IT Industry


Par 100 posts (V.I.P)
'IT Industry:

Overview: The Hardware Industry and the Software Industry are
two sides of the same gold coin representing India emerging as a
Global IT superpower.
India's IT market reached a turn over of US$ 16.2 billion in 2004-05

Exports: Exports of the Indian software and services sector
was Rs. 78,230 crore (US$ 17.2 billion) in 2004-05, up 34 per cent
from Rs. 58,240 crore (US$ 12.8 billion) in 2003-04

Employees: The number of professionals employed in India by IT
and ITES sectors is estimated at 10,45,000 as on March 31, 2005.

Role of Government:
1. The re-imposition of excise duty at 12 per cent on
computers increases the competitive advantage of domestic
manufacturers vis-à-vis importers, since they can now avail
of credit of excise duty paid on inputs.

2. There is exemption of DVD Drives, Flash Drives and Combo Drives
from excise duty.

New Ventures:

1.The establishment of semiconductor fab, the growing interest of
some electronics companies looks promising ..Hyderabad and Pune have
moved a few notches up.

2.With infrastructure pressure on large metros, the emergence of some
new cities on the IT radar is heartening. Kolkata is showing signs of
growth and Chandigarh, Jaipur and Visakhapatnam are joining the
mainstream. Wipro, TCS and Satyam have evinced interest in
Visakhapatnam .
· .
Barriers to Overcome:

1.Lack of local availability of input material,
2. high interest rates,
3.customs duty on capital goods,
4.poor infrastructure,
5.longer and variable transit times
all add to uncertainty, delays and increased costs.
6.Lack of innovation

Global Overview:
To be globally competitive in manufacturing, the manufacturing
environment must enable -:

1.Increased flexibility in production;
2.Substantial reduction in time-to-market, as product life cycles
3.Sharp reduction in manufacturing costs;
4.Significantly reduced need for capital resulting in higher returns
on invested capital;
5.Ability to focus capital and intellectual property on core
6.Ability to start a new product company without competencies or
investment in manufacturing.

Some Major Players: Tata Consultancy Services Ltd
Infosys Technologies Ltd
Wipro Technologies
HCL Technologies Ltd
Satyam Computer Services Ltd

Focus Areas:

1.Enhancing the talent pool advantage -- focus on skill development
to better leverage the worlds largest working population.

2.Strengthening urban infrastructure in existing (tier I) and
emerging (tier II and tier III) cities and continued emphasis on
proactive regulatory reform to facilitate greater ease of doing

3.Driving a philosophy of operational excellence amongst industry
players (across the board) to ensure that India based delivery
sustains world-leading benchmarks in performance.

4.Catalyzing domestic market development.

5.Actively promoting an uncompromised agenda towards global free

6.Engineering and R&D,software products hold significant opportunity
for India—growing at 37% and 43%,respectively.

The industry (exports and domestic combined) is expected to touch Rs
247,000 crore (US$ 53.2 billion) by 2008 compared to Rs 87,000 crore
(US$ 18.7 billion) in 2003, thus growing at a CAGR of 23.1 per cent.

The Industry is forecast to grow more than fivefold over the next
five years(2005-2010,at a CAGR of 28 percent.

IT companies are expected to account for 8-10% of GDP by 2008.

Sources:Nasscom, IBEF, CRISIL report