Information Technology has played a major role in transforming India from an agriculture dependent to a service based economy. It has revamped the country’s image from a slow moving bureaucratic economy to a land of innovative entrepreneurs. Taking advantage of labor arbitrage leading to humongous outsourcing by the developed nations, India has already solidified its position as a provider of IT solutions.
Though the size of Indian firms is still smaller as compared to global players but if we look at the growth rates, the scenario is entirely different. Though top five Indian IT companies account for just 3.7% of IT services market, they have a strong 13% growth against the industry growth rate of 2%. Graphs below can provide a much better picture.
We can clearly see that all Indian IT services firm have shown high growth rates for Year 2012-13 when the leaders in the market were finding their revenues slackened. Liberalization of external trade, elimination of duties on imports of information technology products, relaxation of controls on both inward and outward investments and foreign exchange, setting up of Export Oriented Units (EOU), Software Technology Parks (STP), and Special Economic Zones (SEZ) have enabled India to flourish and acquire a dominant position in world’s IT scenario.
On the other hand, global players faced price pressures from the emerging markets and there was a weakening demand in Western Europe and United States. To counter the disadvantage of higher costs, these players have opened up their major hubs in the developing countries themselves. For example, more than 1/3rd of the workforce of French firm Capgemini operates from India. Still, major advantage is taken home by Indian Pure Plays like TCS, Infosys, Wipro etc.
While we are gearing up to reach the position of leaders, our close neighbor, “The Dragon” has begun offering better rates with reduced operational costs as compared to India. China is generating more than USD 4 billion revenue from information technology and business process outsourcing. Although it has not yet reached India’s revenue rate from Information technology services, China’s IT and BPO industry is expected to grow 30 percent which is an area of concern for Indian firms.
Scenarios are changing worldwide. With the arrival of SMAC (Social, Mobile, Analytics and Cloud) big time in the industry, dynamics are changing and so are the relations with the clients. The contracts have become short termed with companies opting for different vendors much quickly than before. Focus has also shifted from service and solutions to strategic benefits. With the advent of these technologies, firms who can absorb and then respond quickly will take the larger pie home.