a study on the it industry

7/30/2019 A Study on the IT Industry

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ALLIANCE ASCENT COLLEGEGROUP NO. 2

Tables of Contents (yet to be done)


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Executive Summary

The Indian IT / ITES industry has been one of the outstanding accomplishment reports of

present India. An industry that did continue hardly 2 decades ago is nowadays the toast of

the state and the envy of the world. It is arguably the most global equipment of each

Indian industry and has crafted global benchmarks for quality, clarifying to the globe and

to ourselves that Indian firms can contest globally and accomplish on quality. It has

additionally clarified what middle class unleashing the manipulation of middle class can

attain early creation entrepreneurship in India. Entrepreneurs a longside humble

backgrounds and extremely manipulated admission to capital commenced the

overwhelming bulk of firms in this sector. In countless methods, this industry has helped

craft the brand of New India and assisted as an inspiration for everyone else.

For the last couple of years organizations have wanted to tap the IT sector for firm

growth in their business. This report enlightens to select and gaze beyond these borders

and accept an extra comprehensive to discover, to recognize and assess the finished

communal and commercial contribution of this industry in India.

While the IT/ITES industry has created a enthusing onset, there is indeed a long method

to go. As the Nobel Laureate Dr. Amartya Sen said, during his key- note address at the

NASSCOM India Association Summit 2007 that this sector above all will change the

Indian growth and will create a great scenario for us to live in.

The industry is fully cognizant of its obligations and the possible for creating a

difference. This report enhances on many points and certain objectives that cover the IT

contribution to the GDP and environmental forces that act on the same, the economic

development, the effect of liberalization on the industry, different competitive actions

that firms take, and IT industry in comparison with US and other countries.

We hope you find the report functional and if it succeeds in enthusing you by displaying

you methods by that you can give to upholding and scaling up innovative undertakings

that will help you understand the IT sector and use this information relevantly.

-Group No. 2, (Section B)


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Introduction Chapter One.


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Overview of Indian IT Industry

The Indian IT industry is yielding steadily even though the globe meltdown in the year

2009. After the whole world observed the negative development, Indian IT industry yet

grasped to list a development of 5.5%. The industry is concerning to list the vital

attraction of US $ 50 billion exports this year, according to NASSCOM President,

Som MIttal. The internal marketplace is additionally slotted to observe a 12%

development, this year. Possible size of Indias offshoring industry is approximated at US

$ 120 to 180 billion by 2015. The industry presently employs concerning 1 million

people and provides indirect occupation to concerning 2.5 million people. It is anticipated

to add one more 1, 50,000 jobs in the subsequent fiscal according to NASSCOM.Indian

IT/ ITes sector is growing substantially with its

Expanded into varied verticals.

Well-differentiated service offerings. Increasing geographic penetration.

The phenomenal accomplishment of the Indian IT- ITeS industry can be attributed to the

favorable power strategies, blooming demand conditions, healthy development of

connected industries and competitive nature prevalent in the industry. The interplay of

these powers has managed to allocating the industry on the globe map.


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History and Evolution of IT Industry

The evolution of IT industry can be studied in 4 phases:

Phase I: Prior to 1980

The Software industry was factually nonexistent in India till 1960. Software utilized in

the computers till that period, were in crafted alongside the systems. Power protected the

hardware industry across elevated tariff barriers and licensing. Though, in the West, the

demand for multimedia progress was softly being contacted as the Software in crafted in

the arrangement was not adequate to present all the operations. The Power of India

consequently, comprehended the possible for receiving external exchange.

In 1972, the power formulated the Software Export Scheme. This scheme created the

abiility of hardware imports in transactions of Software exports. TCS came to be the

early stable to concur to this condition. The year 1974 marked the commencing ofSoftware exports from India.

Phase II: 1980- 1990

Despite the government initiatives, the software exports were not picking up because of

two reasons mainly:

The exports of Software, was deeply reliant on the imports of hardware, that was

expensive as well as the procedure for obtaining the alike was extremely cumbersome.

To counter these, the Govt formulated a New Computer Strategy in 1984, that clear

import procedures and additionally decreased the import obligation on hardware for

multimedia developers. In an endeavor to create, multimedia industry autonomous of the

hardware industry, the power in 1986, formulated Multimedia Strategy that more,

liberalized the IT industry. According to this strategy, the hardware imports were de-

licensed and were additionally created obligation free for the exporters. This alongside

alongside the globe expansive crash in the hardware benefits decreased the entry barriers

substantially.

In 1990, government established Software Technology Parks of India. This scheme was

formulated to increase the exports of software and services.


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Phase III: 1990- 2000:

This decade created countless significant adjustments in the economy, encompassing

transactions liberalization, onset up of Indian economy to external investment,devaluation of the rupee and relaxation of entry barriers. These adjustments enticed

countless external entities (MNCs) to our nation. These MNCs in India, gave Offshore

Model for multimedia services, according to that, the firms utilized to abiility their

clients from India itself. This ideal more graduated to Globe Transport Ideal (GDM).

Globe Transport Ideal is a combination of Onsite and Offshore Model. In this ideal, the

Offshore Progress Centre is placed at assorted locations across the globe.

During this era due to the entry of countless contestants in the Indian marketplace, the

contest became intensified. Therefore, the contestants commenced investing in scutiny

and progress to discriminate their services from others.

Phase IV: Post 2000

The globe setbacks like the Y2K, the dotcom crash and recession in the US economy,

proved to be a boon to Indian IT industry. The Y2K setback commanded the continuing

softwares to be compatible to the year 2000. Due to the shortage of US established

programmers across this era, countless mid sized firms were compelled to use the

services of Indian firms. This had allocated the Indian IT industry on the globe map.

Post 2002- 03, the industry had registered a robust development rate because of rise in thenumber of clients, colossal sized contracts and a forceful globe transport model.


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The Graph clearly shows that the evolution of the Industry in the past few years and the

development in the industry. It also shows how in different phases what activities have

been taken to do the same.


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IT Industry can be classified into three sectors:

Software Industry. IT Services. IT Enabled services.


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Software / Multimedia:

IT Software comprising of the (a) Software Products and (b) Engineering and R & D

Services, forms the smallest sector of the Indian IT industry.

a. Software Products: The marketplace for Software produce is producing quickly as theTiny and Medium Enterprises (SMEs) as well as colossal associations are employing the

services of Software in elucidating their works.

The sector is exceedingly pondered alongside the top 10 firms, manipulating the market.

IT Software comprises of the:

1. Infrastructure Software.2. Enterprise Application Software.

Infrastructure Software:

The Groundwork Software links the people and arrangements across an organization. It

helps in effectually giving the company procedures, allocate data and grasp the assorted

stroke points alongside the clients and the suppliers. It can be of the following types:

Application Development Application integration and Middleware Business Intelligence tools Database Management Systems Data Integration Tools IT Operations Security Software Operating System software

Enterprise Application Software:

It is software specifically projected to resolve an enterprise problem. The request

software performs assorted company functionalities like accounting, creation arranging,

client data association, etc. The Enterprise request softwares presently obtainable are:

Customer Relationship Management. Enterprise Resource Planning. Supply Chain Management. Project Portfolio Management. Content, Communication and Collaboration & E-Learning.


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IT Services:

India is one of the managing providers of IT services. The frank ideal pursued is

recognized as Offshoring wherein Indian firms cater to the specific necessities of its

clients by retaining effectual undertaking and quality association skills for its execution.

This segment embodies of :

(a) Project- oriented services:These services are held as individual projects. Theservices are catered according to the needs and wants of the clients, and the expertise of

the vendor. These services can be held onsite or offshore, or can be a combination of both

also.

These services include the following services:

IT Consulting: The contestants in this abiility line counsel clients to update theircompany employing IT. They aid them in arranging IT strategy, IT design, IT

assessment and arranging etc. IT consulting in India is yet at a extremely nascent

stage. Main firms that are encompassed in this abiility are Wipro, TCS, Satyam,

Infosys.

Systems Integration: This embodies a finished bouquet of services that areextremely specific to the necessities of the main user.

The scope of services encompassed are:

Integration of various systems deployed by the organization- CRM, ERP,SCM etc.

Integration of business processes and logistics. Configuration of customized software. Database Maintenance. Integration of legacy systems with the new software or hardware.

CADM: These services contain arranging, enhancing and maintenance ofsoftware to suit the user requirements. These services law the undertakingoriented services market. These services are best suited for offshoring that is why,

these services law the Indian export basket.


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Network Consulting and Integration: These services offer planning,construction and designing of data networks. The range of services in this service

line includes:

Network architecture design o Network connectivity Systems Management Project Management Network Maintenance etc.

Software Testing: It checks the quality of a software product or service. It isbasically a technical investigation to recognize and rectify errors to encounter

specific quality parameters. Software Assessing operates in three spheres:

Response Testing: Ensures that parameters from which the responses areelicited from the target audience are operational as well as efficient enough.

Security Testing: Ensures that all the security parameters are risk free oLoad Testing: Ensures that the software can handle the load density so as toreduce the down time.

(b) IT Outsourcing: When the organization outsources its fun ctions to another

organization for maintaining its IT architecture or system, this process is called IT

Outsourcing.

Application Management: It includes management and execution of all activitiesinvolved in deploying, maintaining, and upgrading a firms IT systems.

IS Outsourcing: The services presented in this segment vary relying on thenecessities of the client. The services presented in IS Outsourcing can be:

Desktop management. Help desk support. Management of application systems. Management of operation system. Management of Anti virus systems. Back up equipment systems.


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(c) Training and Support: It includes three segments:

Software Placement and Support: It involves installing, configuring and maintainingSoftware on the clients systems.

Hardware Placement and Support: It involves employing specific hardwaremechanisms on the clients systems.

IT education and Training: It is projected to teach and train the in house team forassociation Data Knowledge systems. It is imparted to furnish organization specific

skills.

IT Enabled Services:

It consists of those services that are held employing Software as a way of creation and

Internet as a way of transmission. According to AT Kearney, India is believed to be the

most favored destination for firms that are looking for off shoring their IT and back office

functions. The factors favoring the development of this sector in India are:


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Customer Data Services: These services contain all the hobbies connected to grasping

connection alongside the client i.e. arrest, storage and analysis of client information.

Financial & Accounting Services: These services manage financial and accounting

aspects of businesses. These services are slowly and steadily gaining pace in the Indian

IT industry. It is the second largest contributor to exports in the ITes segment.


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Tier I Players: Nevertheless the number of contestants in this group is extremely low (5- 7),

but they report for nearly 45 percent of IT Services and 4- 5 percent of BPO exports. These

firms have been able to rise their sales alongside the aid of their forceful association skills and

Globe Transport Ideal (GDM). This has helped them in enhancing their globe presence. They

are rising venturing into new services like IT consulting, Scrutiny and Progress (R & D),assessing.

Tier II Players: These contestants have their revenues larger than US $ 100 billion. The

number of contestants in this group is additionally low (10- 12), but they report for 25 each cent

of IT services and 4- 5 each cent of BPO exports. Due to manipulated number of clients, ability

lines and verticals, these contestants have registered a lower development rate than the Tier I

players.

Offshore Globe Service Providers: This group has concerning 30- 40 contestants who have

registered their sales revenue of US $ 10- 500 billion. These contestants are recording inorganicdevelopment across buys in low price destinations encompassing India. But, due to convoluted

innate marketplace conditions, they are confronting trials in incorporating Indian operations.

Pure Play BPO providers: The number of contestants in this group have hovered concerning

40- 50. They report for concerning 20 each cent of BPO exports. These contestants are

confronting weighty trials in words of rising client expectations in words of quality and

transport of service.

Captive BPO Units: There are concerning 150 contestants in this category. They report for 50

each cent of BPO exports. They are additionally rising their attendance in Tier II metropolises,

chiefly for price and resource considerations.


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Established & Emerging IT Hubs in India

Figure: Established IT Hubs in India Presently.

Figure: Emerging ITHubs in India


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Objectives of the Study:

1. To identify the effect of liberalization on IT industry.

2. To find about major mergers and acquisitions in the industry.

3. To conduct a PESTLE analysis of the industry.

4. To find out the market share and nature of competition.

5. To identify the effect of IT on Economic development in India.

6. To Identify the PORTERS 5 Force model.

7. To identify the Marketing initiatives (advertising, marketing expenses, etc.)

8. To identify the new opportunities of growth for the IT Industry.

9. To identify comparison with US markets and other countries.

The above-mentioned objectives would be covered further in chapter no. 3, considering the

recent trends these objectives would be relevant for the study.


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Conclusion

The Indian Information Technology industry embodies one of the most prosperous industry

displaying consistent quick growth. In a report, Perspective 2020: Change Business, Change

India, coordinated by Mc Kinsey, the export revenues of Indian IT industry will stroke US $

175 billion by the year 2020. The internal sales revenue will additionally give US $ 50 billion

by the year 2020. Therefore, we can say that the industry is gleaming and will tolerate to do so

as well.


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Review ofLiterature

.. Chapter 2


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Introduction

This section talks about reforms and activities that are undertaken in the past few years.

Information Technology (IT) industry in India has frolicked a key act in allocating India on the

globe map. IT industry in India has been one of the most momentous development contributors

for the Indian economy. The industry has frolicked a momentous act in transforming Indias

picture from a sluggish advancing bureaucratic economy to a earth of innovative entrepreneurs

and a globe contestant in bestowing globe class knowledge resolutions and company services.

The industry has helped India change from a rural and agriculture-based economy to a vision

established economy.

Information Technology has created probable data admission at gigabit speeds. It has created

incredible encounter on the lifetimes of millions of people who are poor, marginalized and

living in rural and distant flung topographies. Internet has created extreme adjustments

alongside possibilities of e-government measures like e-health, e-education, e-agriculture, etc.

Today, whether its filing Income Tax returns or requesting for passports online or railway e-

ticketing, it just demand insufficient clicks of the mouse. Indias IT possible is on a stable

protest towards globe competitiveness, enhancing protection skills and encounter up power and

environmental trials amongst others.

IT-ITeS sector in India, alongside the main focus on rising knowledge adoption, and growing

new transport periods, has aggregated revenues of USD 88.1 billion in FY2012, as producing

direct occupation for above 2.5 million people. Out of 88.1 billion, export revenues (including

Hardware) has grasped USD 59.4 billion in FY2012 as internal revenues (including Hardware)

of concerning USD 28.8 billion.


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Government Initiatives:

After the economic improvements of 1991-92, main fiscal incentives endowed by the Power of

India and the State Governments, like, liberalization of external transactions, elimination of

obligations on imports of data knowledge produce, relaxation of controls on both inner and

outward investments and external transactions, setting up of Export Oriented Constituents

(EOU), Software Knowledge Parks (STP), and Distinct economic Zones (SEZ), has enabled

India to flourish and buy a dominant locale in worlds IT scenario.

In order to alleviate and to advance Indian IT industry, the Power of India had set up a

Nationwide Task Power on IT and Software Progress to scrutinize the feasibility of reinforcing

the industry. Venture capital has been the main basis of finance for software industry

concerning the world. In line alongside the global habits, norms for the procedures of venture

capital funds have additionally been liberalized to boost the industry.

The Govt of India is additionally actively bestowing fiscal incentives and liberalizing norms forFDI and rising capital abroad.

Financial Assistance:

While the underlying theme of 2010 was that of stable recovery from recession, due to the

accelerated recovery in growing marketplaces, worldwide paying in IT produce and services

increased considerably in 2011. In 2011, Indias development has imitated new demand for IT

goods and services, alongside a main surge in the use of confidential and area cloud and mobile

computing on a collection of mechanisms and across a scope of new multimedia applications.

High inflow of FDI in the IT sector is anticipated to tolerate in pending years. The inflow of

huge volumes of FDI in the IT industry of India has not merely boosted the industry but the

whole Indian economy in present years. External direct investment (FDI) inflow increased by

extra than 100 each cent to US$ 4.66 billion in May 2011, up from US$ 2.21 billion a year ago,

according to the latest data released by the Department of Industrial Policy and Promotion

(DIPP). This is the highest monthly inflow in 39 months.

Foreign Technology induction is additionally inspired both across FDI and across external

knowledge collaboration agreements. India welcomes financiers in Data Knowledge sector.

Larger transparency in strategies and procedures has created India and financier approachableplatform. An external firm can grasp fairness in Indian companys upto 100%.


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Research & Development:

To prop Scrutiny & progress in the state and advancing Onset ups focused on knowledge and

change, a weighted deduction of 150% of expenditure incurred on in- house R&D is gave

below the Income Tax Ac. In supplement to the continuing scheme for backing assorted R&D

undertakings have been backed across new scheme like Prop Global Patent Protection in

Electronics & IT (SIP-EIT), Multiplier Grants Scheme (MGS).

The power has commenced the setting up of an Open Knowledge Center across NIC aimed at

providing competent association to the state on Open Knowledge in the spans of Open Basis

Solutions, (OSS), Open Standard, Open Processes, Open Hardware specifications and Open

Course-ware. This initiative will deed as a Nationwide Vision abiility bestowing synergy to the

finished constituents of Open Knowledge globally.

Regulations:

After the Economic improvements of 1991-92, liberalization of external transactions,

elimination of obligations on imports of data knowledge produce, relaxation of controls on both

inner and outward investments and external transactions and the fiscal measures seized by the

Power of India and the individual State Powers specifically for IT and ITES have been main

contributory factors for the sector to flourish in India and for the state to be able to buy a

dominant locale in offshore services in the world. The main fiscal incentives endowed by the

Power of India have been for the Export Oriented Constituents (EOU), Software Technology

Parks (STP), and Special Economic Zones (SEZ).

Challenges:

Cyber protection and quality association are insufficient key spans of concern in todays data

age. To vanquish such concerns in todays globe IT scenario, an rising number of IT- BPO

firms in India have softly commenced to emphasize on quality to accept globe standards such

as ISO 9001 (for Quality Management) and ISO 27000 (for Data Security). Today, centers

established in India report for the biggest number of quality certifications attained by each

solitary country.

India aims to change India into a honestly industrialized and inspired area by 2020. Though, to

accomplish this development, the sector has to tolerate to re-invent itself and fight for that

supplementary mile, across new company models, globe transport, partnerships and

transformation. A cooperative power from all stakeholders will be demanded to safeguard

upcoming development of Indias IT-ITeS sector. We will demand to development up to the

new trials and locale in dedicated efforts in the direction of bestowing extra and extra of end-to-

end resolutions to the clients to retain the momentum going.


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Future prospects:

Globalization has had a profound encounter in shaping the Indian Data Knowledge industry.

Over the years, verticals like producing, telecom, insurance, investment, finance and lately the

retail, have been the development drivers for this sector. But it is extremely fast becoming clear

that the upcoming development of IT and IT enabled services will be fuelled by the verticals of

meteorological conditions change. Mobile requests, healthcare, power efficiency and

sustainable energy. The adjacent upcoming of Indian IT industry sees a momentous

development in allocate of knowledge expend as extra and extra ability providers both Indian

and globe target new segments and furnish low price, flexible resolutions to customers.

By 2015, IT sector is anticipated to produce revenues of USD 130 billion (NASSCOM) that

will craft a transformational encounter on the finished economy. IT paying is anticipated to

considerably rise in verticals like automotive and healthcare as the power, alongside its focus

on e-governance, will tolerate to be a main spender.

However, to accomplish this development, the sector has to tolerate to re-invent itself and fight

for that supplementary mile, across new company models, globe transport, partnerships and

transformation. A cooperative power from all stakeholders will be demanded to safeguard

upcoming development of Indias IT-ITeS sector. We will demand to development up to the

new trials and locale in dedicated efforts in the direction of bestowing extra and extra of end-to-

end resolutions to the clients to retain the momentum going.


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Topic 1: How the Indian IT Industry can cope with the US recession

- Abhishek Toraskar, Consultant, Wipro ConsultingEurope.

US Employment fell for the first time after 2003, the manufacturing also declined 5.3%,it did not actually measure recession but the symptoms were even severe. Further would

be discussed what the whole paper talks about by Abhishek Toraskar.

Diversify Globally:

The price supremacy of India above such locations is additionally considerablydiminished as incomes in Eastern Europe as not considerably higher than those in

India.

The demand for nearshoring is exceptionally highlighted by the fact that countlessUK IT abiility providers have presently invested in 3 globe transport centers in

Eastern Europe and Morocco every single and 4 in China.

Such nearshore locations will be able to abiility EMEA and South East Asia spanand their skills cannot be replicated by comparable centers in India.

Many globe firms desire to tolerate offshoring, though they are looking at non-India established partners as a method of addressing the subjects of talent

shortage, income hikes and elevated incomings that are commonplace in India.

Local Foray:

Some of these deals have been jaw-dropping huge TCS' $140 million dealalongside BSNL, Wipro's $80 million and $60 million deal suitably alongside

HDFC and Dena Bank equal, if not exceed, deals of comparable nature alongside

global clients.

The span can not merely be tapped for innate marketplaces, but additionally beutilized as satellite abiilities to prop their Indian counterparts.


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Tighten Recruitment and retention processes:

Earlier, many reputed companies only recruited engineers through campusplacements.

Recruitment cells are covering lower ranked colleges during campus placements. Consequently, the quality of new recruits has gone down noticeably. Not only are the much celebrated analytical skills poor amongst such fresh hires,

but even basic communication skills are a cause for great worry.

Address the Skills Shortage:

Service Oriented Architecture, Software as a Service, Cloud Paradigm (or desktopvirtualization) are emerging as some of the biggest IT trends.

The software designers should be brought up to speed on these new trends and theprogrammers trained on technologies that underline these trends.

Improve Productivity:

Addressing the skills shortage amongst the existing employees will partly lead tobetter productivity.

Technical tasks should form a sizable portion of a project lead's tasks. Technical advancement through training and project work should be an integral

part of a manager's appraisal criteria.

Programming is one of the most intense and focused activities, and any hindranceto it availability of software, training material, access issues should be resolved

speedily through a system that exists to support the programmer more than

anyone else.

Conclusion:

This is indeed a complex period for the Indian IT industry, but theres no real reason to

panic. The IT guns displayed outstanding character and strength across the years pursuing

the spot com bust. They are astute plenty to elucidate the signals and comprehend that

change is in order. With a tiny sequence correction and an unswerving think on the long-

term, the India IT industry can appear stronger and bigger.


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Topic 2: The role of technology in the emergence of the information

society in India.

-Shashi Prabha Singh

Introduction:

India is one of the oldest sophistications alongside a kaleidoscopic collection and affluent

traditional heritage. Across the era of 55 years of its autonomy, it has attained

multifaceted socio-economic progress and is nowadays the tenth industrialized state in

the globe and merely the sixth state to have gone into beyond space to vanquish nature

for the benefit of the people. India has 28 asserts and 7 coalition regions alongside above

1,027 million populace of that extra than 65 each cent are literate. The Indian Nationwide

Literacy Mission, dispatched in 1988, aims at accomplished a sustainable threshold

literacy level of 75 each cent by 2007. India is creating all out efforts to be counted amidthe industrialized asserts of the world. Substantial attention is therefore being paid to the

request of knowledge, progress of groundwork and human resource for encounter

nationwide needs.

Emergence of information society:

The data area has bypassed across four transformational periods of progress, themost extreme period commenced alongside the tail-end of the twentieth centurythat has held a never-ending metamorphosis, chiefly alongside the introduction of

data and contact technologies (ICTs).

Period, there have been unprecedented events, profoundly altering the communalconstruction the plummet of producing sector as contrasted to the prospering

information-rich ability sector is one example of such events India is advancing

fast towards becoming an data area as the Power of India is paying due attention

to the use of Information Technology (IT), and crafting an nature for the Indian

work-force to come to be encompassed in data activities.


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The Information Society:

According to Cawkell, a data area can be described as a area in that in the end most of the

people are involved in brain work rather than physical work. In such area, extra

attention is paid on data hobbies (such as buy, processing, creation, recording,

transmission, dissemination and association of information) and extra expenditure is

incurred on data. India is trooping fast to come to be a data area and knowledge is

frolicking a momentous act in creating India a magnet for Software clients.

Impact of technology on community life:

The last insufficient decades have observed a visible transition in the manufacturing

landscape of India. Knowledge has helped area to cut across the established borders for

becoming modified into an growing data society. The continuing digital gap is becoming

decreased date by date as the internet and globe expansive web are helping considerablyin bridging the gap amid information-rich and information-poor. Knowledge is

possessing a outstanding encounter on the daily existence of customers, their education,

condition care, methods of acting company, governance and contact, etc. and this is

debated briefly in the pursuing sections.

Conclusion:

The last insufficient decades have observed a visible transition in the manufacturing

landscape of India. Knowledge has helped area to cut across the established borders for

becoming modified into an growing data society. The continuing digital gap is becomingdecreased date by date as the internet and globe expansive web are helping considerably

in bridging the gap amid information-rich and information-poor. Knowledge is

possessing a outstanding encounter on the daily existence of customers, their education,

condition care, methods of acting company, governance and contact, etc. and this is

debated briefly in the pursuing sections.


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IndustryAnalysis

. Chapter 3


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Introduction:

The Industrial Analysis talks about the IT/ITES industry that gave birth to the

development and progress of the country in words of assorted economical and

communal aspects across its for-profit as well as not-for-profit activities.Hence this would help us understand the objectives in depth talking about different

aspects of the Industry and how these aspects lead a major role in the

transformation in the industry. Its important to the analysis it is determined that a

new venture is feasible in regard to the industry and market in which it will

compete, more in depth analysis is needed to earn the ins and outs of the

industry the firm plans to enter. It helps in making firms understand niche markets

that are open to tap. It is useful for a new venture to think about its position at both

the companys level and the product or service level. At the company level, a

firms position determines how the entire company is situated relative to itscompetitors.


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Porters 5 Force Model for IT Industry:

Threat of New Entrants:

After the barriers of entry are low, the menace of new entrants becomes extremely high.

As in IT multimedia and services, the contestants relish momentous economies of scale

and the switching prices are additionally extremely elevated, consequently, the entry

barriers for the IT Multimedia and Services are extremely high. In difference to this, inITeS- BPO, lower economies of scale are grasped and the switching price is additionally

extremely low. This leads to extremely low entry barriers.

Therefore, there is elevated menace of new entrants in the ITeS- BPO sector as it is low

in the case of IT multimedia and services.

Growth stage: There is plenty room for development for continuing contestantsand new entrants

With the entry of countless multinational firms (MNC) are onset their proceduresin India to impact the low price supremacy endowed by India, has increased the

completion ratio (CR) of the industry.

Also as there is no huge capital investment needed to onset a new firm, theindustry discern a extremely colossal numbers of tiny and medium-size firms

working in a niche market.

Presence of such colossal number of contestants has created the industry as one ofthe most competitive industry in the market.

Rivalry amid players:


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After the number ofcontestants increases in a sector, the intensity of rivalry additionally

increases. With the rise in rivalry, the contestants resort to a number of strategies being

pursued by the contestants to buy new clients or to retain older ones. Preceding

contestants utilized to furnish customized services to appeal clients, but nowadays this

exercise, additionally fails to appeal them. Therefore, they resorted to bestowing

conclude to conclude resolutions, niche services etc.

Buyers in IT industry can be briefly categorized into pursuing categories:

Institutional buyers:

Institutional clients embodies of large and tiny enterprises that outsource portionof their work or apply an IT resolution for enhancing their processes.

As the IT industry has colossal number of suppliers and insufficient entry barriersfor new entrants, the client has a many option to select from therefore have a

colossal bargaining leverage.

Individual or tiny consumers:

Similarly the individual customer enjoys options of plenty and has colossalbargaining power.


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Bargaining Domination of Buyers: As the switching prices in case of IT Multimedia

and Services, is extremely elevated, the Bargaining manipulation of the clients becomes

low. But just opposite to this, in case of ITeS- BPO sector, the switching price is

moderately extremely low, that creates the bargaining manipulation of the client

extremely high.

Bargaining Domination of Suppliers: Suppliers for the industry can be categorized

into:

(a) Vision Professionals,

(b) Hardware Manufacturers and

(c) Telecom industry players.

Technology Professionals have a elevated bargaining manipulation in the IT Software

and Services sectors because they demand elevated level of skill and expertise to portray

their services. In the ITeS- BPO sector, the level of skill and expertise needed is low;consequently, they have a lower bargaining manipulation on the industry.

For the IT industry to purpose properly, proper hardware groundwork is required.

Therefore, the bargaining manipulation of hardware producer grows. This is upheld by

the fact that hardware-producing industry is extremely pondered (HP, IBM, Dell etc.)

While a robust telecom web is a pre-requisite for proper functionality of the IT industry,

but the attendance of a number of contestants in the industry reduces their bargaining

power.

Threat of Substitutes: As the IT industry is driven by knowledge, that itself is evereveolving, consequently, there is a elevated chance of substitutes for the industry.

The Indian IT industry presently enjoys a extremely elevated development ratedue to pursuing advantages.

High potential of accomplished labour Availability of colossal English articulating population Low price of labour Good power strategies (like tax celebrations till 2009 for IT firms & setting up of

distinct commercial raise zones).

But there are countless asserts such as China, Philippines, and countless eastEuropean asserts that has commenced to furnish comparable opportunities and

Indian IT industries always demand to revolutionize and move into new sectors to

retain out the contest


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To understand the PESTLE Analysis of the IT Sector:

Political:

Government laws and regulation in the direction of a particular companyenvironment.

Other factors: client protection regulation, competitive regulation, and extremeattacks.

Indian power has selected to contract IT job to Indian IT firms crafting extraopportunities for the firm and the industry at large.

Indian power has reinforced the IT deed, 2000 to furnish a sound lawfulenvironment.

Economical:

Rising working wage, globe recession, contest, contract obtainable and fee. Domestic IT paying produced by 20% and grasped $20 billion in 2009. Currency variations cased by the devaluation of the dollar has altered the industry

across the last recession.

Recession cause low attribute rate due to job layouts and job cuts. Indias globe IT paying yet to plummet due to entry of new IS firms and the cause

of the recession.

With the plummet of investment and commercial sectors, the revenue from thereis anticipated to plunge, hurting the bottom line of IT majors.

Social:

The communal factors altering IT industry scopes from operative right, speechbarriers, and contest nationality of firm or supplementary issues.

English speech being extensively articulated in India has aid in fostering theindustrys connection and contact in India and on the globe stage.

Great number of institute and universities proposal IT sequence crafting room forpossibilities of IT experts at lower price as there is job competition.

Being a main contestant in the globe IT marketplace Infosys has introducedcompute to aid in the reduction of carbon emission by trying to cut its waterconsumption, electricity utilization, carbon emission and partnering alongside

supplementary firms in troubleshooting this globe dilemma.


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Technological:

TELEPHONY:

Cellular mobile telephony tariffs in India are the lowest in the world. The airtimetariffs have plunged by above 75% in the last three years alone.

INDIA HAS THE SECOND LARGEST TELEPHONE NETWORK AFTERCHINA.

ENTERPRISE TELEPHONE SERVICES, 3G, WI-MAX AND VPN ARE TOGROW.

INTERNET:

India had as on 2012, 100 million alert internet users.

India nowadays third biggest internet user afterward China (300 million) andUS(207 million).

NEW IT TECHNOLOGY:

Web2.0 embodies the subsequent transition in the progress of web applications. Computer-aided design (CAD).

Legal and Policies:

IT Act:

Email should nowadays be a valid and lawful form of contact in our state that canbe duly produced and agreed in a court of law.

Companies shall nowadays be able to hold out electronic employing the lawfulgroundwork endowed by the Act.

Digital signatures have been given lawful validity and sanction in the Act. The Deed nowadays permits Power to subject notification on the web therefore

heralding e-governance.

Under the Copyright Act:

The right of a copyright holder. Position on rentals of software. The right of the user to create backup copies. Most vitally the corrections imposed heavy penalty and fines for infringement of

copyright of software.


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Environmental:

Environmental conservation and protection is an subject that has obtained famebecause of deteriorating environmental balance that is intimidating the

sustainability of existence and nature. Environment factors like usual catastrophes or calamities like deluge, earth quake,

cyclone, tsunami etc. can alter the IT industry, for example presently due to that

Japan suffers.

Due to usual calamities the financiers will not invest or remove their Money. Companies are focusing on reducing the carbon footprints and energy utilization

along with water consumption.


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To Identify the new opportunities for growth in the IT Industry

The IT industry is ever increasing and is always Innovative in discovering new channels

of growth. The industry endures to reinvent itself producing the marketplace,

constructing new skills and a globalised model. Competition, efficiency, abiilitypredominance and change are the key constructing blocks for the industry. Knowledge is

ever extra becoming an integral portion of every single industry and in a multidevice

related globe, new opportunities are being crafted for resolutions on mobility, analytics,

cloud and partnership. These opportunities are additionally enabling development of new

firms from India that are assisting both innate and globe markets. Internal marketplace in

the state industry is additionally rising knowledge adoption inside the power sector and

the SMB market.

After the commercial reform of 1991-92, liberalization of external transactions, purging

of obligations on imports of data knowledge produce, lessening of controls on both inner

and outward investments and external transactions and the fiscal measures seized by thePower of India and the individual State Powers specifically for IT and ITES have been

main contributory factors for the sector to flourish in India and for the state to be able to

buy a dominant locale in offshore services in the world. The key fiscal incentives

endowed by the Power of India have been for the Export Oriented Constituents (EOU),

Multimedia Knowledge Parks (STP), and Distinct Commercial Zones (SEZ).

There are two other ways in which the IT- Industry can grow:

1. Increasing the domestic sales2. Moving up the value chain

The Industry right nowadays is generally export oriented. After we difference the

development in exports and the development on internal sales, we can discern that the

internal sales development is far lower. So if there is an rise in internal sales,

development of the finished industry will happen. To create this a reality, both the

contestants and the Power ought to seize initiatives to rise internal sales. Nowadays lets

discern what the Indian governments initiatives are:

The Indian Governments involvement in IT growth

Industry promotion activities:

Infrastructure support: Inadequate groundwork has been recognized as one of the

constraining factors behind sluggish development in the Electronics Hardware producingsector. In order to address this setback The Information Technology Investment Regions

(ITIRs) are set up. These spans should have brilliant groundwork and should use the

benefits of networking and larger efficiency across use of public groundwork and prop

services.


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R&D Promotion

For the intention of Advancing Start-ups focussed on knowledge and change, a weighted

deduction of 150% of expenditure incurred on in-house R&D is additionally obtainable

below the Income Tax Ac. Now, the department has locale in locale the 2 key schemes.

1. International Patent Protection in Electronics & IT: In order to enthuse filing of

global patents, a Scheme Global Patent Protection in Electronics & IT has been locale in

place. The Scheme provides Global Patent Protection in Electronics & IT by SMEs

(Small and Medium Enterprises) and Knowledge Start-Up Companies. Below this

scheme, SMEs and Knowledge Start-up constituents will be reimbursed up to 50% of

prices, up to a maximum of Rs.15 lakhs each request, incurred in filing global patent

requests in Electronics and ICT area for their original inventions. This scheme aims to

enthuse original change and enable the firms to arrest globe opportunities in the span of

Electronics and Data Technology.

2. Multiplier Grants Scheme (MGS):

Multiplier Grants Scheme (MGS) inspires cooperative R&D hobbies amid industry and

academics/ R&D institutions for progress of produce and packages and connection the

gap amid R&D and commercialization.

Tax Incentives:

Over the years, the Power has been seizing steps to hold down the finished taxation level

on electronics Hardware. The finished rate of excise obligation has been decreased to 8%

and Central Sales Tax has been decreased from 3% to 2%. VAT on IT produce is @4%.

Task Force to Stimulate Growth:

A Task Power was set up by the Department of Electronics and Data Knowledge vide

Workplace In, 2009 to create recommendations on the pursuing issues:

Strategies to increase the development of the IT multimedia and IT enabled

services sector in the context of globe developments.

Steps demanded to accelerate internal demand for (i) Electronics Hardware

produce and (ii) IT & IT enabled services.


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National e-Governance Plan

Over the years, a colossal number of initiatives have been undertaken by assorted State

Powers and Central Departments to usher in an period of E-Government. Endured efforts

have been created at several levels to enhance the transport of area services and elucidate

the procedure of accessing them.E-governance: has consistently evolved from computerization of Power Departments to

initiatives that encompass of the finer points of Governing, such as resident centricity

abiility orientation and transparency. Due cognizance has been seized of the believed that

to speed up e-Governance implementation across the assorted arms of Power at State,

nationwide, and Native levels, a programme way needs adoption, accompanied by public

vision and strategy. This way has the prospective of enabling huge savings in prices

across allocating of core and prop infrastructures, enabling interoperability across

standards, and of giving a picture flawless think of Power to citizens.

The National e-Governance Plan (NeGP), takes a holistic think of e-Governance

initiatives across the state, incorporating them into a public vision, a public cause.Instituted on this believed, a large countrywide groundwork grasping down to the

remotest of villages are evolving, and large-scale digitization of records is seizing locale

to furnish facile, reliable admission above the internet. The vital goal is to hold area

services closer to residence to residents, as expressed in the Vision Statement of NeGP.

Innovation Promotion:

Innovation capacity is the steering power behind the countrys development and

competitiveness. A forceful cooperation amid R&D hobbies and company fosters the

dynamics of change generation.

Thus alongside the target of fully exploiting the possible for change, growing an Change

strategy for setting up benchmarks globally, the R&D Cluster on Change raise is working

closely jointly alongside assorted associations and efficiently employing synergies to

craft development and value. The pursuing knowledge Change Raise Schemes have been

commenced alongside an goal to advance conception of change, commercialization and

protection.


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Intellectual Property Rights (IPR) Promotion Program:

The main goal behind the programme is to enable R&D associations in protecting and

commercializing their Intellectual Property Entitlements (IPRs) and enable the innovators

to benefit from their conception in Electronics and IT sector. The hobbies undertaken

here are knowledge progress, facilitation services and plans to advance awareness. The

main hobbies of the separation contain bestowing facilitation prop to file IPRs of DIT

areas and grantee institutes, furnish knowledge alert reports established on Patent Find

System, growing of IPR instruments and databases and prop and guidance for IPR

connected subjects in ICT sector.

Incubating technology and Developing Entrepreneurship:

A little of the goals of the scheme contain the following: Setting up and reinforcing the

incubation of Knowledge Centres in institutions of higher discovering, nurture

Knowledge Entrepreneurship Progress for business exploitation of technologies

industrialized by them, advancing product oriented scutiny and progress, enthuse

progress of original produce and packages and bridging the gap amid R&D andcommercialization.

E-learning:

E-Learning is a combination of discovering services and knowledge to furnish elevated

worth consolidated discovering to admission anytime, anyplace. It is being consented in

the marketplace as the subsequent progress of training and the education industry and the

subsequent period in digital revolution.

Advances in digital electronics have created e-learning probable because digital data can

be - accessed randomly; retrieved fast; manipulated; less storage space necessity etc.

These digital instruments can be efficiently utilized to increase the courseware content

alongside multimedia features Audio, video, graphics, 3D-animation etc. This aftermathin a larger visualization and understanding managing to larger retention of the subject.

This summarizes the efforts of the Power to enhance Internal sales.

What the Players must do to improve domestic sales:

The Indian IT contestants are generally encompassed in rendering lower conclude

services to their clients. Consequently if the industry is to produce next it have to move

up the worth chain. Presently, the Indian IT industry is basically concentrating on the

Request Maintenance and Groundwork Management. But the focus on rendering higher

conclude services will aid in reinforcing the brand picture of the industry. SO nowadays

firms demand to move up the worth shackle from bestowing Request Maintenance and

Groundwork Association to bestowing company and IT strategy.


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Globalization has a profound encounter in shaping the Indian Data Knowledge (IT)

industry above the years alongside India seizing a sizeable chunk of the globe

marketplace for knowledge sourcing and company services. Over the years the drivers of

development for this sector have been the verticals of telecom, producing, insurance,

investment, finance and of late the fledgling metamorphosis in retail. As the new scenario

emerges it is becoming clear that the upcoming development of IT and IT enabled

services will be fuelled by the verticals of meteorological conditions change, mobile

requests, power efficiency, healthcare and sustainable power etc. Instituted company

stronghold should create method for brand new geographies, there should be new clients

and extra and extra of SMEs (Small and Medium Enterprises) will go for IT request and

services.

Rising up to the new trials will merely be probable after we scale-up the worth shackle

and locale in efforts in the direction of bestowing extra and extra of end-to-end

resolutions to the clients.

Indian IT firms will have to endeavour for that supplementary mile and locale in

intelligent work to endure in the newer development opportunities.


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Future Outlook

Despite 2011 concluding in a challenging commercial nature, a little geographic spans

and services have vanquish the situation in 2012. Right nowadays the growing economies

ate producing thrice as fast as the industrialized economies and this year seems to be

signifying the revisit of customer assurance and renewal of company development, is

anticipated to drive IT paying going forward.

Key Highlights during FY2012:

Expect a rise in IT paying development above 2012's 2.1% rate, alongside a adjusted2013 dollar-valued development of 4.1%.

India reports for less than 5% of globe knowledge spending. Incredible untappedpossible for development of Indian IT-BPO sector, in both core as well as growing

opportunities. Global sourcing to tolerate development trend as associations target to cut prices,

admission innate marketplace and change and sourcing requirements.

IT exports to produce at 12 to 14 percent. The internal IT marketplace will produce at13 to 15 percent to grasp INR 1.18 trillion to INR 1.2 trillion (US$21.8 billion to

US$22.2 billion.

To accomplish this development, the sector has to uphold to re-invent itself that willform the knowledge industry landscape.

IT- BPO sector will demand to locale jointly on its strengths and address trialsconcerning contest, talent, protection and company environment.

In the upcoming, the industry to be makeover driven, change and inclusivity incompany and India.


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The Important action themes for the IT-BPO industry to remain competitive and

profitable in the future are:

To rise operational efficiency, reinvent and grasp new company models, that willproposal clients a transformed company proposition.

Drive concerted initiatives to reinforce the change capacity and scutiny skillsacross specific area focus and by reassuring R&D collaborations and public-private

partnerships. Pursue endured efforts to more craft a high-calibre R&D pool, not merely

from an educational viewpoint, but additionally by instilling the relevant scutiny aptitudes

and capabilities.

Strengthen the long-term enterprising development in the country. Improve the accomplished talent pool in the state and focus on specialization. Continue the use of ICT for inclusive growth. Create sure that the frank necessitieslike education abiilities for the masses; quality healthcare and occupation and skill

creation is benefited by ICT.


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To Identify the Growth and Impact of the IT Industry on the Indian Economy

India is a land blossoming alongside youth and life. It is the 11th biggest economy in the

globe by nominal GDP (Gross Domestic Product) and 4th in words of PPP (Purchasing

Power Parity). India is additionally creating extremely momentous strides onward frugally

and is poised to come to be an commercial world power by 2020. As agriculture is yet the

predominant employer and commercial mainstay of the state, industries give a extremely

colossal percentage to the economy. This contribution has increased extra quickly

afterward the government opened up the economy and adjusted its commercial strategy to

contain liberalisation and globalisation. With extra external firms going in the state and

extra Indian firms becoming MNCs, India is anticipated to have one of the fastest

predicted commercial development rates in the world. Currently its GDP is producing at

the rate of an average of 7.5%.

IT industries responsible for 6% of the GDP of India and provides employment directly or

indirectly for above 11.5 million people. It additionally contributes considerably to Indias

exports: accounting for concerning 18% in 2001. India produces roughly 150,000

technically and socially adept builders every single year. Most of them travel to

industrialized asserts and form an integral portion of the workforce there, therefore

becoming Indias most beloved export.

The development of knowledge as a field of education commenced alongside the

formation of the early Indian Institute of Technology (IIT) in Kharagpur in 1951, by the

then Education Minister Maulana Abul Kalam Azad. The IITs stay, till date, one of the

best amid the premier technical institutes in the globe, bestowing elevated quality trainingin both the hypothetical and useful aspects of engineering. The concept of IT as an

industry started to seize origin in India in the late 1960s. Till then, India used to import

the EVS EM computers from the Soviet Union. But in 1968, Tata Firm industrialized the

Tata Consultancy Services that quickly came to be the biggest software providers of the

60s. The Nationwide Informatics Centre was instituted in 1975 and was pursued by a

boom of indigenous IT firms such as Tata Infotech, Patni Computers and Wipro. Even

though the development of industries as such was sluggish in the pre-liberalisation dates,

both Indira Gandhi and Rajeev Gandhi were convinced that electronics and

telecommunication industry were up-coming. The Indian government crafted three wide-

area computer networking schemes: INDONET that was aimed to assist IBM websacross the state, NICNET- the web crafted for the NIC, and Education and Research

Network (ERNET) that was oriented towards educational research; in the years 1986-

1987. With the origin of the 90s, India saw large adjustments in the IT industry.


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The Department of Electronics crafted Software Technology Parks of India (STPI) in

1991,that is basically an export oriented scheme for the progress and export of computer

software, encompassing export of expert services. The decade saw a large pace in Indias

commercial development, partly due to the comprehensive internet connectivity endowed

all above the state at that time. In the 21st century, India has increased to the locale of

one of the biggest IT capitals of the world. As of 2006, technologically inclined services

sector in India accounted for 40% of the countrys GDP and 30% of export earnings.

Perhaps no other industry has altered the middle and higher middle class populace of

India as far as the IT sector. As the formation of the IIT, technical education has grown

like an ever increasing tree alongside new engineering colleges onset every single day. It

is of sequence the fondest desire of all Indian parents that their youngster becomes

whichever a builder or a doctor. As the main 1950s technical education has been the

ticket out of poverty and to a comfortable life for the people of India. The first huge wave

of Indians travelling to the US in find of elevated accomplished jobs was across the

1950s and the 60s. An approximated 10,000 Indians were stayed in the US by the year

1960. This phenomenon, recognized as brain drain activated off the mass migration of a

colossal number of Indians to various countries around the world in search of jobs with

better pay and comforts. This plausibly impacted India in a negative method, because

even nevertheless the populace steadily increased, the number of skilled workers in India

went on reducing. The subsequent wave of Indian migration to the US transpired in the

90s. The number of Indian Americans grasped 1.7 million in the year 2000. The

development of the IT industry has additionally helped to forge affirmative governmentalties alongside asserts round the globe for the public transactions of intellectual resources.

A combined EU-India cluster of scholars was formed on 23 November 2001 to more

advance combined scutiny and development. On 25 June 2002 India and the European

Coalition concurred to bilateral cooperation in the field of science and technology.

The IT industry has helped the development of India in countless ways. Indian engineers

and technicians are pursued world over for their competency and diligence and strong

fundamentals in their field of work and study. Indias technology boom has additionallyhelped her shed her Hollywood picture of being the land of mystics, snake charmers

and beggars and has put her on the map for being a globe data hub. The IT industry refers

to a broad, umbrella term encompassing various other industries like software industries,

hardware industry, computer firms and outsourcing companies.


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Every single of the above mentioned industries have grown at large rates, bestowing jobs

and products to Indians. For example HCL Enterprise is an electronics computing IT firm

established in India, has come to be a leading provider of IT services and technical

resolutions worldwide. In fact, the IT boom of the 90s and the 2000s in India was

additionally convoyed alongside the development of BPOs in the nation. India has come

under fire from some groups of people worldwide for stealing their jobs, but the fact

stands that external firms affection for India and its plentiful potential of accomplished

labour that can master foreign languages and are satisfied at moderately low salaries. But

with most recent graduates these days being absorbed into IT companies and BPOs and

then getting their ticket to America and Europe, India is losing a large chunk of its brains

which will perhaps be detrimental to the growth of innovative, indigenous technology and

inventions in India.

The IT industry in India has seen large changes, development and progress along the

years. The future of these industries seems brilliant with more development beingpredicted. Financial analysts are optimistically forecasting strides in software technology

progress in India. Additionally, the growth of the IT sector is expected to bring about a

corresponding growth in other sectors like employment, exports and Foreign Direct

Investments. IT sector is also intimately linked to other relevant sectors like biomedical

technology, defense and infrastructure. Thus the future of the IT sector will directly

impact the growth of the nation.


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To Identify the Indian IT industrys comparison with US markets and

other countries

US experience alongside software outsourcing to India

The most frequently quoted reasons for outsourcing is the shortage of skilled

professionals in the US Firms claim that they plainly cannot find enough softwareprofessionals fast enough. In supplement, firms outsource because they do not want to

invest in in-house skill in spans beyond their core-competence (such as developing

requests for old computing platforms) and to free their in-house IT staff from mundane

maintenance tasks for other creative projects. Firms involved in developing multimedia

produce emphasized the demand for accelerating product development in the face of

ever-shorter product lifecycles.

US firms outsource to Indian firms to access more specialized engineering talent, mainly

in the area of telecommunications. Other reasons contain the option of round the clock

procedures and the skill of Indian vendors to amass "functional" teams of builders at a

extremely short notice. One reason that we expected to hear, but oftentimes did not, wasoutsourcing to cut costs. Countless of the respondents downplayed this subject, asserting

that price was a relatively minor consideration.

This appears to be a reply to the prevailing concern in the US about the probable damage

to US engineers from software outsourcing and inflow of foreign software programmers.

It is additionally inconsistent alongside the comprehensive worth contest that prevails in

the Indian multimedia industry. Many say that there are excellent programming and

coding skills available in India

Also Indian vendors are good and willing learners, and receptive to new ideas, and

flexible in terms of the software and hardware platforms for which they provide services.

There are a number of areas of dissatisfaction also. Indian firms at times had no domain

knowledge and poor management skills.

Even a highly rated Indian subsidiary of a leading electronics and communication firm

was considered 4-5 years behind the latest communication technologies. Most of the

managers in the US believed that Indian firms could not work on high level specifications

or project definition stages of a project, although for the most part, this belief had not

been tested. Many were critical of the Indian system of promoting software programmers

to managers based on seniority rather than on proven managerial ability.

This weakened project management. Indian firms, on the other hand, have cited this

practice as a way of providing a career path to their professionals and a major part of theirattempts to hold down employee attrition. Indian productivity levels are lower as well.

For instance, managers at the electronics and telecom firm believe that they needed to

assign more engineers to task in their Indian subsidiary than would be assigned in the US.


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Employee attrition seems to be a big problem and Indian suppliers need to tackle it

quickly. Sometimes an entire project team would leave after the first six months, causing

substantial delays. Some Indian firms are unable or unwilling to move up the value chain.

This would make us firms to outsource more software design and development tasks to

its Indian vendors. In particular, firms would like suppliers to display more initiative in

identifying business problems it faces and propose solutions.


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Also there are a number of cultural and political issues that are seen as irritants or

barriers. One such issue is the apparent unwillingness of Indian software professionals to

point out potential problems up-front, and in general, an unwillingness to say no for fear

of offending the clients. Another linked weakness is the lack of familiarity of many

Indian firms and professionals with the work culture and work norms in the West, and

especially in the United States. Other difficulties included resistance within the US to

foreign programmers, poor telecommunication infrastructure, and the delays in obtain

required visas for Indian programmers.

Comparing the IT industry in India and China

China mainly focuses its IT industrial policy on infrastructure and high technology.

Through massive expansion of telephone networks, PC manufacturing and adoption,

extensive use of the internet and IT applications, and a pool of trained, demanding usersand the managers and technicians to provide services to them. On the other hand, even

though Chinese literacy and general education is higher than in India, Indias English

speaking professional class of employees are an advantage in the increasingly globalized

IT industry. To snatch the top off-shoring title from India, China is relying on expatriates.

Like their Indian counterparts, Chinese-American entrepreneurs from the Bay Area are

going back to their homeland with Silicon Valley know-how, connections and capital to

help build a mushrooming software industry.

Chinas advantage

Cheap labour: Chinese IT professionals have salaries which are at par with (or even lowerthan) their Indian counterparts.

Market opportunity: China is attracting multinational corporations that need help tolocalize their products for the Chinese market.

Domestic demand: Chinas domestic market requires software services not like in India,where the market still does not consider software as a necessity.

China as gateway: The Chinese also serve customers from Japan and Korea, whoseculture, language and geography are closer to the mainland than India. India's outsourcing

firms have struggled to tap these markets.

Indias advantage

Tata, Infosys and Wipro, the top three Indian software outsourcing firms, have beentrying to make a foundation in China, and are trying to profit from Chinas rise. In

October 2002, Tata opened a development center in Hangzhou. Infosys opened a center

in Shanghai , and also Wipro is considering expansion in China


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Skilled Labor: Although labour costs for an entry-level programmer in China are lowerthan in India, experienced management is pricier in China. China does not have enough

skilled IT resources to meet domestic and export software demands. It is willing to give

up a large piece of its market to gain these resources.

Attempt to use China as gateway: There is vast potential revenue in the Chinese domesticmarket, and markets such as Korea and Japan. Infosys plans to use its China centres to

support Asian Pacific clients, rather than its North American customers.

Instead of the differences in Chinas and Indias approach to the Internet, their

similarities may be more telling. Both are developing nations. The expatriate community

has been an important source of ideas, expertise, contacts, and funds for both India and

China. Most important, with large, unserved populations, they both face the same

demographic and geographic issues, and in this they are representative of much of the

world. We are still in the early days of the Internet and IT. And it can be hoped that both

India and China will make momentous innovations in the industry in the future. It may be

in the form of consulting business strategists, or the value proposition may even be a joint

one with unique approaches from solid alliance partners and joint ventures between the

two countries.

Brazil

The Government of Brazil has published a sprouting set of interoperability standards for

electronic government known as the e-PING program, which address semantic, technical

and organizational issues, as well promote open standards and public or free software. Itcovers federal government-to-government, federal government to-state government,

federal government-to-citizen, federal government-to-business, and federal government-

to-foreign government information exchanges. E-ping standards and policies are

mandatory for all federal government agencies and apply to all new and legacy systems.

As a matter of general policy, government agencies are to prioritize the adoption of open

standards meeting technical specifications wherever possible. In the absence of open

standards, proprietary standards will be accepted, but only on a temporary interim basis

until an open standard replacement can be secured. In addition, consistent with the

general policy, government agencies must prioritize the use of public software and/or free

software in

the implementation of interoperability standards. For purposes of implementing such

policy free software has been defined as source code available for anyone to use, copy,

and distribute in its original or modified form either free or at cost, and is necessarily

non-proprietary. And an open standard is one that:

1) Enables the interoperability between several application platforms, internal and

external


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2) Enables application without any restriction or fee payment

3) Is capable of being fully and independently implemented by multiple suppliers of

computer programs, in multiple platforms, with no charge relating to intellectual property

for the necessary technology.

Russia

The day following the release of the European Commissions final EIF, Russian

Federation Prime Minister Vladimir Putin signed an executive order setting forth specific

guidelines that mandate the complete transition from proprietary to free software by all

Russian federal executive bodies and agencies during 2011-2015. Apparently, the

concept underlying the executive order was first openly discussed by the Russian

Ministry of Communication during 2007 when Mr. Putin still held the Office of the

Russian Presidency. The open forum had followed from the results of a cursory study

entitled, Concept of the Development and Use of Free Software in the RussianFederation, which cited the importance of open source software for the development of

Russia, for the securing of significant budgetary savings, for reducing dependence on

foreign manufacturers and software providers and for increasing the intellectual potential

of the country. Consistent therewith, in October 2008, the Russian Ministry of

Communication announced a framework for the mandatory installation of free software

on all Russian school computers by year end 2009.

These activities were subsequently followed by a late February 2009 meeting convened

by the principal of the Russian Federations Ministry of Communications and Mass

Communications and representatives of Russian Free and Open Source Software

(RFOSS) development companies, including VDEL...to discuss concrete steps that couldbe taken by the state to support the RFOSS development process.

One possible step that had previously been discussed but not resolved during an earlier

February 2009 roundtable meeting concerned whether the Russian government should

actively seek to create and control a closed national system of open source software for

Russian developers. Apparently, some within the Russian FOSS community did not

favour such an outcome. According to VDEL CEO Milan Prohaska, the governments of

China and Brazil made efforts to control the process of open source software

development, i.e. to create closed operating systems. This approach just led them to a

dead end...The idea of creating an exclusive Russian information system (to be developed

in Russia and for Russian users only) is, in essence, an attempt to build an information

ghetto for Russian programmers, to limit them both at home and foreign markets.

Rather, in order to create a real operating system in Russia, it was recommended that

Russia fully integrate itself into the global development process.


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South Africa

While having only very recently become a member of the BRICS nations, South Africa

is the leader of information and communication technology (ICT) development in

Africa...and...has become the 20th largest consumer of IT products and services in the

world...[T]he countrys ICT and electronics sector [is recognized] as an increasingly

important contributor to South Africas gross domestic product (GDP).The South African

Ministry of Trade and Industry (DTi) has identified ICT and electronics among priority

sectors that have the highest growth and investment potential in South Africa.

It is therefore not surprising that the South African government, a leading member of the

WIPO DAG, released its own national e-Government ICT interoperability framework

during 2007. Like the interoperability frameworks previously discussed in this working

paper, the South African framework broadly defines open standards as standards

containing specifications that are documented, freely implementable and available to the

public at large. The MIOS is applicable to all existing as well as legacy governmentsystems used by South African national, provincial and local government departments

and agencies, and covers all intra-government agency, government-to-citizen,

government-to-employee and government-to-third party interactions consisting of the

exchange of data and information access.

The South African government also recommends that MIOS be implemented in all

public sector procurements and major upgrades to...departmental legacy systems..., even

for systems that fall outside the scope and mandate of MIOS. And, as in the case of some

otherof national governments frameworks, South Africa has drawn a strong correlation

between ICT interoperability and open standards largely for economic/competitiveness

and ostensibly public interest reasons.While acknowledging the different definitions of open standards which emphasize

different aspects of directness, including of the resulting specification, the candidness of

the drafting process, and the ownership of rights in the standard, the framework

nevertheless sets forth a list of criteria the complete satisfaction of which is mandatory in

order for a standard to be considered open. Among other things, for example, the

intellectual property rights required to implement the standard (e.g., essential patent

claims) [must be] irrevocably available without any royalties attached and there must be

no reservations regarding reuse of the standard.

Perhaps corporate innovators and investors may derive some comfort from the South

African governments willingness, for reasons of pragmatism, to adopt other than fully

open standards as so defined i.e., to take into account...the degree of openness...when

selecting an appropriate standard that does not necessarily conform to being open in all

respects, as in the case where a fully open royalty-free standard is unavailable or is

unsupported by the market and an otherwise compatible

FRAND, royalty-based specification.


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TO FIND OUT THE MARKET SHARE AND THE NATURE OF COMPETITION

MARKET SHARE OF THE IT SECTOR

The market share when being spoken about IT sector either in India or in different

foreign countries and taken into consideration globally is nothing but the percentage whichthe company owns in the market for its entity (units or revenue).The forecasting of the

market share for the IT sector in particular would be very difficult as it has few very top

players in the market both domestically and globally like the TCS(Tata Consultancy

Services),IBM(International Business Machines), WIPRO and HP(Hewlett Packard) and

so on, who have all occupied a dominant position in the market already and a huge number

of small business firms in the field of Information Technology competing with each other

and the market share is either attained by growing with the market or by capturing the

shares of the competitors. The latter will almost be all the difficult to achieve and hence the

market share in these cases are generally measured by the change in the competition

landscape. The main objective of any business in any sector would be to increase the

market share of their organization when compared to its competitors as thats the only

factor for the businesses to judge and monitor the performance and it is one which is

comparatively less influenced by the macro-economic variables such as the economy of the

country and the policies of tax, etc.

The main purpose of the market share to find the business competitiveness in the

market which enables to find out the growth or decline and also the trends in the

preferences of the customers among the customers. IT sector actually covers a large

variety under a section called as the IT umbrella including the computers(softwares andthe hardwares),networks, intranets, databases, websites and the telecommunications ,all

which help to improve the efficiency ant to also increase the revenues from customer

satisfaction.

Information Technology (IT) allows for the communication in both the directions

between the customers and the organisation, say for example through means of updated

and sophisticated infrastructure like the ATMs and payment fecility through online etc.

Besides this, people are positively influenced by direct or indirect contribution of ITsector to various parameters such as employment, standard of living, per-capita income

etc.


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CLASSIFICATION OF THE IT SECTOR ON THE BASIS OF MARKET SHARE

IT- Software- segment

It predominantly occupies a huge portion of the market share of approximately 71.70%

ITeS Business process outsourcing (BPO)- segment

This segment occupies approximately about 5.11% of the market share.

IT- Hardware and peripheralssegment

This segment would cover laptops, desktops, Storage and Networking devices, LCD,

printers etc. which occupies a negligible portion of the ma

a study on the it industry

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