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IT Industry in India

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IT SECTOR OVERVIEW

Statistics, news & updates: everything you need to know about the IT Industry in India

Technology and Research & Development

Growth Drivers​

  • Production-linked incentives for IT Hardware were approved in 2021 to stimulate local manufacturing.​

  • In the IT and BPM sectors, India permits up to 100% Foreign Direct Investment (FDI) under the automatic method.​

  • Consumer acceptance of technology and telecom, and targeted government measures, are driving increased adoption of information and communication technology.​

  • The Bharat Net Project aims to integrate at least five Wi-Fi access sites in each of the country’s 250,000 villages.​

Sub industries​

  • Information Technology​

Opportunities

  • According to the Department of Science and Technology, at the BRICS S&T Steering Committee’s 12th meeting, all countries agreed to an STI-led BRICS Innovation Cooperation Action Plan (2021-24) suggested by India.​

  • India is the world’s leading supplier of IT products, has the world’s third-largest pharmaceutical industry, and a rapidly expanding contract research sector.​

Challenges

  • Cyber security threats is one of the major challenge faced by the IT sector, in the last four years there have been more than a 50% increase in data breaches​

  • Other countries’ new data protection and privacy standards are blocking Indian enterprises from serving in those countries. The GDPR (General Data Protection Regulation) of the European Union, for example, went into force in May 2018. Because not all Indian IT firms can comply with GDPR and other data privacy regulations, many have had to stop serving EU clients.​

  • One of the most difficult difficulties facing the IT business is employee retention.​

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Summary/Snapshot​

  • India’s IT-BPM industry accounts for 8% of the country’s GDP. With 3.9 million employees, the industry is the largest employer in the private sector.​

  • India has the world’s second-largest number of telephone connections. In the Global Innovation Index 2020, India is ranked 48th out of 50 countries. ​

  • In India, more than 500 million people are projected to use cell phones, with three-quarters of them online. Indians are also among the world’s most prolific app downloaders.​

  • IT hardware output is predicted to reach 3 trillion rupees in four years, with domestic value addition rising from 5-10 per cent to 20-25 per cent in five years.​

  • Cisco India recently announced a series of new investments to improve India’s cyber security infrastructure. It would allow India’s digital transformation to be accelerated by creating a transparent and secure digital infrastructure environment.​

  • The government established the National Research Foundation for R&D as part of the Union Budget 2019-20.​

  • India comes in third place among the world’s most inventive lower-middle-income economies.​

  • With about 24 per cent of overall FDI equity inflows in April 2021, Computer Software & Hardware has emerged as the top sector.​

  • The government allocated US$ 2 billion to the Ministry of Science and Technology in the Budget 2021-22. The Department of Atomic Energy has received US$ 2.50 billion in funding.​

  • In 2020, the Indian data center industry is expected to receive about $396 million in investment. By 2025, per capita, data consumption is expected to reach 25GB per month.​

Technology R&D

Key Investment Opportunities​

  • IT services, BPM, software product companies, and shared service centers are all being established.​

  • Knowledge services, data analytics, legal services, Business Process as a Service (BPaaS), and cloud-based services are fast-growing sectors within the BPM domain.​

  • IT Services and fast-growing industries within it, such as SMAC (Social, Mobile, Analytics, Cloud) products and services, IT consulting, and software testing.​

  • The fastest expanding sectors in engineering and R&D are telecom and semiconductors.

COVID Impact​

How has COVID affected the industry?

  • R&D investment continued to grow in 2020, despite the economic impacts of COVID-19, although at a significantly lower rate than in 2019 and with big differences across industries. ​

  • Both the Information and communications technology (ICT) and the life sciences industries fared well in 2020, less so in other industries such as transport equipment.​

  • IT spending in India is estimated to reach US$ 93 billion in 2021 (7.3% YoY growth) and further increase to US$ 98.5 billion in 2022.​

  • Covid-19 impacted almost every sector. R&D is no exception. There have also been several compelling lessons learned on how the pandemic had impacted R&D. Some of these learnings would get translated as new norms, practices, and cultures in the future.

Outlook for the Technology industry post-Covid

  • Increase in labour cost: The labour cost for skilled workers is expected to rise by 20-25% while for semi-skilled and unskilled workers the cost is expected to increase by 10-15%.
  • Revised SOP’s that take into account new health and sanitary norms: Standard operating procedures require social distancing, personal protective equipment and hygiene will drive up the project cost in short term.
  • Companies are considering hybrid arrangements: The work-from-home approach seems likely to continue throughout 2021 after India’s experienced a dreadful second wave of the pandemic. People have turned their home spaces into temporary home offices. We can expect a surge in demand for the home renovation, maintenance, and interior designing sector.

Key Players in India

National

  • Infosys​

  • Wipro​

  • TCS​

  • Tech Mahindra​

  • HCL Technologies​

  • Larsen & Toubro Infotech​

     

International

  • Cognizant​

  • IBM​

  • Google​

  • Microsoft​

  • Accenture​

  • Dell​

  • Apple Inc.​

  • SAP​

  • Oracle Corporation​

  • Capgemini​

     

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IT Industry
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