I.T. Industry in India

To gauge the dimensions of the IT industry in India, it would be pertinent to look at the achievements, indicators and growth prospects of the Indian I.T. Industry:

• In the year 1998-99, the Indian IT industry earned revenues of Rs 24,781 crore or US $ 6.1 billion, a growth of 32.79% over the revenue of Rs 18,662 crore in the year 1997-98. This high growth rate has been achieved in spite of otherwise slow growth in Indian economy, uncertain political situation and not so healthy GDP growth.

• In the last five years (1994-1999), the Indian IT Industry has recorded a C.A.G.R. (Compounded Annual Growth Rate) of more than 40.5% which is almost double the growth rate of the IT Industry in many of the developed countries.

• In India, IT Spending as a percentage to GDP is currently less than 1 percent. In USA, however, IT Spending as a percentage to GDP is more than 3.5 percent. However, with Government of India’s resolve to increase I.T. spending - it is predicted that by 2003, India’s I.T. spending could be 2.5% of its GDP.

• The IT manufacturing sector is growing at an average rate of 28-30% annually over the past decade. The industry has over 135 major hardware players supported by over 800 ancillary units and small time vendors engaged in subassemblies and equipment manufacturing.

• Software continues to contribute a major portion of Indian IT Industry’s revenues. During the year 1998-99, the Indian software industry’s revenues constituted almost 65% of Indian IT industry’s revenues.

• Software industry in India grew by 59% in 1998-99 with revenues of Rs. 15,890 crore, over the revenues of Rs. 10,040 crore during 1997-98.

• More than 203 of Fortune 1000 companies outsourced their software requirements to Indian software houses in 1998-99.

• R&D spending by Indian software houses reached about 3.2% of total revenues in 1998-99. This signifies ploughing of increasing resources in creating IPR and developing practices and domain knowledge for moving up the value chain.

• Peripherals showed significant increase in volumes and major surge in revenues. The peripherals segment grew at more than 59% with revenues of Rs. 1,433 crore during 1998-99. It was partly aided by buoyant sales in non impact printers.

• IT training segment grew at over 32.7% with revenues of Rs. 1,250 crore in 1998-99. The SOHO segment and high end certifications contributed a significant portion of total IT training industry’s revenues.

• During 1998-99, more than 820,000 PCs were sold in India. This took the PC penetration in India to 3.2 PCs per 1000 people by the end of 1998-99 (31 March 1999).

• Government has conventionally been recognized a key driver of domestic IT demand in India and even around the world. For example, in USA, about 23% of total domestic IT spending is derived from government and public sector units. However, in the year 1998-99, in India, Government spending constituted more than 28% of total IT spending.

• The major sectors which are witnessing a special thrust on adoption of IT are Central / State Administrations, Insurance, Banks, Energy, Financial Institutions, Defence, Public Tax System, Ports, Customs, Telecom, Education and Small Office Home Office / Individuals.

• Southern and Western states such as Andhra Pradesh, Tamil Nadu, Maharashtra, Karnataka in their drive to emerge as coveted Silicon Valleys in India and recognized as one around the world, contributed a large portion to total domestic IT spending. However, at the same time, many other states of India also announced major computerization drives. These states included Gujarat, Kerala, Orissa, Delhi, Goa, Himachal Pradesh, West Bengal, Uttar Pradesh, Madhya Pradesh, Rajasthan, amongst others. As an instance to underscore the endorsement and gravity that the IT has acquired in India, Government of Jammu & Kashmir has drawn up plans to promote IT in state by inviting companies to set up IT Enabled Services units in the state as well as encouraging extensive use of IT in the state administration as well as educational system. It also completes a missing link in the vision of making India a world class IT user.