Central Government Departments

Electronics Production : Indian Electronics Industry : Department of Information Technology

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The year 2004 marked a turning point in the history of global trade in services, with growing acceptance of IT based global delivery model. With ever increasing availability of international bandwidth and powerful workflow management software, it is now possible to disaggregate any business process, execute the sub-processes in multiple centres around the world, and reassemble it, in near-real time, at another location. This is driving fundamental changes in the global IT services landscape, vendors and customers are redefining the levels of value creation in the industry. In the wake of changing global service landscape, Indian Information Technology (IT) and IT enabled services (ITES-BPO) continue to chart remarkable growth.

The Indian software and services export is estimated at Rs. 78,230 crore (US$ 17.2 billion) in 2004-05, as compared to Rs. 58,240 crore (US $ 12.8 billion) in 2003-04, an increase of 34 per cent both in rupee terms and dollar terms. This segment will continue to show robust growth in future also.

Indian ITES-BPO sector industry continues to grow from strength to strength, witnessing high levels of activity – both onshore as well as offshore. Last year witnessed vendors moving up the value-chain to offer higher-end research and analytics services to their clients. Attrition levels also remained high, between 25-40 per cent, as demand for trained talent outpaced supply.

As export revenues from ITES-BPO grew from US $ 2.5 billion in year 2002-03 to US $ 3.6 billion in years 2003-04, an year-on-year growth of 44 per cent was achieved. In year 2003-04, ITES-BPO exports accounted for over 27 per cent of the total export revenue earned by the Indian IT-ITES industry. The value of ITES-BPO exports from India is expected to exceed US $ 5 billion mark in the year 2004-05.

The Indian IT success story has also highlighted India ’s attractiveness as an investment destination – also beyond the IT sector. Another key impact of the global sourcing model popularised by the growth of IT-ITES has been the reversal of the brain drain – as people of Indian origin (who went to pursue careers abroad), as well as young expatriates, are now attracted to work in India.

Indian IT-ITES growth has had a significant multiplier effect on the Indian economy. Apart from the direct impact on national income and employment, the sector has also contributed to the growth of several ancillary industries, a rise in direct-tax collection and an increase in consumer spend due to the significantly higher disposable incomes.

The rapid growth of ITES-BPO and the IT industry as a whole has made a deep impact on the socio-economic dynamics of the country. The sector has risen to become biggest employment generator with the number of jobs added almost doubling each year, has spawned a number of ancillary businesses such as transportation, real estate and catering, and has contributed to a rising class of young consumers with high disposable incomes.

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