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The information technology sector includes all the companies offering IT-enabled services (ITES), IT services, software products, e-commerce facilities, etc. In the past decade, the role of the internet and computer has grown manifold in our lives. Most people consume IT services in some form or the other. The COVID-19 pandemic further highlighted the contribution of the IT sector to the Indian economy. With the shift to remote working, the IT sector enabled the other sectors to operate from distance mode as well. New startups in the sector are opening up, which boosts the economy as a whole.
Industry trends
The IT-BPM (Information technology and Business Process Management) sector of India has a share of 9.3% of the country’s GDP, making it one of the biggest sectors to contribute to India’s economic growth. The IT sector captures 56% of the global outsourcing market.
The Software Technology Park of India (STPI) reported that IT companies associated with it made software exports worth $16.29 billion in only the first quarter of the financial year 2022.
The National Association of Software and Service Companies (Nasscom) estimates that the revenue of the Indian IT industry will reach $227 billion in 2022, which is a massive increase from $196 billion in 2021.
The branch of the IT sector dealing with software products is projected to become worth $100 billion by the financial year 2025. The Indian technology companies are shifting their focus to international markets. There are plans to make investments in the global markets so that their global delivery centres can increase in number.
4.5 lakh employees were hired till February 2022 in the first quarter of 2022. This has been the highest ever addition in any given year. There is significant participation of women as out of the total new employees, 44% were women.
The Foreign Direct Investment (FDI) inflows in the IT sector (computer hardware and software, to be precise) between April 2000-December 2021 stood at $81.31 billion (14.19% of the FDI inflows). The data from the Department for Promotion of Industry and Internal Trade (DPIIT) proves that it was the second-largest sector to have received such high FDI inflows.
Record investments of $36 billion were made in private-sector IT companies in the financial year 2021 alone. In 2020, this number stood at $11 billion. Hence, the investment increased more than three times in just a year, making this sector a lucrative investment destination.
Government Initiatives for the IT Sector
In the Union Budget 2022-23 announced by Finance Minister Nirmala Sitharaman, $11.58 billion were allocated to the IT and telecom sector. This is equivalent to ₹ 88,567.57 crores.
The Department of Telecom, the Government of India, and the Ministry of Communications have signed a Memorandum of Understanding with the Government of Japan. Under this, there would be increased cooperation in sectors related to the development of 5G technologies, submarine optical fibre cable systems, and telecom security.
Five new National Institute of Electronics & Information Technology (NIELIT) Centres were inaugurated by the Government of India in September 2021. They were inaugurated in North-eastern states where the development of the IT sector is limited to boost the sector and also provide employment to the youth there.
In the same month, Phase II of the Visvesvaraya PhD Scheme was launched to boost the research in the 42 sectors related to IT and ITES.
The GoI has well laid-out plans to develop the emerging blockchain, cloud computing, and artificial intelligence technology in the country in the next few years. There is also an increased focus on providing internet access to remote areas, where people currently face major connectivity issues.
5G is set to bring advancement to the country’s telecom infrastructure. Along with the top private players in the sector, the government is working to make 5G technology accessible in the country as soon as possible.
The hardware market is also set to develop under the government’s initiative of Atmanirbhar Bharat. The government has launched several PLI schemes meant to boost the development of computer hardware parts in the country. Currently, we rely on Asian markets like China and Taiwan for computer hardware like chips.
During the COVID-19 pandemic, global trade suffered, and since the imports from these Asian countries slowed down, it created a problem of chip shortage in the entire world. India wants to be the pioneer of chip development technology, for which it is empowering private players to set up hardware manufacturing plants in the country itself.
Conclusion
In 1998, the IT sector contributed merely 1.8% to India’s GDP. Today, it stands at over 9% and will soon go to double digits. The importance of the IT sector is also that it employs millions of people. Major tech companies like Wipro, Infosys, TATA, Reliance, etc., hire young professionals in large numbers. The IT sector has a fair share in the Indian export market also. The USA is the single largest country where our IT products and services are exported. The IT sector will play one of the biggest roles in realising India’s goal of becoming a $5 trillion economy.
