Information Technology (IT) is one of the top two industries in India today. IT and Information Technology- Enabled Services (IT-ITeS) sector is undergoing rapid evolution. It is transforming Indian businesses. The sector includes software development, consultancies, software management, online services, and Business Process Outsourcing (BPO).
According to an article in a national English daily, India’s liberalisation was possible due to development of the IT industry. The industry started off in the 1990s with an export of nearly $100 million and around 5000 employees. At present, the industry thrives globally and India’s IT exports are now around $70 billion with 2.8 million employees working in this sector. India’s IT and ITeS industry grew to reach $181 billion in 2018-19. Exports from the industry increased to $137 billion in FY19 while domestic revenues (including hardware) advanced to $44 billion. The spending on this sector is expected to grow over 9% to reach $87.1 billion in 2018. Revenue from the digital segment is expected to comprise 38% of the forecasted $350 billion industry revenue by 2025.
Siddhartha Dutta, Founder and Director at Fox Web Wizardz, a Kolkata-based IT firm, informed BE, “At present, the industry is passing through a temporary slowdown but this will pass. 2020 will bring new prospects and growth opportunities will be around 8-10%.”
The government has identified the IT sector as one of the 12 champion service sectors for the development of which an action plan has been developed. The government has set up a Rs 5,000 crore ($745.82 million) fund for realising the potential of these champion service sectors. As a part of the Union Budget 2018-19, NITI Aayog is going to set up a national level programme that will enable efforts in Artificial Intelligence (AI) and will help in leveraging technology. In the Interim Budget 2019-20, the Government of India announced plans to launch a national programme on AI and also spoke of setting up of a national AI portal.
CII recently organised the 18th ICT East at ITC Sonar in Kolkata. At the conference, Debasish Sen, Additional
Chief Secretary, Department of Information Technology and Electronics, Government of West Bengal, Chairman & Managing Director, WBHIDCO and Chairman, Nabadiganta Industrial Township Authority said, “The Government of West Bengal is keen on taking forward digitisation for a sustainable development of the state.” Sen took the instance of a Taiwanese IT business delegation visiting Kolkata to scout for investments in the IT Hardware parks at Sonarpur, Naihati and Falta. He further informed about the government’s efforts to build an “ecosystem for innovation” through government backed projects such as FinTech Hub, Silicon Valley Hub and the other IT hubs in the state.
Dutta informed BE, “The government has to intervene if the current condition persists and must rethink about the GST slabs as well. In addition to this, we’re also facing a technology disruption that has taken a serious upsurge in 2018. The government is nurturing a lot of start-up firms in the initial stages but most of them are losing vision after a few years and losing course. The SMEs have to go through a lot of paperwork while seeking corporate loans. Since most of the SMEs are in urban areas, these are divided into clusters and each cluster has an authorised person who often seeks bribe for getting things done. This needs to change to give the IT sector more steam in West Bengal.”
Digital India programme
The Government of India has recently launched the Digital India Programme. Google’s Chief Internet Evangelist, Vinton Cerf discussed ways to increase internet penetration in the India in a recent event organised by Federation of Indian Chambers of Commerce and Industry (FICCI). Digital India is all about digitising several government departments and their procedures as well as transforming India into a digitally
The whole programme, covering several projects, is worth over Rs1 lakh crore. Also, it concentrates on the concept of paperless office that brings routine interaction between consumers and various authorities online.
Even if the government is investing huge money in digitising all its procedures, it is hard to implement any system without the involvement of private companies, particularly Indian IT companies. The Indian IT companies have to play a major role in digitising India and in making this ambitious government project successful. E-governance (aimed at reforming government through technology) and E-kranti (aimed at electronic delivery of services) are two major areas where Indian software development companies can contribute significantly.
IT entrepreneurship can be classified into three categories –start-ups, Small and Medium Enterprises (SMEs) and top IT multi-national companies. Dutta stated, “The Startup India campaign has been good but a company with a proven track record of paying corporate taxes and providing export services to clients around the world must enjoy some additional benefits such as good exchange rates and ease of transferring the foreign funds to local bank accounts in India.”
He added, “Several programmes are being promoted that is provided to entrepreneurs but in general, very few people reap the benefits from it. Obviously a proper KYC for all start-up firms are mandatory but in doing so, many of them are losing interest. Big IT firms are surely enjoying the IT park benefits but in reality, the small and mid-sized firms haven’t had their due share from government initiatives.”
According to a Cognizant source, the pyramidal structure which is essential for any successful industry has deformed for the IT industry. The source told BE, “The number of experienced people has outgrown the need and so new resources are struggling to get a hold. Moreover, IT is always adapting newer technologies and is difficult for experienced people to switch to a new technology swiftly. As a result, though the demand and opportunities in IT has not reached any sort of saturation, the required skill set and proper allocation of resources is becoming a challenge.”
The government has placed a number of polices to promote the IT industry. However, it has failed to make the desired impact. Dutta stated, “Digitisation has already been introduced and the government should use it to better promote government initiatives. Many of the firms are not aware of these initiatives. In my opinion, these initiatives should be incorporated for firms who’re bootstrapping for more than five years and having a good credibility as well. At Fox Web Wizardz Private Limited (India) we are delivering services to clients worldwide for the last eight years but haven’t enjoyed many benefits. Technically speaking, the initiatives haven’t impacted the business a great deal.”
Competition with other countries
India is not being threatened or at war with other IT major countries. India has already proven its capabilities in delivering both on-shore and off-shore projects to clients around the world and recorded highest ever revenue at $181 billion in 2018-19.
Dutta added, “However, there will be consequences for sure in other areas if we’re not upgrading our standard operating procedure. Some of the major countries like Ireland, Ukraine, Spain, Poland, Thailand and Philippines who work on offshore projects have a GDP lot lesser than India but what they follow is a good systematic approach with moderate service fees and remote working options.”
Remote working allows employees to yield higher productivity. India can do well to take to remote working. This is one angle that remains relatively untouched. If implemented, it may yield better results for the IT industry in India and place it better with global competition.