Innovations in the Software Industry: India’s IT sector records boost

India’s IT sector records boost

Tuesday, August 02, 2005

According to Gartner, while India has established as a leading destination for offshore IT and BPO (business process outsourcing) services through the last 10 years, the domestic market demand started picking growth very recently. The Indian IT industry's growth is having a significant multiplier effect on Asia's fourth-largest economy with the emergence of a rising class of younger consumers with high disposable incomes. With the IT industry becoming one of the biggest employment generators in the country, it has spawned a number of ancillary businesses such as transportation, real estate and catering. In the fiscal year 2004-05, the Indian IT and ITES industries are estimated to have created the demand for nearly 12,500 passenger cars, over 80,000 two-wheelers and 150,000 mobile phone subscriptions. The sector currently accounts for six to seven percent of the incremental demand in the real estate and construction services. China, which outstrips India in almost every sphere of business except software, is racing to take on India, the world's second-largest software exporter after the US, by unveiling new policies and offering incentives to the companies. China attracts a bigger chunk of foreign investment and its share of world exports, whether textiles or toys, is far larger. In IT, however, India takes pride in outdoing its rival, industry experts said. Compared with $17.2 billion in IT products and services exports for India in the fiscal year ended March 31, China sold just $2.5 billion worth of software globally last year. No major Chinese software companies are globally important whereas Indian firms like Infosys Technologies, Satyam Computer Services, and Wipro are favourites of investors both in Mumbai and in New York. In an AT Kearney survey comparing alternative destinations for outsourcing of IT services, India leads the pack, driven by cost competitiveness, rich experience in offshore outsourcing and a large labour force second only to China.

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