OVERVIEW | OPPORTUNITIES

IT & IT - Enabled Services

 

OVERVIEW

SIZE

• India is the leading destination for providing IT and IT-Enabled Services (ITeS), with revenues of about US$40 billion in 2006-07 of which:
  • IT Services and Software constituted 58%, ITeS about 21%, and the domestic market about 21%
  • Exports constituted 79% of the total IT and ITeS revenues

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STRUCTURE

• The industry has 3 broad categories of companies:
• Indian IT and ITeS companies ranging from large companies (Tata Consultancy Services, Infosys, Wipro, HCL) to small niche companies
• Global IT companies such as IBM, Dell, Microsoft, HP, Accenture, etc. all of whom have set up development centres in India
• Captive back office operations of large global corporations like JP Morgan, American Express, GE, HSBC, British Airways, etc.

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POLICY

• 100% FDI is permitted in this sector under the automatic route
• SEZs, EOUs and Software Technology Parks have been set up across India – income tax exemptions are available for units in these designated areas/zones
• IT Act, 2000 legalises the acceptance of electronic records and digital signatures providing a legal backbone to e-commerce

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Major IT & ITeS Companies in India

	Revenues1 (US$ million) (FY 07)	Nos. of Employees
Domestic Private Companies
Tata Consultancy Services	5,676	85,582
Wipro Technologies	4,970	67,800
Infosys Technologies	4,144	59,831
Satyam	2,103	40,000
International Private Companies
IBM (CY 07)	98,786	386,558
Accenture (CY 07)	19,696	170,000

¹Global Revenues, Consolidated
Source: Bloomberg, Fortune

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OPPORTUNITY

World leaders in IT have a significant presence in India	ITeS is set to grow three-fold over the next 5 years

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OUTLOOK

• The Indian IT and ITeS industry is expected to grow to US$77 billion by 2010
  • Over 25% p.a. CAGR expected
  • Exports expected to reach US$60 billion in 2010

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POTENTIAL

• India’s inherent IT capabilities - talented workforce and world-class companies
  • Availability of technically skilled and English-speaking labour force at a fraction of the costs in USA and Europe
  • Quality orientation, project and process management expertise
  • Enhanced global service delivery capabilities of Indian companies through a combination of greenfield initiatives, M&A, alliances and partnerships with local players
• International recognition of India’s strengths
  • Increasing awareness among global companies about India’s capabilities in higher, value-added activities and in the Global Delivery Model
  • Leading international companies have identified custom application development and maintenance as priority areas due to a high offshoreable component
• High growth of domestic IT & ITeS market due to several regulatory and technological factors:
  • Increased investments by enterprises in IT infrastructure, applications and IT outsourcing
  • Demand for domestic BPOs has been largely driven by faster GDP growth and by sectors such as telecom, banking, insurance, retail, healthcare, tourism and automobiles.
• Opportunity to supply to the global market in addition to serving the growing domestic demand

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For additional information: Ministry of Information Technology and Communications (http://www.mit.gov.in), National Association of Software and Services Companies (http://www.nasscom.org)