Investment Opportunities in IT & Software Industry
IT services and software products will lead this growth due to an increase in IT adoption by companies, shift towards outsourcing and emergence of new technologies, said the report by Boston Consulting Group & Confederation of Indian Industries.
India has become the digital capabilities hub of the world with around 75 per cent of global digital talent present in the country.
IT & BPM industry’s revenue was estimated at around US$ 191 billion in FY20, growing at 7.7 per cent y-o-y. It is estimated to reach US$ 350 billion by 2025. Moreover, revenue from the digital segment is expected to form 38 per cent of the total industry revenue by 2025. Digital economy is estimated to reach Rs 69,89,000 crore (US$ 1 trillion) by 2025. The domestic revenue of the IT industry was estimated at US$ 44 billion and export revenue was estimated at US$ 147 billion in FY20.
Total number of employees grew to 1.02 million cumulatively for four Indian IT majors (including TCS, Infosys, Wipro, HCL Tech) as on December 31, 2019. Indian IT industry employed 205,000 new hires and had 884,000 digitally skilled talent in 2019.
Indian IT’s core competencies and strengths have attracted significant investment from major countries. The computer software and hardware sector in India attracted cumulative Foreign Direct Investment (FDI) inflow worth US$ 44.91 billion between April 2000 and March 2020. The sector ranked second in FDI inflow as per the data released by Department for Promotion of Industry and Internal Trade (DPIIT).
Leading Indian IT firms like Infosys, Wipro, TCS and Tech Mahindra are diversifying their offerings and showcasing leading ideas in blockchain and artificial intelligence to clients using innovation hubs and research and development centres to create differentiated offerings.
Some of the major developments in the Indian IT & BPM sector are as follows:
In May 2020, SirionLabs, a software-as-a-service (SaaS) provider, raised US$ 44 million as part of its Series C round led by Tiger Global and Avatar Growth Capital.
PE (private equity) investment in the sector stood at US$ 11.8 billion across 493 deals in 2019.
In January 2020, Nippon Telegraph and Telephone, a Japanese tech announced its plans to invest a significant part of its US$ 7 billion global commitment for data centres business in India over the next four years.
In February 2020, Tata Consultancy Services bagged a contract worth Rs 10,650 crore (US$ 1.5 billion) from pharma company Walgreens Boots Alliance.
UK-based tech consultancy firm, Contino, was acquired by Cognizant.
In May 2019, Infosys acquired 75 per cent stake in ABN AMRO Bank’s subsidiary Stater for US$ 143.08 million
In June 2019, Mindtree was acquired by L&T.
Nasscom has launched an online platform which is aimed at up-skilling over 2 million technology professionals and skilling another 2 million potential employees and students.
As of February 2020, there were 417 approved SEZs across the country with 274 from IT & BPM and 143 as exporting SEZs.
Some of the major initiatives taken by the Government to promote IT & BPM sector in India are as follows:
- On May 2019, the Ministry of Electronics and Information Technology (MeitY) launched the MeitY Startup Hub (MSH) portal.
- In February 2019, Government released the National Policy on Software Products 2019 to develop India as a software product nation
- The Government has identified Information Technology as one of 12 champion service sectors for which an action plan is being developed. Also, the Government has set up a Rs 5,000 crore (US$ 745.82 million) fund for realising the potential of these champion service sectors.
- As part of Union Budget 2018-19, NITI Aayog was to set up a national level programme to enable efforts in AI^ and leverage AI^ technology for developing the country.
- In the Interim Budget 2019-20, the Government announced plans to launch a national programme on AI* and setting up of a National AI* portal.
- National Policy on Software Products-2019 was passed by the Union Cabinet to develop India as a software product.
Following are the achievements of the Government during 2019
- About 200 Indian IT firms are present in around 80 countries.
- Total export revenue of the industry is expected to grow 8.1 per cent y-o-y to US$ 147 billion in FY20. IT & BPM sector accounted for the largest share in the Indian services export at 45 per cent.
- Total number of employees grew to 1.02 million cumulatively for four Indian IT majors (including TCS, Infosys, Wipro, HCL Tech) as on December 31, 2019.
- Indian IT industry employed 205,000 new hires and had 884,000 digitally skilled talent in 2019.
The IT industry is expected to grow to US$ 350 billion by 2025 and BPM is expected to account for US$ 50-55 billion of the total revenue.
India is the topmost offshoring destination for IT companies across the world. Having proven its capabilities in delivering both on-shore and off-shore services to global clients, emerging technologies now offer an entire new gamut of opportunities for top IT firms in India. The IT industry is expected to grow to US$ 350 billion by 2025 and BPM is expected to account for US$ 50-55 billion of the total revenue.
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