Background of It Industries in India

Background of IT industries in India

The history

After the economy opened up in 1991, the department of electronics made an organization called the Software technology park of India which was Government owned and could provide VSAT communication link to the firms.  It was in 1993 when the Government allowed the firms to transmit their own data abroad through VSAT networks of their own.

The new telecommunications policy of 1999 further liberalized the  telecom sector. The Information Technology Act of 2000 laid down the rules and regulations for electronic transactions, e-commerce and censorship of data.

Recent Developments

Today IT contributes to 7.5 % of India’s GDP. IT industry is segmented into two categories- IT services and Business Processes Outsourcing (BPO). In 2015 India’s aggregated revenue in IT stood at US$ 147 Bn with US$ 99 Bn of export revenue which is growing at a rate of 13%.  IT is the backbone of the servces sector which contributes to 40% of India’s GDP. Today Bangalore is known as the Silicon Valley of Asia. It is the IT capital of India. Companies like Infosys, Wipro, Mindtree and Mphasis are headquartered in Bangalore.

IT sector provides direct employment to 2.9 Mn people and indirect employment to over 9 Mn people in India. India is a dominant player in globl outsourcing market and faces competition from China and Philippines.

Future Outlook

During the economic crisis of 2008, Indian IT industry was far less hit than its Indian counterparts due to stable Indian economy and ever growing domestic demand. Many IT companies are indulging into forward integration and have started rolling out IT enabled services called ITES. As an example Denave India also ventured into the FMCG business in India by rolling out a retail management software. The manufacturing sector is about to expand due to make in India campaign by the current Government which will further increase the need of Enterprise resource planning packages and logistic management softwares. Companies like Oracle India are fiercely trying to capture the ITES market through their ERP softwares. Earlier US giants who used to outsource the work to Indians critical processes of the software development life cycle like requirement analysis and high-level design. But the rising competency of Indian IT industry has compelled them to increase the outsourcing bandwidth and diffuse larger role to the Indian offshore counterparts.