Investment Opportunity in IT and IT Enabled Services

IT Sector of India
India is the most preferred destination for providing IT and IT Enabled Services (ITeS). In 2004-05 the total revenues generated by this sector was $28.2 billion. Out of the total revenue, IT Services and Software constituted 59%, IT Hardware about 21% and ITeS about 20%. Out of the total world market, India accounts for 33% of the market in 2004.Out of the total revenues,69% of the industry revenues are accounted by the Indian companies whereas, International companies account for the rest. About 45% of Fortune 500 corporations source software from India


Industry Structure
Both the domestic private sector and the international players are operating in India. The IT industry in India can be divided into following groups:

Group 1
Under this lie both large and medium Indian IT and ITeS companies. Some of the big companies in this sector are: Tata Consultancy Services, Infosys, Wipro, and HCL

Group2
Major international MNCs who have set up development centers in India. Some of the
major MNCs are: IBM, Dell, Microsoft, HP, etc.

Group 3
Under this category, large Global corporations like JP Morgan, American Express, GE, Citigroup, HSBC, British Airways, etc. are included which have set up Captive back office operations in India





Government Policy

• Government of India in order to promote Investment in IT sector has allowed 100% FDI is permitted in this sector under the automatic route
• Government has also established SEZs, EOUs and Software Technology Parks to encourage IT industry. Units setting there operations in these areas are also being provided income tax exemptions
• Information Technology (IT) Act, 2000 has legalized the acceptance of electronic records and digital signatures which provided a legal backbone to e-commerce
  

Major IT and ITES Companies in India

Investment Opportunity and Business Potential

• Almost every major IT players are present in India. It is estimated that ITES is set to grow five-fold over the next 5 years.
• By 2012, it is expected that the Indian IT and ITeS industry would grow to $148 billion.
• IT sector, would grow over 25% p.a. over the next seven years
• Government of India has aimed to achieve a 50% share in the global off-shored IT and BPO services by 2008
  

Key Drivers of IT sector

• Presence of talented and low cost workforce and world-class companies
• Availability of technically-skilled and English-speaking labor force at lower costs as compared to USA and Europe
• Expertise in project and process management
• Strength of India has been recognized globally
• India is highly capable in higher, value added activities and in the Global Delivery Model
• Identification of custom application development and maintenance as priority areas due to high off-shoreable component by the leading international
• Several regulatory and technological factors, have led to the growth of domestic IT & ITeS market
• Efforts are being taken to stop software piracy
• Lots of efforts are being taken to make PCs available to large section of the population