Computers & IT Industry

Overview

The computers industry or the IT-BPM industry is one of India’s fastest growing sectors with revenues of over USD 140 billion as of 2015. The sector had been growing at a rate of CAGR of 15% until 2015 and is expected to expand to revenues of over USD 300 billion by 2020 at a CAGR of 9.5%. The industry has been a big contributor to the exports of the country and is considered as a cash cow for the country in terms of revenue. The sector has been instrumental in bringing in large amounts of foreign exchange and has helped companies save over USD 200 billion worldwide as a result of low cost and highly skilled labour. Also, India’s IT industry amounts to 12.3 per cent of the global market, largely due to exports

Industry Segmentation

Domestic and Global Outlook

The IT and ITes industry is one of India’s top performing industries and hence, phenomenal growth is expected in the years to come. Currently, India is the world’s largest sourcing destination, accounting for approximately 55 per cent of the USD146 billion market. The country’s cost competitiveness in providing IT services, which is approximately 3-4 times cheaper than the US continues to be one of its biggest plusses.

 

Besides this, India has a highly qualified talent pool of technical graduates, which is one of the largest in the world, facilitating India’s emergence as a preferred destination for outsourcing, resulting in computer science/information technology accounting for the biggest chunk of India' fresh engineering talent pool, with more than 98 per cent of the colleges offering this stream. The sector ranks fourth in India’s total FDI share and accounts for approximately 37 per cent of total Private Equity and Venture investments in the country. Currently, Tata Consultancy Services (TCS) is the market leader, accounting for about 10.1 per cent of India’s total IT & ITeS sector revenue. Other top firms such as HCL Tech, Infosys, Wipro and Cognizant contribute around 36 per cent to the total industry revenue, indicating the market is fairly competitive.

 

Strong growth in demand for exports from new verticals, rapidly growing urban infrastructure and an expanding economy have fostered the growth of IT centres across the country. IT & ITeS industry is well diversified across verticals such as BFSI, telecom and retail which are indicative of how well integrated IT is in other industries. The presence of IT hubs such as Bangalore and Hyderabad have established India as one off the most important IT players in the world commanding a strong market share in export revenues and total share in the global IT market space.

Future Potential

The IT & ITes sector hold enormous potential and is slated to grow at a CAGR of 9.5%. One of the biggest drivers of growth in this sector is the hardware segment where the growth of personal computers in India will be one of the biggest drivers of demand. Given the low penetration of computers and the growing use of the internet, this segment highlights the latent potential and will result in exceptional growth in the next five years. The business process management segment is one of the biggest employers and has created over 3.5 million jobs in the country and therefore high growth rates in the sector as whole will help job growth and hence, increase in national income.

 

The growth of the entire economy by over 7% per annum is another positive for the industry as it will attract investment from several foreign companies and will benefit the industry enormously. The contribution of the IT sector to India’s GDP rose to approximately 9.5 per cent in FY15 from 1.2 per cent in FY98. With cost savings of about 60-70% over source countries, this industry is lucrative for investors and will remain so for a long time. With introduction of new policies for healthcare and retail, these sectors are expected to grow at a faster pace in coming years, thus accelerating revenue of IT enabled services for the sectors.

Coming to technology, disruptive technologies, such as cloud computing, social media and data analytics, are offering new avenues of growth across verticals for IT companies. The SMAC (social, mobility, analytics, cloud) market is expected to grow to USD225 billion by 2020. The future of this sector therefore is expected to be bright and progressive given the services led economy of the country.

What this report contains:

  • A detailed overview of the industry

  • Structure of the industry from both, domestic and international perspectives

  • Related industries that this industry has inter-dependencies with and their understanding

  • Detailed analysis of industry segments in terms of the value and depth of corresponding market

  • Analysis & insights about the elements and critical success factors of this industry using strategic models

  • A forecast on the state of this industry in 2021, predicting the growth and movement patterns for 2016 - 2021

  • Our professional analysis on the future of the industry based on strategic actions adopted by major industry participants analysis and their key strategic initiatives

  • Quantitative estimates and forecasts of the growth prospects of the industry using revenue and financial forecasting models and Valuations of major players of the market

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