyoti choudhory

Assistant prof.

Assam University submitted by-

Maumita kar

Roll no.-06

Mba-1st semester

Assam university
Contents….

Introduction

Origin

Its trends

Its success factor

International cooperation

Challenges for Outsourcing Sector of India in 2009

CONCLUSION
Introduction…

Information Technology (IT) industry in India is one of the fastest growing

industries. Indian IT industry has built up valuable brand equity for itself in the global
markets. IT industry in India comprises of software industry and information
technology enabled services (ITES), which also includes business process outsourcing
(BPO) industry. India is considered as a pioneer in software development and a favorite
destination for IT-enabled services.

The Indian information technology (IT) industry has played a key role in putting
India on the global map. Thanks to the success of the IT industry, India is now a power
to reckon with. According to the annual report 2009-10, prepared by the Department of
Information Technology (DIT), the IT-BPO industry is expected to garner a revenue
aggregate of US$ 73.1 billion in 2009-10 as compared to US$ 69.4 billion in 2008-09,
growing at a rate of over 5 per cent. The report predicts that the Indian IT-BPO
revenues may reach US$ 225 billion in 2020.

According to DIT, the Indian software and services exports is expected to reach
US$ 49.7 billion in 2009-10 as compared to US$ 47.1 billion in 2008-09, registering an
increase of 5.5 per cent in dollar terms. Further, the IT services exports is estimated to
grow from US$ 25.8 billion in 2008-09 to US$ 27.3 billion in 2009-10, showing a growth
of 5.8 per cent.

Moreover, according to a study by Springboard Research published in February

2010, the Indian information technology (IT) market is expected to grow at around 15.5
per cent in 2010, on the back of growing investor confidence and favourable initiatives
taken by the government.

The data centre services market in the country is forecast to grow at a compound
annual growth rate (CAGR) of 22.7 per cent between 2009 and 2011, to touch close to
US$ 2.2 billion by the end of 2011, according to research firm IDC India's report
published in March 2010. The IDC India report stated that the overall India data centre
services market in 2009 was estimated at US$ 1.39 billion.

As per a report by the Internet and Mobile Association of India (IAMAI) and
market research firm IMRB, the total number of Internet users in India reached 71
million in 2009. The number of active users increased to 52 million in September 2009
from 42 million in September 2008, registering a growth of 19 per cent year-on-year,
stated the report.

According to IDC India, during January-March 2010, total PC sales in India

reached 2,240,000 units registering a year-on-year increase of 33 per cent over the same
period in 2009. Desktop PC sales witnessed a year-on-year increase of 18 per cent
during January-March 2010, over the corresponding period last year to reach 1,436,000
units. The sales of Notebook computers also increased by 72 per cent year-on-year,
clocking 803,000 shipments.

ORIGIN…

The origin of IT industry in India can be traced to 1974, when the mainframe
manufacturer, Burroughs, asked its India sales agent, Tata Consultancy Services (TCS),
to export programmers for installing system software for a U.S. client. The IT industry
originated under unfavorable conditions. Local markets were absent and government
policy toward private enterprise was hostile. The industry was begun by Bombay-based
conglomerates which entered the business by supplying programmers to global IT
firms located overseas.

During that time Indian economy was state-controlled and the state remained hostile to
the software industry through the 1970s. Import tariffs were high (135% on hardware
and 100% on software) and software was not considered an "industry", so that exporters
were ineligible for bank finance. Government policy towards IT sector changed when
Rajiv Gandhi became Prime Minister in 1984. His New Computer Policy (NCP-1984)
consisted of a package of reduced import tariffs on hardware and software (reduced to
60%), recognition of software exports as a "delicensed industry", i.e., henceforth eligible
for bank finance and freed from license-permit raj, permission for foreign firms to set
up wholly-owned, export-dedicated units and a project to set up a chain of software
parks that would offer infrastructure at below-market costs. These policies laid the
foundation for the development of a world-class IT industry in India.

MAJOR TRENDS..

Trends in Hiring
 The bar chart shows that the recruitment of engineers and IT professionals in the
industry is growing at the Compound Annual Rate of 14.5% approximately.

In the FY06, the direct employment in the IT-ITES sector was 1.3 million people
and the indirect employment was 3 million approximately.

Trends in Salary Hikes

Along with abundant growth opportunities, IT sector is one of the highest

paying sectors. The average increase in salary in IT sector across the levels was
around 16% and the average increase in the ITeS BPO sector across the levels was
in between 16%-18%

IT – SUCCESS FACTORS

Today, Indian IT companies such as Tata Consultancy Services (TCS), Wipro,

Infosys, HCLall are renowned in the global market for their IT prowess. In the last few
years Indian IT industry has seen tremendous growth. Destinations such as Bangalore,
Hyderabad and Gurgaon have evolved into global IT hubs. Several IT parks have come
up at Bangalore, Hyderabad, Chennai, Pune, Gurgaon etc. These parks offer Silicon
Valley type infrastructure. In the light of all the factors that have added to the strength
of Indian IT industry, it seems that Indian success story is all set to continue.Some of the
major factors which played a key role in India's emergence as key global IT player are:
  Indian Education System

The Indian education system places strong emphasis on mathematics and science,
resulting in a large number of science and engineering graduates. Mastery over
quantitative concepts coupled with English proficiency has resulted in a skill set that
has enabled India to reap the benefits of the current international demand for IT.

 High Quality Human Resource

Indian programmers are known for their strong technical and analytical skills and their
willingness to accommodate clients. India also has one of the largest pools of English-
speaking professionals.

 Competitive Costs
The cost of software development and other services in India is very competitive
as compared to the West.

 The demographic factor-

Approximately 60% of the population of India lies in the age group of 15-65.
More than half of the population of India is below the age of 25. So in the future,
the number of working people is going to be more than the number of
dependants.

 The vast academic infrastructure of India-

In the year 2006, Total Enrollment in colleges was 9.3 million and India
produced 441,000 Technical graduates.

 India has the second largest English-speaking workforce in the world.

 Increasing number of skilled professionals in IT.

International Cooperation in IT Sector

It is a recognized fact that Information and Communications

Technology (ICT) can help to enhance the sustainable socio-
economic transformation of societies. There are needs to bridge the
gap between people with effective access to digital and
information technology and those with very limited or no access at
all. In this direction, India is helping partner countries to achieve
these objecives. The development cooperation efforts have been focused on extending
the technical assistance in the area of IT infrastructure, networking, capacity building,
HRD and e-government. Additionally, to promote international cooperation in the
emerging and frontier areas of information technology, explore ways to enhance
investment and address regulatory mechanism, various collaborative efforts have been
geared up to encourage sustainable development and strengthening partnerships with
other countries.

Challenges for Outsourcing Sector of India in 2009

2 009 is perhaps a very challenging year for the global economy. The only good
thing is that the price of oil is very low. The bad thing is that we are in the midst of
economic recession. Satyam Scandal has come at a time when in the USA, a president
who has talked a lot against outsourcing jobs to India has taken oath. Some other
countries like Philippines, China and Russia are determined to take larger pies from the
outsourcing revenue. Here, have been analyzed some about the challenges that the
Indian outsourcing industry faced in 2009.

 Economic Recession

Indian outsourcing industry is almost solely dependent on American market and

American companies. As we know, the condition of American economy at this moment
is not good at all because of the ongoing economic recession. So, there is a lot of worry
among Indian technology companies about the possible impact or negative impact on
the outsourcing sector of the recession. I thing that it is a very big challenge but
economic recession in America can have a positive impact too. Now, American
companies feel the need of cutting cost more than ever before and what can be a better
way to cut costs than outsourcing the jobs to India?

 Satyam Scandal and Corporate Governance

It has been almost three weeks since Satyam Scandal then to the media and that
people could know about it. Still, it seems that there is no end to the media coverage of
this scandal. Every day, new news items and reports about it and this has seriously put
some questions about the level and quality of corporate governance in India. Today,
“Nasscom requests members not to poach Satyam staff”.

Nasscom President Som Mittal said in an interview:

“It was decided in our executive committee meeting that other companies should not
try to take over Satyam’s staff and clients, as this would affect the business continuity of
the company. The employees of the company are working on different projects and it’s
necessary to complete all these projects, …… “The association had put in a request to all
our members, and the companies are maintaining a self-imposed restraint,”

The employees of Satyam a tough raid and frustrated and are desperate to go to other
companies because they feel that they have a bleak prospect in Satyam.

 Philippines

You may think that there can be no comparison between Philippines and India in
outsourcing as Philippines is a poor country with all the political instability. Well, the
decision makers in the country have realized the potential of outsourcing and that is
why, they are doing everything they can to get more American companies outsource to
the Philippines. According to a research of Everest Research Institute, Philippines
expected to emerge as premier non-voice outsourcing hub. If there are few more stories
like Satyam Scandal in 2009 then in 2010, we may find a significant shift in outsourcing
projects to Philippines from India.

 China, Nigeria and East Europe

Eastern Europe countries and Russia have already started to compete with Indian
companies in this field. Just take a look at Odesk and you will find that a large number
of service providers are from Russia and they are ready to work at a competitive rate.
You can find detailed information here:

2008 oDesk Russia Offshore Outsourcing Statistics Data Report

China has been trying a lot to emerge as the market leader in this field and is
now in second position after India. Well, China surely has some good sides but the
main problem is still the lack of large pool of workers skilled in English language.
Chinese government is serious to fill up this gap and I have a feeling that China may
have some big success stories in the next few years.

About Nigeria? Nigeria is famous for online scams of sending all kinds of emails. Now
the question arises why Nigerians are related to online scams in such a large scale?
Well, the reason is very simple: Nigeria has a large population with good skill of
English language and some skill of Internet and then they are poor and unemployed.
They are ready to work hard if they can get the taste of earning American dollar or
British Pound by the outsourcing sector Nigeria can be a very big challenge for India in
the next one decade provided that Nigerian decision makers have the same attitude and
wisdom like the decision makers of the Philippines.

 Obama and American Public Opinion

Barack Obama took oath as the new president of United States of America. During
his campaign for presidency, Obama several times said that he was not happy with
outsourcing of American jobs and he would try his best to support those American
companies who keep the jobs inside USA. In 2008, 2.6 million American people lost jobs
and now, they hope that Obama will really do something about outsourcing and ensure
that more jobs do not go out of the US. If the condition of US economy does not witness
a significant improvement in the next few months then there will be more pressure on
Obama to keep his promise about working against outsourcing jobs to India.

For many years, India followed closed economic system. In the last two
decades, India opened up its economy and IT outsourcing sector witnessed impressive
growth. 2009 can be a challenging year for outsourcing sector.

CONCLUSION

Our society is being reshaped by rapid advances in information technologies,

computers, telecommunications networks, and digital systems that have vastly
increased our capacity to know achieve and collaborate. These technologies allow
people to transmit information quickly and widely, linking distant places and to create
communities that just a decade ago were unimaginable.

Corporation and government are reorganizing their work culture to enhance

productivity, improve quality, and control cost. Entire industries have been
restructured to better align themselves with the realities of the digital age. It is no
exaggeration to say that information technology is fundamentally changing the
relationship between people and knowledge.

The Indian information technology (IT) industry has played a key role in putting
India on the global map. Thanks to the success of the IT industry, India is now a power
to reckon with.