Information technology in India
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. According to NASSCOM, the sector aggregated revenues of US$100 billion in 2012, where export revenue stood at US$69.1 billion and domestic at US$31.7 billion, growing by over 9%.
Information technology is playing an important role in India today and 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.
Bengaluru is considered to be the Silicon Valley of India because it is the leading IT exporter. 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. 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.
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.
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-CMMI Level 5 Companies." Numerous IT companies are based in Mumbai such as TCS (among India's first and largest), Reliance, 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. 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.
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.
Major information technology hubs
|1||Bangalore||Popularly known as the Silicon Valley of India and IT Capital of India. Bangalore is considered to be a global information technology hub and largest software exports from India. The top Indian IT service providers like Infosys and Wipro are headquartered in Bangalore, It is also country headquarters to many top firms like Intel, Texas Instruments, Bosch, Yahoo, SAP labs, Continental and many more, Bangalore alone consists of more than 35 percentage of all the IT companies present in India and contains close to 5000 companies making it the largest IT contributor in India.|
|2||Chennai||Chennai is the second largest exporter of IT and ITES of India. Some of the major companies having operation centres at Chennai are Accenture, Cognizant, TCS, Syntel, Wipro, Infosys, Verizon, L&T, HCL, Amazon.com, eBay, Paypal, Polaris, Patni, Capgemini and many major global providers. The city has a world class IT infrastructures with dedicated expressway nicknamed as IT expressway, and many other IT parks promoted by both government and private entities. The city's strong industrial base also favors setting up of many major R&D centers in its vicinity.|
|3||Hyderabad||Hyderabad is the third major IT hub in India. It has become the first destination for the Microsoft development centre in India and largest software development centre outside of their headquarters in Redmond, Washington.Facebook is also based here. It is also known as Cyberabad which consists of many multinational corporation companies such as Google, Cognizant, Tata Consultancy Services|
|4||Delhi||The National Capital Region comprising Delhi, Gurgaon and Noida are clusters of software development.|
|5||Pune||Major Indian and International Firms present in Pune and is one of the biggest global IT services & outsourcing exporter of India. The next biggest IT park of India (Rajiv Gandhi IT Park at Hinjewadi) is expected to scale up to phase 7. It is also known as Tech City, which consists of many multinational corporation companies such as TCS, Tech Mahindra Capgemini, Syntel, Infosys etc., and is one of the IT hub of India. Pune is also C-DAC headquarters.|
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. 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. India's IT Services industry was born in Mumbai in 1967 with the establishment of Tata Group in partnership with Burroughs. 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.
The Indian IT market currently focuses on providing low cost solution in the services business of global IT. Presence of Indian companies in the product development business of global IT is very meagre, however, this number is slowly on the raise. US giants that outsource work to India, do not allocate the high end SDLC (Software Development Life Cycle) processes like requirement analysis, high level design and architectural design, although some Indian IT players have enough competency to take up and successfully complete these high level software jobs. The other prominent trend is, IT jobs, that were earlier confined to Bangalore, are slowly starting to experience a geographical diffuse into other cities like Chennai, Hyderabad and Pune. The growth is not fast paced, this, can be largely attributed to the lethargic attitude of the government in providing proper telecommunication infrastructure. The penetration levels are higher for mobile, but, the speed at which the backbone infrastructure works (network speed) and the coverage it offers are far below what other countries of the world have currently in offer.
The Indian Advantage
The above listed views might possibly work against India’s’ dream to become the biggest contributor to world IT business, but, if there is one factor that is particular only to India, and, the one that can nullify all negative factors lined up against it, would be, the volume of young, English speaking talent pool that India has got to offer. This number far exceeds, any other country can generate in the coming years. It cannot be denied that China is gearing up to reduce the English fluency gap, but, at the same time, doing it with ease like India, is a topic of discussion.
From Services to Product Orientation
The migration of Indian IT companies to mainstream product development is not happening any time in the near future, this, primarily can be attributed to the fact that was discussed in earlier section, which is, lack of innovation culture amongst the top hierarchy of the firm, and, less availability of skilled management graduates in the country. However, what might possibly happen is, global multinationals that are currently outsourcing services and back office jobs to India, might outsource more of higher level jobs in SDLC (Software Development Life Cycle) like requirement analysis and architecture design. The other opportunity is, Indian subsidiaries of global multinationals might take up significant chunk of the product development than what they are currently doing, this, however, is not happening currently because, the global IT firms are still not comfortable in working out a way to extract high end work from Indian companies.
Research and Development- The new drivers
The research in the industry was earlier concentrated towards programming technologies like Java, in the recent times, the research focus changed towards technologies like mobile computing, cloud computing and software as a service. This shift is attributed to preference of clients towards the ubiquitous computing over standalone computing and the growing demand for low cost computing solutions.
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