Information technology in India

From Wikipedia, the free encyclopedia
Jump to: navigation, search

Information technology in India is an industry consisting of two major components: IT Services and business process outsourcing (BPO). The sector has increased its contribution to India's GDP from 1.2% in 1998 to 7.5% in 2012.[1] According to NASSCOM, the sector aggregated revenues of US$100 billion in 2012, where export and domestic revenue stood at US$69.1 billion and US$31.7 billion respectively, growing by over 9%.[1]

Information technology is playing an important role in India today & has transformed India's image from a slow moving bureaucratic economy to a land of innovative entrepreneurs.

The IT sector in India is generating 2.5 million direct employment.India is now one of the biggest IT capitals of the modern world and all the major players in the world IT sector are present in the country.[2]

The major cities that account for about nearly 90% of the sector's exports are Bangalore, Chennai, Kolkata, Hyderabad, Trivandrum, Noida, Mumbai and Pune. Bangalore is considered to be the Silicon Valley of India because it is the leading IT exporter.[3][4] Exports dominate the industry and constitute about 77% of the total industry revenue. However, the domestic market is also significant with a robust revenue growth.[1] The industry’s share of total Indian exports (merchandise plus services) increased from less than 4% in FY1998 to about 25% in FY2012. According to Gartner, the "Top Five Indian IT Services Providers" are Tata Consultancy Services, Infosys, Cognizant, Wipro and HCL Technologies.[5]


The Indian Government acquired the EVS EM computers from the Soviet Union, which were used in large companies and research laboratories. In 1968 Tata Consultancy Services—established in SEEPZ, Mumbai[6] by the Tata Group—were the country's largest software producers during the 1960s.The sector developed privately and the government did not play an active part in it till 1999. On 18 August 1951 the Indian Institute of Technology was inaugurated at Kharagpur in West Bengal. These institutions were conceived by a 22-member committee of scholars and entrepreneurs under the chairmanship of N. R. Sarkar.

Relaxed immigration laws in the United States of America (1965) attracted a number of skilled Indian professionals aiming for research. By 1960 as many as 10,000 Indians were estimated to have settled in the US. By the 1980s a number of engineers from India were seeking employment in other countries. In response, the Indian companies realigned wages to retain their experienced staff. In the Encyclopedia of India, Kamdar (2006) reports on the role of Indian immigrants (1980 - early 1990s) in promoting technology-driven growth:

The United States’ technological lead was driven in no small part by the brain power of brilliant immigrants, many of whom came from India. The inestimable contributions of thousands of highly trained Indian migrants in every area of American scientific and technological achievement culminated with the information technology revolution most associated with California’s Silicon Valley in the 1980s and 1990s.[2]

The ground work and focal point for the development of the information technology industry in India was led by the Electronics Commission in the early 1970s. The driving force was India's most esteemed scientific and technology policy leader M. G. K. Menon. With the support of the United Nations Development Programme (UNDP) under project IND/73/001, the Electronics Commission formulated a strategy and master plan for regional computing centers, each to have a specific purpose as well as to serve as a hub for manpower development and to spur the propagation of informatics in local economies. The first center, the National Centre for Software Development and Computing Techniques (from 1973 onward) was at the Tata Institute of Fundamental Research in Mumbai and was focused on software development.[7] A key decision of the strategy was to not focus on large-scale hardware production but rather intellectual capital and knowledge development. The success of this decision can be seen in the global leadership of Indian entrepreneurs and computer scientists in software development. Jack Fensterstock of the United States was the program manager on behalf of the UNDP and the key advisor to the Indian Government for the implementation of the master plan.

The National Informatics Centre was established in March 1975. The inception of The Computer Maintenance Company (CMC) followed in October 1976. From 1977 to 1980, the country's Information Technology companies Tata Infotech, ProcSys, Patni Computer Systems and Wipro had become visible. The 'microchip revolution' of the 1980s had convinced both Indira Gandhi and her successor Rajiv Gandhi that electronics and telecommunications were vital to India's growth and development but they were releuctant to anything because they were more focused on saving their government from falling and continue their vote bank policies. MTNL underwent technological improvements. From 1986 to 1987, the Indian government embarked upon the creation of three wide-area computer networking schemes: INDONET (intended to serve the IBM mainframes in India), NICNET (the network for India's National Informatics Centre), and the academic research oriented Education and Research Network (ERNET).

Post liberalization[edit]

Regulated VSAT links became visible in 1994.[8] Desai (2006) describes the steps taken to relax regulations on linking in 1991:

In 1991 the Department of Electronics broke this impasse, creating a corporation called Software Technology Parks of India (STPI) that, being owned by the government, could provide VSAT communications without breaching its monopoly. STPI set up software technology parks in different cities, each of which provided satellite links to be used by firms; the local link was a wireless radio link. In 1993 the government began to allow individual companies their own dedicated links, which allowed work done in India to be transmitted abroad directly. Indian firms soon convinced their American customers that a satellite link was as reliable as a team of programmers working in the clients’ office.

Videsh Sanchar Nigam Limited (VSNL) introduced Gateway Electronic Mail Service in 1991, the 64 kbit/s leased line service in 1992, and commercial Internet access on a visible scale in 1992. Election results were displayed via National Informatics Centre's NICNET.

The Indian economy underwent economic reforms in 1991, leading to a new era of globalization and international economic integration. Economic growth of over 6% annually was seen during 1993-2002. The economic reforms were driven in part by significant the internet usage in the country. The new administration under [[Atal Bihari Vajpayee] 1999 govt pm]—which placed the development of Information Technology among its top five priorities— formed the Indian National Task Force on Information Technology and Software Development.

Wolcott & Goodman (2003) report on the role of the Indian National Task Force on Information Technology and Software Development:

Within 90 days of its establishment, the Task Force produced an extensive background report on the state of technology in India and an IT Action Plan with 108 recommendations. The Task Force could act quickly because it built upon the experience and frustrations of state governments, central government agencies, universities, and the software industry. Much of what it proposed was also consistent with the thinking and recommendations of international bodies like the World Trade Organization (WTO), International Telecommunications Union (ITU), and World Bank. In addition, the Task Force incorporated the experiences of Singapore and other nations, which implemented similar programs. It was less a task of invention than of sparking action on a consensus that had already evolved within the networking community and government.

"The New Telecommunications Policy, 1999" (NTP 1999) helped further liberalize India's telecommunications sector. The Information Technology Act 2000 created legal procedures for electronic transactions and e-commerce.

Throughout the 1990s, another wave of Indian professionals entered the United States. The number of Indian Americans reached 1.7 million by 2000. This immigration consisted largely of highly educated technologically proficient workers. Within the United States, Indians fared well in science, engineering, and management. Graduates from the Indian Institutes of Technology (IIT) became known for their technical skills. The success of Information Technology in India not only had economic repercussions but also had far-reaching political consequences. India's reputation both as a source and a destination for skilled workforce helped it improve its relations with a number of world economies. The relationship between economy and technology—valued in the western world—facilitated the growth of an entrepreneurial class of immigrant Indians, which further helped aid in promoting technology-driven growth.

Recent development[edit]

The economic effect of the technologically inclined services sector in India—accounting for 40% of the country's GDP and 30% of export earnings as of 2006, while employing only 25% of its workforce—is summarized by Sharma (2006): "Today, Bangalore is known as the Silicon Valley of India and contributes 33% of Indian IT Exports. India's second and third largest software companies are headquartered in Bangalore, as are many of the global SEI-CMM Level 5 Companies."[citation needed]

Numerous IT companies are based in Mumbai, such as TCS (among India's first and largest), Reliance,[disambiguation needed] Patni, LnT Infotech, Myzornis Corporation and i-Flex.

Thiruvananthapuram (Trivandrum), the capital of Kerala state, is the foremost among the Tier II cities that is rapidly growing in terms of IT infrastructure. As the software hub of Kerala (more than 80% of the state's software exports are from here[citation needed]), comparisons have been drawn between Trivandrum and Bangalore. Major campuses and headquarters of companies such as Infosys, Oracle Corporation, IBS Software Services and UST Global are located in the city. India's biggest IT company Tata Consultancy Services is building the country's largest IT training facility in Trivandrum—the project is worth INR10 billion and will have a capacity of 10,000 seats. The completion of the facility is expected in 2014 or 2015.[9]

In January 2012, French company Capgemini announced the establishment of the software centre at the Technopark IT hub in the capital of Kerala. At the time of the announcement, Technopark's business development manager stated: "In two years time, Technopark IT campus is poised to become one of the country's leading IT hubs".[10]

On 25 June 2002, India and the European Union agreed to bilateral cooperation in the field of science and technology. A joint EU-India group of scholars was formed on 23 November 2001 to further promote joint research and development. India holds observer status at CERN, while a joint India-EU Software Education and Development Center will be located in Bangalore.[citation needed]

"Big Five" IT services companies[edit]

Firm Revenues Employees Fiscal Year Headquarters Source
Tata Consultancy Services $11.57 billion 254,076 2012 Mumbai [11]
Cognizant Technology Solutions $7.05 billion 185,045 2012 Teaneck, New Jersey [12]
Infosys $6.69 billion 153,761 2012 Bangalore [13]
Wipro $6.87 billion 140,569 2012 Bangalore [14]
HCL Technologies $4.3 billion 85,335 2012 Noida [15]

Major IT Hubs[edit]

Rank City Description
1 Bangalore Popularly known as the Silicon Valley of India and leading software exporter from India. Bangalore is considered to be a global information technology hub of India.
2 Chennai Chennai is the second largest exporter of IT and ITES of India, and is the BPO hub of India.[16] Chennai has the largest operations centers of TCS, and Cognizant.
3 Hyderabad Hyderabad is a major IT hub in India which is also known as Cyberabad which consists of many Multinational corporation companies such as Google, Facebook, Microsoft, Amazon, Oracle and Electronic Arts, AT&T, etc.
4 Mumbai The Financial capital of India, but recently many IT companies have established offices.
5 Delhi The National Capital Region comprising Delhi, Gurgaon and Noida are clusters of software development.
6 Pune Major Indian and International Firms present in Pune. Pune is also C-DAC headquarters.
7 Kolkata The city is a major back-end operational hub for IBM, Deloitte.
8 Bhubaneswar The capital city of Odisha, an emerging IT and education hub, is one of India's fastest developing cities.
9 Thiruvananthapuram The capital of Kerala, now houses all major IT companies including Oracle, TCS, Infosys, and contributes in IT export of India.


This sector has also led to massive employment generation. The industry continues to be a net employment generator - expected to add 230,000 jobs in FY2012, thus providing direct employment to about 2.8 million, and indirectly employing 8.9 million people.[1] Generally dominant player in the global outsourcing sector. However, the sector continues to face challenges of competitiveness in the globalized and modern world, particularly from countries like China and Philippines.

India's growing stature in the Information Age enabled it to form close ties with both the United States of America and the European Union. However, the recent global financial crises has deeply impacted the Indian IT companies as well as global companies. As a result hiring has dropped sharply, and employees are looking at different sectors like the financial service, telecommunications, and manufacturing industries, which have been growing phenomenally over the last few years.[17] India's IT Services industry was born in Mumbai in 1967 with the establishment of Tata Group in partnership with Burroughs.[6] The first software export zone SEEPZ was set up here way back in 1973, the old avatar of the modern day IT park. More than 80 percent of the country's software exports happened out of SEEPZ, Mumbai in 1980s.[18]


Despite its rapid growth, the IT industry in India has attracted its fair share of criticism. This is primarily leveled against the industry's excessive political influence - as articulated through its association, NASSCOM - which, it is claimed, far exceeds its economic contribution to the country.[19] This has allowed the industry to secure the support and resources of the Indian state ahead of other sectors of the national economy where the developmental returns would be greater.[20]

See also[edit]


  1. ^ a b c d "Indian IT-BPO Industry". NASSCOM. Retrieved 15 December 2012. 
  2. ^ a b Kamdar (2006)
  3. ^ Canton, Naomi. "How the 'Silicon Valley of India' is bridging the digital divide". CNN. Retrieved December 6, 2012. 
  4. ^ RAI, SARITHA. "Is the Next Silicon Valley Taking Root in Bangalore?". New York Times. Retrieved March 20, 2006. 
  5. ^ "Gartner Says Top Five Indian IT Services Providers Grew 23.8 Percent In 2011". 2012-05-07. Retrieved 2013-09-28. 
  6. ^ a b "Special Economic Zones: Profits At Any Cost". Retrieved 22 July 2010. 
  7. ^ Narasimhan, R. "Characterizing literacy: a study of western and Indian literacy experience", ISBN 0-7619-9829-2 (US Pb), 2004.
  8. ^ "Online Journal of Space Communication". Retrieved 2013-09-28. 
  9. ^ "TCS to build a 10,000 seat learning campus in Kerala" (Press release). TATA Consultancy Services. TATA Consultancy Services. 14 September 2010. Retrieved 10 November 2013. 
  10. ^ "Capgemini to set up centre in Kerala". 7 January 2012. Retrieved 10 November 2013. 
  11. ^ "TCS FY 2012 results". TCS. 
  12. ^ Shelley Singh, ET Bureau May 28, 2013, 01.36PM IST (2013-05-28). "TCS, Cognizant, Wipro, Infosys and HCL Tech, the `fab five’ IT services providers grew 13.3% in 2012 - Economic Times". Retrieved 2013-09-28. 
  13. ^ "Wipro". Yahoo. Retrieved 8 December 2011. 
  14. ^ "2012 Form 10-K, Infosys Technologies Limited". 
  15. ^ "HCL Technologies Fast Facts". Retrieved 2012-07-25. 
  16. ^ "Chennai Activities". Nasscom. Retrieved 2013-09-28. 
  17. ^ "Economic Times (2010), ''Are IT jobs losing sparkle?''". 27 August 2010. Retrieved 30 August 2010. 
  18. ^ "Top 50 Emerging Global Outsourcing Cities". Retrieved 22 July 2010. 
  19. ^ Saraswati, Jyoti (3333). Dot.compradors: Power and Policy in the Development of the Indian Software Industry, Pluto Press, London. ISBN 9780745332659.
  20. ^ Chandrasekhar, C.P. and Ghosh, Jayati. "IT-Driven Offshoring: The Exaggerated Development Opportunity" [Macroscan], New Delhi, 27 January 2006. Retrieved on 1 November 2012.

Further reading[edit]

  • Alexander, Steve, E-Commerce. (2006: from Computers and Information Systems), Encyclopædia Britannica 2008.
  • Chand, Vikram K. (2006), Reinventing public service delivery in India: Selected Case Studies, Sage Publications, ISBN 0-7619-3489-8.
  • Desai, Ashok V. (2006), "Information and other Technology Development", Encyclopedia of India (vol. 2) edited by Stanley Wolpert, pp. 269–273, Thomson Gale, ISBN 0-684-31351-0.
  • Kamdar, Mira (2006), "Indo -U.S. Relations, Cultural Exchanges in", Encyclopedia of India (vol. 2) edited by Stanley Wolpert, pp. 236–239, Thomson Gale, ISBN 0-684-31351-0.
  • Kapur, Devesh (2006), "Diaspora" in Encyclopedia of India (vol. 1) edited by Stanley Wolpert, pp. 328–331, Thomson Gale, ISBN 0-684-31350-2.
  • Ketkar, Prafulla (2006), "European Union, Relations with (Science and technology)", Encyclopedia of India (vol. 2) edited by Stanley Wolpert, pp. 48–51, Thomson Gale, ISBN 0-684-31351-0.
  • Nanda, B. R. (2006), "Nehru, Jawaharlal", Encyclopedia of India (vol. 3) edited by Stanley Wolpert, pp. 222–227, Thomson Gale, ISBN 0-684-31352-9.
  • Rothermund, Dietmar (2006), "Andhra Pradesh", Encyclopedia of India (vol. 1) edited by Stanley Wolpert, pp. 43–44, Thomson Gale, ISBN 0-684-31350-2.
  • Saraswati, Jyoti. Dot.compradors: Power and Policy in the Development of the Indian Software Industry. London: Pluto, 2012. ISBN 9780745332659.
  • Sharma, Jagdish (2006), "Diaspora: History of and Global Distribution", Encyclopedia of India (vol. 1) edited by Stanley Wolpert, pp. 331–336, Thomson Gale, ISBN 0-684-31350-2.
  • Sharma, Shalendra D. (2006), "Globalization", Encyclopedia of India (vol. 2) edited by Stanley Wolpert, pp. 146–149, Thomson Gale, ISBN 0-684-31351-0
  • Vrat, Prem (2006), "Indian Institutes of Technology", Encyclopedia of India (vol. 2) edited by Stanley Wolpert, pp. 229–231, Thomson Gale, ISBN 0-684-31351-0.
  • Wolcott, P. & Goodman, S. E. (2003), Global Diffusion of the Internet – I India: Is the Elephant Learning to Dance?, Communications of the Association for Information Systems, 11: 560-646.

External links[edit]