Information Technology in India
Information Technology in India
  • Korea IT Times
  • 승인 2010.01.20 13:58
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Skand R Tayal, Ambassador of India

The Indian information technology 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. The revenue of the information technology sector has risen from 1.2 per cent of the gross domestic product (GDP) in the year 1997 to an estimated 5.8 per cent in 2008.

India's IT growth in the world is primarily dominated by IT software and services such as Custom Application Development and Maintenance (CADM), System Integration, IT Consulting, Application Management, Software testing, and Web services.

As per India's National Association of Software & Service Companies (NASSCOM) latest findings, Indian IT-BPO sector grew by 12 per cent in the year 2009 to reach US$ 71.7 billion in aggregate revenue (including hardware). Of this, the software and services segment accounted for US$ 59.6 billion.

Moreover, according to a study by Springboard Research, the Indian IT services market is estimated to remain the fastest growing in the Asia-Pacific region with a Compound Annual Growth Rate (CAGR) of 18.6 per cent.

At present, there are 60 million Internet users in India. According to Manufacturer's Association of IT (MAIT), the number of active Internet entities rose to 8.6 million by March 2009 from 7.2 million units in March 2008. A recent study estimates that the total PC sale in India is likely to grow by 7 per cent in 2009, with total sales expected to cross 7.3 million units.

Outsourcing

According to NASSCOM, software and services exports (including exports of IT services, BPO, engineering services and R&D and software products) reached US$ 47 billion in 2008, contributing nearly 78 per cent to the total software and services revenue of US$ 59.6 billion.

India continues to be the most preferred destination for companies looking to offshore their IT and back-office functions. It also retains its low-cost advantage and is among the most financially attractive locations when viewed in combination with the business environment it offers and the availability of skilled people, according to global management consultancy AT Kearney.

Some recent big deals in the outsourcing space include:

  • Tata Consultancy Services is understood to have bagged a US$ 248.75 million software implementation contract from the Cardiff City Council, UK.
  • Etisalat DB, formerly known as Swan Telecom, has outsourced implementation of its software applications and IT infrastructure to Tech Mahindra as part of a US$ 400 million deal spread over the next 10 years.

IT enabled Services

India is referred to as the back office of the world owing mainly to the Information Technology-enabled Services (ITeS) sector. Software and services exports (includes exports of IT services, BPO, Engineering Services and R&D and Software products) reached US$ 47 billion, contributing nearly 66 per cent to the overall IT-BPO revenue aggregate.

ITeS, which started with basic data entry tasks over a decade ago, is witnessing an expansion in its scope of services to include increasingly complex processes involving rule-based decision making and even research services requiring informed individual judgment. It now offers services such as knowledge process outsourcing (KPO), legal process outsourcing (LPO), games process outsourcing (GPO) and design outsourcing among others.

India continues to capture a large share of new offshore centers being established in Asia. According to a new report by the Everest Research Institute,  more delivery centers have been set-up in tier-I and tier-II cities during the second quarter of 2009 as compared to the first quarter.

Moving up the value-chain

India with its natural competitive advantage is likely to play an important role in various segments of the ITeS industry.

  • The Indian animation industry is rapidly growing as a major outsourcing hub with a growth rate of 30 per cent.
  • The Indian Knowledge Process Outsourcing (KPO) sector is estimated to become a US$ 10 billion industry by 2012, from the current size of US$ 4 billion.
  • India is fast becoming a hot destination for outsourced e-publishing work. As per a Confederation of Indian Industry (CII) report, the industry is growing at an annual rate of 35 per cent and India's outsourcing opportunities in the value-added and core services will help make the publishing BPO industry worth US$ 1.46 billion by 2010.
  • As per a CRISIL study, engineering services outsourcing (ESO) is poised to be the next big opportunity in the Indian outsourcing services industry. The ESO sector is likely to grow at a compounded rate of 26 per cent and post revenues aggregating around US$ 7.5 billion by 2012.
  • The market for recruitment process outsourcing (RPO) continues to grow at a healthy rate notwithstanding the tough economic condition with the number of deals signed rising in 2009.

Recent Deals

The cross-border merger and acquisition (M&A) involving Indian IT and IT-enabled companies increased by nearly 12 per cent between January 1 and December 15, 2008 to US$ 3.22 billion (in 98 deals) compared with US$ 2.88 billion (in 159 deals) in 2007. The average deal size in 2008 increased to US$ 32.86 million (as compared to US$ 18.15 million), according to Grant Thornton India.

Etisalat DB Telecom, a new entrant in the Indian telecom space has awarded an end-to-end outsourcing contract to three Indian BPO service providers - Tech Mahindra, Aegis and Conflux. The deal, spanning over five years, is valued at over US$ 161.3 million.

Indian IT majors Tata Consultancy Services (TCS), Infosys Technologies and Wipro Ltd, besides global IT giants IBM and Accenture, have bagged a five-year US$ 1.5 billion outsourcing deal from BP (British Petroleum), the world's third-largest petroleum refining company in the world.

CEPA

A Comprehensive Economic Partnership Agreement (CEPA) between India and Korea has become operational from the beginning of this year. CEPA is more than a normal free trade agreement and covers services sector also. An important provision of CEPA is that it eases the entry of Indian professionals in 163 types of occupations into Korea for contractual work. These include ICT hardware design engineers, LAN engineers, web masters, database programmers and internet engineers.

Prestigious  Indian IT companies like Tata Consultancy Services (www.tcs.com), L&T Infotech (www.lntinfotech.com)  , WIPRO (www.wipro.com) , Nucleus  Software (www.nucleussoftware.com) have their offices in Seoul and have been working for their Korean clients for several years.

We hope that, in the years to come, Indian IT companies would enter into major collaborative projects with Korean companies which would further enhance the profitability and efficiency of Korean corporate sector.


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