IT and BPM

Summary
  • Global Technology spending stood at USD 3.65 tn during 2018-19.1 
  • The IT-BPM industry in India accounts for 55% of the total global outsourcing market. In India, it accounts for more than 45% share, which is the largest, in total services export.
  • The IT-BPM industry in India constitutes 8% of India's GDP. The industry is the largest employer within the private sector, employing 3.9 mn people.
  • Indian IT & BPM industry is expected to grow to USD 310 Bn by 2020.3
  • India has the second-largest number of telephone connections in the world.
  • Telecom Sees Laying of about 4.87 lakh kms of optical fibre cable to cover 1.63 lakh Gram Panchayats (GPS); nearly 1.51 lakh GPS have become service ready.
  • IT hardware is estimated to achieve 3 tn rupees worth production in 4 years and domestic value addition is expected to rise from the current 5-10 per cent to 20-25 per cent in 5 years. 
  • During the first ten months of F.Y. 2020-21, Computer Software & Hardware has emerged as the top sector with 45.81% of the total FDI Equity inflow.
Reasons to Invest
  • As of 2018-19, the expenditure on global Technology stood at USD 3.65 Tn.  
  • India in 2018-19 witnessed 1,70,000 net new hires in the industry - a total of 6,00,000 digitally skilled human resources, and a 20-25% increase in learning and development budget of IT-BPM companies.
  • India’s IT-BPM industry amounts to 55% of the global outsourcing market size. 
  • Favorable government policies and incentives facilitate investments in IT industry. 
  • There is a presence of skilled manpower, as India is home to 4.14 mn IT-BPM professionals.
  • Rapidly growing urban infrastructure has fostered several IT centers in the country. 
  • The National Broadband Mission of the Government of India is focussed to fulfil the vision of 'Broadband for All' of the National Digital Communications Policy 2018. Under the mission, following deliverables and outcomes are planned: 6
    • Provide broadband access to all villages by 2022
    • Availability of high broadband speeds
    • Increase present route length of 22 lakh km the Optical Fiber Cable (OFC) to 50 lakh km
    • Enhance connectivity and improve Quality of Service by increasing tower density
    • Increase fiberization of telecom towers from 30% to at least 70%
    • Create a Geographic Information System (GIS) based tool and set up a National Fiber Grid to keep a mapping of entire OFC network in the country
    • Facilitate rollout of 5G network and strengthening of 4G network
    • Promote Make in India by promoting domestic manufacturing and incentivizing homegrown broadband products

 

Explore more about infrastructure availability in IT and BPM sector >

Recent Announcements

 

08th May 2021: Under India and the EU submit will increases, the digital partnership among the countries via submarine cables and satellite networks. This will support resilient, secure and standards-compliant networks and increases joint efforts to promote an open, free, stable and secure cyberspace.

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04th May 2021: Nineteen companies filed their applications under the PLI scheme for IT Hardware to boost PM Narendra Modi’s Make in India and Atma Nirbhar Bharat initiative.

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04th May 2021: Telecom Department gives go-ahead for 5G Technology and Spectrum Trials in different locations across India as 5G trials aims to cover rural, semi-urban and urban areas.

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16th April 2021: Department of Telecom (DoT) successfully completed the assignment of frequencies to successful bidders of the Spectrum Auction, 2021 to improved Quality of Service for consumers.

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15th April 2021: Secretary MeitY Shri Ajay Prakash Sawhney inaugurates three new initiatives /services of National Internet Exchange of India to boost the role for IPv6 awareness and adoption in the country.

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Statistics
  • The IT-BPM industry revenue (excluding hardware) is estimated to be USD 177 Bn for 2018-19. 7  
  • The industry has more than 17,000 firms; 8 of which 1000+ are large firms with over 50 delivery locations in India.
  • The IT-BPM industry is the largest private sector employer – delivering around 4.14 mn jobs. The industry accounts for more than 45% share in total services export from India.8
  • India is the 2nd largest9 start-up ecosystem in the world with 18,000+ start-ups recognized by the government till May 2019.10
Growth Drivers
  • Emerging geographies and verticals, non-linear growth due to platforms, products and automation.
  • Revival in demand for IT services from the US and Europe.
  • Increasing adoption of technology and telecom by consumers and focused government initiatives – leading to increased information and communication technology adoption.
  • The use of IT in emerging verticals (retail, healthcare, utilities) are driving growth in the Indian IT industry.
  • India is creating a future-ready digital workforce, with more than 6,00,000 digitally skilled human resources. India’s IT-BPM firms witnessed a 20-25% increase in Learning & Development budget in 2018-19.11
  • About USD 1.6 Bn is spent annually on training the workforce and growing R&D expenditure.
  • Telecom Department gives go-ahead for 5G Technology and Spectrum Trials to cover rural, semi-urban and urban areas
  • Bharat Net project aims to connect at least 5 Wi-Fi access points in all 2,50,000 gram-panchayats (village councils) in the country.12
  • The government's Digital India Campaign envisages a USD 20 Bn investment covering mobile connectivity throughout the country, re-engineering of government process via technology and enabling e-delivery of citizen services.
FDI Policy
  • The government of India has allowed up to 100% Foreign Direct Investment (FDI) under the automatic route in the IT & BPM sector.
  • Hon'ble PM Shri Narendra Modi has approved the FDI proposal of INR 2480.92 cr in M/s. ATC Telecom Infrastructure Private Limited by M/s. ATC Asia Pacific Pte. Ltd.18

 

Read more about Foreign Direct Investment Policy in India >

Sector Policy
  • Hon’ble Prime Minister, Shri Narendra Modi has given its approval to introduce the Production-Linked Incentive (PLI) Scheme in IT and BPM Sector through the Department of Telecom of with a financial outlay of INR 12195 cr over a five-year period for Enhancing India’s Manufacturing Capabilities and Enhancing Exports – Atmanirbhar Bharat.

Prime Minister's Wi-Fi Access Network Interface (PM-WANI):51 

  • The Union Cabinet on 9th December 2020 has approved the setting up of Public Wi-Fi Networks by Public Data Office Aggregators (PDOAs) to provide public Wi-Fi service through Public Data Offices (PDOs). This will encourage technology entrepreneurs to develop and deploy Wi-Fi technology solutions triggering Make in India. 

Production Linked Incentive Scheme (PLI) for IT Hardware:21

  • The scheme proposes PLI to boost domestic manufacturing and attract large investments in the value chain of IT Hardware.
  • The Target Segments under the proposed Scheme include Laptops, Tablets, All-in-One PCs and servers.
  • The total cost of the proposed scheme is approximately INR 7,350 cr over 4 years, which includes an incentive outlay of INR 7,325 cr and administrative charges of INR 25 cr.
  • Over the next 4 years, IT Hardware companies have proposed production of over INR 1,35,000 cr, and Domestic Companies have proposed a production of over INR 25,000 cr. The scheme is expected to promote exports significantly.
  • The scheme will bring additional investment in electronics manufacturing to the tune of INR 2,350 cr.
  • The scheme will generate approximately 37,500 direct employment opportunities in the next 4 years along with the creation of additional indirect employment of nearly 3 times the direct employment.
  • Domestic Value Addition is expected to grow from the current 5-12% to 16-35%.
Financial Support

Provisions of Union Budget - 2018-19, 2019-20 and 2020-21 

  • Allocation of Digital India doubled to USD 472 Mn in 2018-19.13
  • Interim Budget 2019-20 announced that 1,00,000 villages to be made Digital Villages by 2023-24.14 It is proposed to provide USD 845 Mn to Bharatnet programme in 2020-21.15
  • It is proposed to provide an outlay of USD 1.13 Bn over a period five years for the National Mission on Quantum Technologies and Applications.

National Policy on Software Products (2019)

  • A dedicated Software Product Development Fund (SPDF) with a corpus of USD 145.65 Mn will be created in the form of Fund of Funds.16

Software Technology Park Scheme 

  • Custom duty exemption
  • Excise duty exemption
  • Central Sales Tax reimbursement
  • Corporate tax exemption on 90% export turnover
  • Sales in Domestic Tariff Area (DTA) up to 50% of the Freight On Board (FOB) value of exports permissible.17

 

Explore Government policies/schemes in IT and BPM sector >

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 (Social, Mobile, Analytics, Cloud), IT consulting, software testing.
  • Engineering and R&D within which the fastest growing sectors are – telecom and semiconductors.

 

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Foreign Investors
  • Accenture (Ireland)
  • Cognizant (USA)
  • HP (USA)
  • Capgemini (France)
  • IBM (USA)
  • Atos (France)
  • Microsoft (USA)
  • CDNS (USA)
  • Intel (USA)
  • Dell International (USA)
  • Agilent Technologies (USA)
  • Mentor Graphics (USA)
  • Oracle Corporation (USA)
  • Qualcomm (USA)
  • Steria (France)
  • Ricoh (Japan)
  • SAP (Germany)
  • TIBCO (USA)
  • Philips (Netherlands)
Agencies
Key Achievements
  • Hon’ble PM Shri Narendra Modi signed bilateral Memorandum of Cooperation (MoC) between India and Japan in the field of Information and Communication Technologies (ICTs). This MoC will boost opportunities for India to get into the global standardization process.  This will further enhance  human capacity building and development of the startup ecosystem which will contribute in realizing the objectives of Atmanirbhar Bharat.17
  • Asian Development Bank (ADB) and the Government of India signed USD 50 mn loan to boost West Bengal’s digital platforms for public finance reforms.19 
Sources
  1. “Industry Performance: 2018-19 and what lies ahead,” NASSCOM, https://www.nasscom.in/sites/default/files/Industry-Performance2018-19-and-what-lies-ahead_0.pdf
  2. “Catalyzing the Ecosystem for A Trillion Dollar Digital Economy,” NASSCOM, https://www.nasscom.in/sites/default/files/NASSCOM-annual-guidance-fy-2018.pdf
  3. “Industry Performance: 2018-19 and what lies ahead,” NASSCOM, https://www.nasscom.in/sites/default/files/Industry-Performance2018-19-and-what-lies-ahead_0.pdf
  4. “Strategic Review: IT-BPM Sector In India 2019: Decoding Digital,” NASSCOM, https://www.nasscom.in/knowledge-center/publications/strategic-review-it-bpm-sector-india-2019-decoding-digital
  5. “National Broadband Mission,” Department of Telecommunications,  https://dot.gov.in/sites/default/files/National%20Broadband%20Mission%20-%20Booklet_0.pdf?download=1
  6. “India’s Share in World’s Commercial Services Exports Rise to 3.5 Per Cent in 2018: Economic Survey 2019-20”, PIB, https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1601248
  7. “The IT-BPM Sector in India 2018 amplify digital,” NASSCOM, https://community.nasscom.in/download.php?file=wp-content/uploads/attachment/nasscom-itsr--executive-summary-2018.pdf
  8. “Budget 2019-2020,” India Budget, https://www.indiabudget.gov.in/budget2019-20/index.php
  9. “Home Page,” Startup India, https://www.startupindia.gov.in/
  10. “Industry Performance: 2018-19 and what lies ahead,” NASSCOM, https://www.nasscom.in/sites/default/files/Industry-Performance2018-19-and-what-lies-ahead_0.pdf
  11. “BharatNet Usage Status as on 20-05-2019,” BBNL, http://www.bbnl.nic.in/BharatNet.pdf
  12. “Summary of Budget 2018-19,” Ministry of Finance, PIB,  http://pibarchive.nic.in/newsite/PrintRelease.aspx?relid=176062
  13. “Highlights Of Interim Budget 2019-20,” Ministry of Finance, PIB, http://pibarchive.nic.in/newsite/PrintRelease.aspx?relid=187934
  14. "Summary of Union Budget 2020-21", PIB, https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1601475
  15. “National Policy on Software Products (2019),” MeitY, https://meity.gov.in/writereaddata/files/national_policy_on_software_products-2019.pdf
  16. “Software Technology Park of India,” Invest India, https://static.investindia.gov.in/Software%20Technology%20Parks%20%28STP%29%20Scheme.pdf
  17. PIB, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1668396 
  18. PIB, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1675607
  19. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1677688
  20. PIB Release, https://pib.gov.in/PressReleseDetail.aspx?PRID=1687591
  21. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1700431

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