The IT Sector in India
In IT, India has built up valuable brand equity
over the years. In IT enabled services (ITES),
India is emerging as one of the most preferred
destinations for business process outsourcing
(BPO). The importance of IT industry in the
Indian economy can be gauged from the fact
that its contribution to the national gross
domestic product (GDP) has increased by
seven fold in a span of just one decade from
0.6% in 1994-95 to 4.3% in 2004-05 (Table 1 on
page 5). Although industry figures are not
directly comparable with GDP as they are
based on revenues rather than value added,
they provide an indicator of growing
importance of the IT sector in the country.
Assuming that the Indian economy and IT
sector will replicate the past six years
performance during the next six years and
value added in IT sector is two third of its sales
revenue, the contribution of IT sector to
national GDP will be around 8.5% during the
year 2010-11, quite similar to that in the United
States (US) today. The IT sector revenue is
expected to increase from Rs. 1276 billion in
2004-05 to Rs. 6435 billion in 2010-11.
The Indian IT industry is broadly categorized
into IT services and software, ITES-BPO, and
Hardware segments. Although IT services and
software continues to remain the key
contributor to the IT sector's revenues, ITES-
BPO is emerging as the fastest growing
segment of the sector (Figure 1). Between the
year 2000-01 and 2004-05, contribution of
ITES-BPO to the IT sector's total revenue
increased from 7.4% to 20.2% whereas the
corresponding figure for IT services and
software fell from 64.5% to 58.5%. Presently,
ITES-BPO segment of the industry is almost
as big as the hardware segment.
Services and Software vs. Hardware
The services and software segment of IT
industry in India is more robust than its
hardware counterpart. India has become one
of the most favored destinations for sourcing
software and ITES. The revenue of IT services
& software and ITES-BPO taken together
reached US $ 22.2 billion during 2004-05 out of
which US $ 17.3 billion was earned through
export. India ranks high in comparison to its
competitors such as China, Philippines,
Ireland, Australia, Canada, etc., in various
parameters such as quality of the labor pool
In IT, India has built up valuable brand equity
over the years. In IT enabled services (ITES),
India is emerging as one of the most preferred
destinations for business process outsourcing
(BPO). The importance of IT industry in the
Indian economy can be gauged from the fact
that its contribution to the national gross
domestic product (GDP) has increased by
seven fold in a span of just one decade from
0.6% in 1994-95 to 4.3% in 2004-05 (Table 1 on
page 5). Although industry figures are not
directly comparable with GDP as they are
based on revenues rather than value added,
they provide an indicator of growing
importance of the IT sector in the country.
Assuming that the Indian economy and IT
sector will replicate the past six years
performance during the next six years and
value added in IT sector is two third of its sales
revenue, the contribution of IT sector to
national GDP will be around 8.5% during the
year 2010-11, quite similar to that in the United
States (US) today. The IT sector revenue is
expected to increase from Rs. 1276 billion in
2004-05 to Rs. 6435 billion in 2010-11.
The Indian IT industry is broadly categorized
into IT services and software, ITES-BPO, and
Hardware segments. Although IT services and
software continues to remain the key
contributor to the IT sector's revenues, ITES-
BPO is emerging as the fastest growing
segment of the sector (Figure 1). Between the
year 2000-01 and 2004-05, contribution of
ITES-BPO to the IT sector's total revenue
increased from 7.4% to 20.2% whereas the
corresponding figure for IT services and
software fell from 64.5% to 58.5%. Presently,
ITES-BPO segment of the industry is almost
as big as the hardware segment.
Services and Software vs. Hardware
The services and software segment of IT
industry in India is more robust than its
hardware counterpart. India has become one
of the most favored destinations for sourcing
software and ITES. The revenue of IT services
& software and ITES-BPO taken together
reached US $ 22.2 billion during 2004-05 out of
which US $ 17.3 billion was earned through
export. India ranks high in comparison to its
competitors such as China, Philippines,
Ireland, Australia, Canada, etc., in various
parameters such as quality of the labor pool
IMPORTANCE OF HARD WARE ENGINEERING~
Hardware is the only segment of IT sector in
India in which the size of the domestic market
exceeds that of export. MNCs dominate the
hardware segment occupying the top positions
in key categories such as desktop PCs and
notebooks, servers, and peripherals. The BFSI,
government, and telecom service providers
continued to be the key contributors. BFSI
alone accounts for one fourth of the total
hardware spending in the domestic market.
Although the size of the hardware domestic
market still remains small, there is a huge
potential for its growth. Currently, India is one
of the fastest growing hardware markets in the WORLD
India in which the size of the domestic market
exceeds that of export. MNCs dominate the
hardware segment occupying the top positions
in key categories such as desktop PCs and
notebooks, servers, and peripherals. The BFSI,
government, and telecom service providers
continued to be the key contributors. BFSI
alone accounts for one fourth of the total
hardware spending in the domestic market.
Although the size of the hardware domestic
market still remains small, there is a huge
potential for its growth. Currently, India is one
of the fastest growing hardware markets in the WORLD
BROAD BAND POLICY
According to the Broadband Policy 2004
document published by the Ministry of
Communication and Information Technology,
Government of India, New Delhi, internet
connectivity in the country is expected to
increase from 6 million in 2005 to 40 million in
2010). A denser telephone and internet
network along with increased PC ownership
will provide the opportunities for increasing
the rate of training people for the IT industry.
document published by the Ministry of
Communication and Information Technology,
Government of India, New Delhi, internet
connectivity in the country is expected to
increase from 6 million in 2005 to 40 million in
2010). A denser telephone and internet
network along with increased PC ownership
will provide the opportunities for increasing
the rate of training people for the IT industry.
FUTURE PROSPECTS~
The information technology can play a major
role in overall economic development of the
country. India has a comparative advantage in
the global IT sector at least in terms of cost.
With large pool of workers having software
and language skills, it is in a position to move
toward producing higher value-added goods
and services. In fact, it has just started to move
towards higher value added goods and services.
IT service companies have included new
service lines such as package software
implementation, system integration, R&D
engineering, and remote network management
whereas ITES-BPO companies have started
offering more complex services such as
financial research and analytics, actuarial
modeling, and corporate and business
research. The availability of large number of
workers with a combination of engineering
and managerial skills will definitely be helpful
to move towards higher value-added goods and
services.
role in overall economic development of the
country. India has a comparative advantage in
the global IT sector at least in terms of cost.
With large pool of workers having software
and language skills, it is in a position to move
toward producing higher value-added goods
and services. In fact, it has just started to move
towards higher value added goods and services.
IT service companies have included new
service lines such as package software
implementation, system integration, R&D
engineering, and remote network management
whereas ITES-BPO companies have started
offering more complex services such as
financial research and analytics, actuarial
modeling, and corporate and business
research. The availability of large number of
workers with a combination of engineering
and managerial skills will definitely be helpful
to move towards higher value-added goods and
services.
Above all, IT has the
potential to improve transparency and
accountability and thus the efficiency of
government delivery system. In India, many
government organizations have started to
adopt IT based systems and solutions to
manage payrolls, stock market, rail reservation,
tax collection, etc. Various initiatives have been
taken by the government to provide e-
governance interface to citizens. The central
government has recommended that each
ministry should allocate 2-3% of its budget for
promotion of IT and move towards electronic
governance. It is clear that IT can be used not
only for improvement in competitiveness in
the global market but also for overall economic
development.
There are strong complementarities between
IT and rest of the economy. IT can enhance the
productivity and efficiency in other industries.
It can improve efficiency in areas such as
accounting, procurement, inventory
management, and production and operations
management. Although labor unions usually
raise concern with IT adoption due to fear of
job loss, evidence suggests that increases in
other kinds of job as a result of IT use more
than make up for job loss (Singh, 2002).
Moreover, IT implementation may increase the
productivity and/or quality more than that is
feasible otherwise. The use of IT in rural
banking and micro-finance may enhance
efficiency in informal sector and can impact
broader cross-section of population.
Information access to farmers could benefit
agriculture sector as well. Farmers can receive
weather forecasts, market price quotes, advice
on farming practice, offers to buy and sell
livestock, and specific trainings. Even basic
education could be enhanced in rural areas by
the use of IT.
potential to improve transparency and
accountability and thus the efficiency of
government delivery system. In India, many
government organizations have started to
adopt IT based systems and solutions to
manage payrolls, stock market, rail reservation,
tax collection, etc. Various initiatives have been
taken by the government to provide e-
governance interface to citizens. The central
government has recommended that each
ministry should allocate 2-3% of its budget for
promotion of IT and move towards electronic
governance. It is clear that IT can be used not
only for improvement in competitiveness in
the global market but also for overall economic
development.
There are strong complementarities between
IT and rest of the economy. IT can enhance the
productivity and efficiency in other industries.
It can improve efficiency in areas such as
accounting, procurement, inventory
management, and production and operations
management. Although labor unions usually
raise concern with IT adoption due to fear of
job loss, evidence suggests that increases in
other kinds of job as a result of IT use more
than make up for job loss (Singh, 2002).
Moreover, IT implementation may increase the
productivity and/or quality more than that is
feasible otherwise. The use of IT in rural
banking and micro-finance may enhance
efficiency in informal sector and can impact
broader cross-section of population.
Information access to farmers could benefit
agriculture sector as well. Farmers can receive
weather forecasts, market price quotes, advice
on farming practice, offers to buy and sell
livestock, and specific trainings. Even basic
education could be enhanced in rural areas by
the use of IT.
THE ROLE OF COMPUTER SCIENCE &I.T FOR DEVELOPMENT OF FEMINISM (OPPURTUNITIES FOR GIRLS)
The IT sector is one of the largest employers
of women, and therefore, can play a crucial role
in women empowerment and the reduction of
gender inequalities. The sector provides
flexibility to its employee of operating from
home and in working time, which enables
women to carry on with jobs with family life. It
is estimated that during the year 2004-05, male
to female ratio in IT services and software
segment of the industry was 76:24. The ITES-
BPO segment provides more opportunity for
women. The ratio of male to female is reverse
i.e., 31:69 in this segment (Annual Report
(2004-05), Ministry of Communication and
Information Technology, GOI, New Delhi, pp.
46). It is clear that the promotion of IT will
help to address the gender issues in the country.
Encouragement and promotion of computer
education and IT use among socially and
economically weaker section of the society has
potential to reduce inequality. The government
has to play a key role in this regard.
To uplift the status of socially and
economically weaker section of the society, the
government needs to make IT accessible to
them. Special efforts should be made to
promote IT use in rural areas. There is a need to
make significant capital investments in rural
areas if not for some altruistic reasoning, at
least because of a desire to enter a domestic
emerging market that has been virtually
untapped so far. The industry along with the
central and the state governments should now
look at taking IT services to villages. One
should remember that without access to the IT,
the rural people can be caught in a poverty trap
caused by the digital divide between the haves
and the have nots. Efforts should be made to
promote the development and availability of
low cost PCs and other communication access
devices with internet connectivity at the most
reasonable prices. There is a need to resolve
regulatory issues in communication, and
reduction and rationalization of tariff
structure on hardware and software to provide
seamless communication connectivity to rural
areas and promote value-added services and
micro enterprises to enhance economic well-
being of rural community.
The IT sector is one of the largest employers
of women, and therefore, can play a crucial role
in women empowerment and the reduction of
gender inequalities. The sector provides
flexibility to its employee of operating from
home and in working time, which enables
women to carry on with jobs with family life. It
is estimated that during the year 2004-05, male
to female ratio in IT services and software
segment of the industry was 76:24. The ITES-
BPO segment provides more opportunity for
women. The ratio of male to female is reverse
i.e., 31:69 in this segment (Annual Report
(2004-05), Ministry of Communication and
Information Technology, GOI, New Delhi, pp.
46). It is clear that the promotion of IT will
help to address the gender issues in the country.
Encouragement and promotion of computer
education and IT use among socially and
economically weaker section of the society has
potential to reduce inequality. The government
has to play a key role in this regard.
To uplift the status of socially and
economically weaker section of the society, the
government needs to make IT accessible to
them. Special efforts should be made to
promote IT use in rural areas. There is a need to
make significant capital investments in rural
areas if not for some altruistic reasoning, at
least because of a desire to enter a domestic
emerging market that has been virtually
untapped so far. The industry along with the
central and the state governments should now
look at taking IT services to villages. One
should remember that without access to the IT,
the rural people can be caught in a poverty trap
caused by the digital divide between the haves
and the have nots. Efforts should be made to
promote the development and availability of
low cost PCs and other communication access
devices with internet connectivity at the most
reasonable prices. There is a need to resolve
regulatory issues in communication, and
reduction and rationalization of tariff
structure on hardware and software to provide
seamless communication connectivity to rural
areas and promote value-added services and
micro enterprises to enhance economic well-
being of rural community.
CONCLUSION~
Concluding Remarks
The main aim of this BLOG has been to assess
the possible role of IT in broad-based
economic development of India. From the
analysis, it is clear that the IT has potential of
not only accelerating the growth in the Indian
economy but also promoting the broad-based
economic development. To realize the same,
besides standard policy initiatives such as
improving infrastructure, strengthening
training and education system, and introducing
flexible labor laws that affect every sector of
the economy including the IT sector, the
government needs to take specific measures to
promote IT use and to make it accessible to
every section of the society. The IT should be
promoted to be used as a tool for raising the
living standards of the common people and
enriching their lives. IT literacy needs to be
enhanced manifold among the population at
large through conventional and non-
conventional means, so that ordinary people
can begin to use it to derive benefits, both
economically and socially.
The main aim of this BLOG has been to assess
the possible role of IT in broad-based
economic development of India. From the
analysis, it is clear that the IT has potential of
not only accelerating the growth in the Indian
economy but also promoting the broad-based
economic development. To realize the same,
besides standard policy initiatives such as
improving infrastructure, strengthening
training and education system, and introducing
flexible labor laws that affect every sector of
the economy including the IT sector, the
government needs to take specific measures to
promote IT use and to make it accessible to
every section of the society. The IT should be
promoted to be used as a tool for raising the
living standards of the common people and
enriching their lives. IT literacy needs to be
enhanced manifold among the population at
large through conventional and non-
conventional means, so that ordinary people
can begin to use it to derive benefits, both
economically and socially.
SOURCE OF ARTICLE:DIFFERENT SPEECHES AND ANALYSIS OF IT SECTOR MANAGEMENT
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