Information

technology
 OVERVIEW
•Information Technology is one of the most important industries in the Indian
economy.

•In 1970, high import duties had forced IBM to leave India. However, after the early
nineties(Liberalization), many multi national IT companies, including IBM, have set
up their operations in India.

The IT industry can be broadly divided into four segments -

 
•IT services
•Software
•ITES-BPO
•Hardware
•The IT exports have grown to a staggering US$ 46.3 billion in 2008-09

•The IT sector currently employing 2.2 million professionals directly and another 8
million people indirectly .

•Accounts for over 5% of GDP

•A majority of the Fortune 500 and Global 2000 corporations are sourcing IT/ITES
from India and it is the premier destination for the global sourcing of IT/ITES
accounting for 55% of the global market in offshore IT services and garnering 35% of
the ITES/BPO market.

•India is the IT outsourcing hub. Major revenues are generated from outsourced
projects
 POLITICAL

The Indian Government has announced promotion of Information

Technology as one of the top five priorities of the country and has
constituted a National Task Force on Information Technology and
Software Development.

 For promoting Startups focused on technology and innovation, a

weighted deduction of 150% of expenditure incurred on in-house
R&D is also available under the Income Tax Act.

The general rate of excise duty (CENVAT) has been reduced to

8% and Central Sales Tax (CST) has been reduced from 3% to 2%.
VAT on IT products is @4%.
Setting up of Software Technology Parks of India (STPIs) in 1991
for the promotion of software exports from the country, there are
currently 51 STPI centers where apart from exemption from
customs duty available for capital goods there are also exemptions
from service tax, excise duty, and rebate for payment of Central
Sales Tax. But the most important incentive available is 100 per
cent exemption from Income Tax of export profits, which has been
extended till 31st March 2011.

Earlier in the year, US President Barack Obama had also

announced that tax benefits would be taken away from American
companies that ship jobs overseas.(US, is the largest contributor to
the Indian IT sector's revenues)
•In 2005, the Ministry of Commerce, Government of India has
enacted the Special Economic Zone (SEZ) Act, with an objective of
providing an internationally competitive and hassle free
environment for exports.

•The department of IT( Govt of India) has taken many initiatives to

facilitate proliferation and absorption of emerging technologies in
the IT sector. The Department supports Research and
Development and coordinates the technical activities of the
respective Scientific Societies of the Department by:
1. Centre for Development of Advanced Computing (C-DAC)
2. Media Lab Asia
3. Free and Open Source Software(FOSS)
Growth in IT spending is being driven by the government. The e-Governance
projects and state data centers are the focus of IT spending in the government
sector. There are many projects in the pipeline that will boost spending in the
next few years.
 ECONOMICAL
Economic growth / Recession : FDI, Pink slips.

Monetary policies: Rate of Interest

Taxation : STPI Benefits may end in March 2011,

R&D, Jobs

Exchange rates: Effect of Rupee Appreciation

 social
•As India integrates into the world economy, there is a need
for it to reposition itself as a country.

•From the domestic-oriented, self-sufficient license raj, it has

come a long way to become a globally-oriented economy
focusing on those key sectors of the economy where it has a
resource advantage over other nations.

•The objective is to offer better products at lower prices

• India is doing exceptionally well in the IT industry, mostly

because of its human resource (social factors).
Social factors contributing to the competitive advantage to the
India:
•Is drawn mainly from the technical base of the India’s higher education as
exemplified by the Indian Institute of Technology (IITs) and the regional
engineering colleges.

•English medium education Indian school and college level has been the major
strength

•India has a huge domestic demand hence it is being seen as an opportunity

 TECHNOLOGICAL
•The trend in the technology : Broadband , wireless Internet; VoIP;
digital music to on-demand software to biometrics.

Repository of digitized data

•Knowledge Process Outsourcing (KPO), which may be called the
highest level of the BPO, is still at a nascent stage of development in
the country. It is expected that emergence of the KPO market will offer
high-value services in off shoring and help the Indian ITeS Industry to
climb the global value and knowledge chain.

•There is always a ‘first mover’ advantage. Countries like Vietnam,

Philippines, Malaysia, China and Central & Eastern European countries
offer IT-BPO services at competitive rates. Hence, it becomes imperative
to develop KPO
Environmental
 Legal
 The IT ACT 2000 is a set of recent legal
enactments, which governs the process and
dissemination of information digitally.

 E-archiving. E-contracting, E-signatures,

Justice Dispensation systems for cyber
crimes, Privacy & Security.

 Intellectual Property Law

•Most financially attractive country in a study by A T •Indian IT industry focus is only
Kearney on global IT destinations.
•Breadth of service offering– end to end solutions limited to software and by both
•including high end services like IT consultancy and
•KPO.
volume and revenue hardware
•More than half of India‟s population is less than 25 market has the biggest piece in the
years old. English speaking IT– ITES professionals
growing at a good pace.
whole IT market pie.
•Global and 24/7 delivery capability– Good internet •Excessive dependence on USA for
backbone and telecommunications facilities
enabling companies to develop 24/7 delivery
revenue
capabilities from India itself •High rates of attrition

• IT industries are now forming •Increased competition from

strategic alliances with corporations
low-wage countries like China,
in other sectors in order to increase
the scope of the services they Indonesia etc
provide. •US Govt. against outsourcing.
•Greater scope for product •Shrinking margins due to rising
innovation. wage inflation
• Increased focus on high end work
like consulting
and KPO
 Group 1
K.Sruthi Reddy
Lakshmi Divya Vegiraju
Khushboo Mishra
Priyanka Gupta
Manmeet Walia
Naman Gupta