IT AND BPM

SUMMARY

REASONS TO INVEST

India’s IT – BPM industry amounts for 56% of the global outsourcing market size.
Rapidly growing urban infrastructure has fostered several IT centers in the country.
Favorable government policies and incentives to facilitate investments in IT sector.
Presence of skilled manpower, India is home to a large number of IT professionals.

STATISTICS

IT BPM industry revenues (excluding hardware) is estimated at around USD 130 billion (2015-16).
Exports from the IT-BPM industry stands at USD 107.8 billion for Financial Year 2015-16 (Segment wise breakup is as under):
- IT services - USD 61.0 billion
- The BPM industry exports - USD 24.4 billion
- ER&D and Software Product Development - USD 22.4 billion
The IT industry has more than 16000 firms; of which 1000+ are large firms with over 50 delivery locations in India.
The IT-BPM industry is the largest private sector employer – delivering 3.7 million jobs.
The sector accounts for 45% share in total services export from the country.
India is ranked as the 3rd largest tech based start-up hub in the world with over 4200 start-ups in the country.

GROWTH DRIVERS

Emerging geographies and verticals, non-linear growth due to platforms, products and automation.
Revival in demand for IT services from US and Europe.
Increasing adoption of technology and telecom by consumers and focused government initiatives – leading to increased Information and communication technology adoption.
Use of IT in emerging verticals (retail, healthcare, utilities) are driving growth in Indian IT sector.
India has been creating a future-ready digital workforce, with more than 0.15 million employees SMAC (social, mobile, analytics, cloud) skills.
The SMAC (social, mobility, analytics, cloud) market is expected to grow to USD 225 billion by 2020.
USD 1.6 billion is spent annually on training workforce and growing R&D spend.
The National Optical Fibre Network (NOFN) is being laid down in phases to connect all the 0.25 million gram panchayats in the country.
The government's Digital India Campaign envisages a USD 20 billion investment covering mobile connectivity throughout the country, re-engineering of government process via technology and enabling e-delivery of citizen services.

FINANCIAL SUPPORT

PROVISIONS OF THE 2015-2016 UNION BUDGET :

Tax rate on royalty and fee for technical service payable to non-residents has been reduced from 25% to 10%.
The National Optical Fibre Network Programme (NOFNP) to be further speeded up by allowing willing states to execute on reimbursement of cost basis as determined by Department of Telecom.
Supporting technology driven start-ups - Creating of innovation Promotion Platform and Techno-financial and facilitation support scheme
Self Employment and Talent Utilization (SETU) to establish as techno-financial, incubation and facilitation programme to support all aspects of start-up business.
Transfer Pricing - Increase in Domestic Transfer pricing threshold from USD 769,230 to USD 3.07 million.
Reduction in tax rate on Royalty and Fees from Technical services from 25% to 10%
CENVAT credit time limit for availment increased from 6 months to 1 year.
General Anti-Avoidance Rule (GAAR) deferred by another two years and will be implied prospectively.
2 days time for service tax/ excise duty registration; electronic filing including digital signature.
Micro Units Development Refinance Agency (MUDRA) Bank, with a corpus of USD 3.07 billion, and credit guarantee corpus of USD 461.53 million aiming to infuse funding among the new generation entrepreneurs.

INVESTMENT OPPORTUNITIES

The setting up of IT services, BPM, software product companies, shared service centres.
Fast-growing sectors within the BPM domain – knowledge services, data analytics, legal services, Business Process as a Service (BPaaS), cloud-based services.
IT Services and fast-growing sectors within it such as solutions and services around SMAC, IS outsourcing, IT consulting, software testing.
Engineering and R&D within which the fastest growing sectors are – telecom & semiconductors.

FOREIGN INVESTORS

AGENCIES