The document summarizes the growth and development of the Indian software industry from the 1990s to the present. It discusses factors that contributed to the industry's growth such as emphasis on engineering education, low wages, satellite communication, and time zone advantages. It also outlines government policies that promoted the industry, including liberalization in 1991, establishment of software technology parks, tax incentives, and liberal foreign investment policies. The document provides current statistics on the size and leaders of the Indian software industry.

2.  Growth of sales and exports between 91-92 and 96-97
 Types of projects done by Indian Software Industry
 Rise of Industry despite poor facilities in 90s
 Factors contributing to growth:
◦ Emphasis on Engineering
◦ Highly educated middle class
◦ Low wage rate
◦ Satellite communication
◦ Time zone advantage
 Steps by Indian companies to compete against its foreign competitors

3. What is the current status of the software
industry in India?

4. Sr. No Company Revenues USD billion (FY 14-15)
1 Tata Consultancy Services Ltd
15.4
2 Infosys Ltd 8.71
3 Wipro Ltd 7.84
4 HCL Technologies Ltd 4.41
5 Tech Mahindra Ltd 3.75
6 iGate 1.27
7 Syntel Ltd 0.91
8 Mphasis Ltd 0.90
9 L&T Infotech 0.80
10 Genpact India Pvt. Ltd. 0.49

5.  Contribution of IT sector to GDP rose to 9.5 % in FY15 from 1.2% in FY98
 The top six firms contribute 36% of total industry revenue
 Accounts 52% of US$ 124-130 billion market
 Employs about 10 million Indians, responsible for social transformation
 Pricing is 3-4 times cheaper than the US
 Cumulative FDI inflows worth US$ 13,788.56 million between April ’00 - Dec ’14
23.60%
22.30%
16.70%
27.10%
16.40%
18.10%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
Indian Firms European Firms US Firms
New IT Projects Offered in 2014 and 2015

6. Breakup of IT firms in India

7. 42
12
8
5
2
52.46
14.62
10.32
6.88
1.72
0
10
20
30
40
50
60
US UK Europe
(excluding UK)
APAC ROW
Geographic Break-up of Export Revenue (USD billion)
FY12 FY14

8. The 1991 Crisis

9.  Import Substitution was the main strategy for growth
 Trade policy was characterized by high tariffs and pervasive import
restrictions
 Most items where domestic substitutes were being produced, imports
were only possible with import licenses- The License Raj
 No export related reforms
 Late to recognize the need for LPG
 Resistance towards foreign investment
 Too much control in the hands of the government

10. “ India was a latecomer to economic reforms, embarking on the process in earnest only in 1991, in
the wake of an exceptionally severe balance of payments crisis. The need for a policy shift had
become evident much earlier, as many countries in east Asia achieved high growth and poverty
reduction through policies which emphasized greater export orientation and encouragement of the
private sector.”
- Montek Singh Ahluwalia (Former Deputy Chairman , Planning Commission)
“Up to 80 agencies had to be satisfied before a firm could be granted a licence to produce and the
state would decide what was produced, how much, at what price and what sources of capital were
used. The belief (was) that India needed to rely on internal markets for development, not
international trade—a belief generated by a mixture of socialism and the experience of colonial
exploitation. Planning and the state, rather than markets, would determine how much investment
was needed in which sectors.”
- BBC on the 1991 Economic Reforms

11. • Increasing Burden- With India’s foreign exchange reserves at $1.2
billion in January 1991 depleted to half by June, 1991
• Had only funds to cover a few weeks of India’s import needs
• India Close to Default
• Required to airlift gold reserves to IMF for a loan
• Export Promotion became the main strategy
• Reforms were made gradually- Gradualism
• Industrial licensing by the central government was almost abolished
except for a few hazardous and environmentally sensitive industries
1991 Crisis and Beyond

12. What factors have lead to the evolution of the
software industry in India?

13. ◦ In 1972, Department of Telecom (DoT) introduced a policy to permit duty free
imports of computer systems
◦ In 1980, DoT formed a Software Export promotion Council to initiate software
export friendly policies & it liberalized import rules for materials required by the
industry
◦ Investment in Technical Education –
 India’s investment in technical education beginning in 1960s provided the foundation for
the growth of the IT industry
 In the 1960s, government created many elite engineering & management institutes in
collaboration with leading universities in the US
 Subsequently, many state governments set up Regional Engineering Colleges

14.  Government’s Policy Initiatives (post 1991)
◦ Economic liberalization of the 1991
◦ De-licensing and de-regulating the import of software productivity
tools
◦ Establishment of software technology parks
◦ Elimination of duties on imports of information technology products
◦ Relaxation of industrial controls on both inward and outward
investments
◦ The list of industries reserved solely for the public sector- Reduced
from 18 (includes telecom) to 3 (Defence, Atomic Energy and
Railway Transport)

15. The creation of NASSCOM in 1988 and the subsequent establishment of software technology
parks (STPs) in 1990 represented a fundamental approach to policy making for the software
industry
 Providing infrastructure for private companies to export software
 Established in 39 locations, including most major towns
 Provide ready-to-plug IT and telecom infrastructure
 Allowed single-window clearance for all regulatory matters
 Benefits & approvals for STPs similar to those of export-oriented units
 Provide high-speed data communication services to the industry
 STP exports  INR 2,51,498 Cr in FY12-13
 Direct tax benefits under STPI ended in September 2011; indirect tax benefits still continue

16.  Delicensing: Only six industries were kept under Licensing scheme.
 Disinvestment and the Privatisation policies the state owned monopolies in many service
areas came to an end Multinationals were permitted to enter the Indian market
 Liberal lending policies and lower interest rates motivated many people to become self-
employed.
 Different sectors like Banking, Insurance, Power projects, Telecommunication, Hospitality
sector, Health Services, Entertainment, Air transport, and Courier services witnessed intense
competition, due to the entry of multinationals.
 Liberalisation of Foreign Policy. The limit of foreign equity was raised to 100% in many
activities, i.e., NRI and foreign investors were permitted to invest in Indian companies.

17. In 2005, the Government of India came up with the Special Economic Zone Act
• Objective -
Provide internationally competitive & hassle free environments for exports
• Provides -
• Drastic simplification of procedures &
• A single window clearance policy on matters relating to central & state governments
• Some of the incentives include –
• Duty free imports & Exemption from CST & service tax
• 100% income tax exemption on export income

18. Was set up in 1998 whose mandate was to draft National Informatics Policy in order to remove
bottlenecks and give boost to India’s IT industry in general and software industry in particular
• Major recommendations of the task force included:
 Opening of Internet Gateway access
 Encouragement for private sector Software Technology Parks (STPs)
 Zero customs and excise duty on It software
 Income tax exemption to software and services exports
 Encouragement to set up venture capital funds
 1-3 % of Budget of every Ministry/Department for IT applications
 Allowing US Dollar linked stock options to employees of Indian software companies
• The Government accepted almost all the recommendations and directed all concerned
departments to implement recommendations

19.  The acquisition of overseas parent-company shares by employees of the Indian company
 Companies whose software sales were over 80 percent could grant stock options to non-
resident and permanent-resident employees
 Foreign exchange could be freely remitted for buying services
 Companies that executed contracts in “computer software” abroad could use income up to 70 %
of contract value to meet contract-related expenses abroad.
 Tax holidays were given on company profits; tax breaks from corporate income and tax on
profits were available to units in any free-trade zone, any software-technology park, or any
special economic zone to the extent of 100 percent of the profits derived from the business.

20. • Tax breaks on corporate income & tax on profits was available to units in any free trade
zones, any STP or any SEZ to the extent of 100% of the profits derived from the business
• Indian Direct Investment in joint ventures & wholly owned subsidies abroad was simplified
& a fast track window is available for large investments
• IT companies in India can acquire companies overseas through American Depository
Receipt/ Global Depository Receipt stock swaps without prior approval for up to $ 100 Mn
or ten times the export earnings of the previous year
• The IT Act of 2000 – covering privacy, digital signatures & cyber crimes – took care of the
concerns of clients in the developed countries related to the issue of data protection

21. ◦ Recognizing the growing need of manpower of the software industry, the ministry of HRD
took various steps to meet the demand
◦ It helped create & expand computer science departments in existing colleges
◦ It also eased policies to enable private sector to open educational institutes without public
funding
◦ It introduced quality control systems for engineering colleges & other IT training Institutes
like AICTE & accreditation systems run by professional bodies as the Computer Society of
India to monitor private training institutions

22. Which are some of the leading IT companies in
India?
How did they become successful?

23.  Established in 1968 by a division of Tata Sons Limited
• Started off as a Data Processing Unit for the Tata Group of Companies in 1968
• Central Bank of India and Unit trust of India some of its earliest clients
 Problems they Faced:
• In 1973, FERA(Foreign Exchange Regulation Act) was passed
• Duty on Hardware and Software Imports- 135 %
• Foreign Ownership- restricted to 40%
• Hardware Problems: Malfunctioning of equipment was a regular occurrence
• Telecommunications a challenge
• Till 1977, not allowed to have even an offshore sales office
 Opportunity Grabbed:
• Tata Consultancy Services created the factory model for Y2K conversion and developed software
tools which automated the conversion process and enabled third-party developer and client
implementationOperations spread across the Americas, Europe, Asia-Pacific, and Middle East and
Africa (MEA)
 Accounts for nearly 50% of the Indian IT industry’s combined market capitalisation

25. “It would take us two years in India and almost a year in the US to get all the
clearances we needed to import computers. By the time we got the approvals, the
model of the computer would have changed. Then we had to explain to Indian
customs officers that model numbers don't mean much, etc. But they would say, go
back and get the license amended. Very few companies would have persisted through
all of that.”
- SR Ramadorai, Former CEO OF TCS

27. • Set up first office in Pune, 1981
• Moved to Bangalore when got the first Client- Data Basics Corporation in US
• Infosys decided to import a Data General 32-bit MV8000, the founders realized they would not be in a
position to use the computer for 24 hours a day. Given the high expense involved – it cost Rs. 52 lakh*
• Infosys struck a time-sharing deal with MICO (Motor Industries Company Ltd.) for partial use of the
computer
Global Delivery Model:
• Working while the client in the US sleeps (Between 1985-1990)
• Many a times, software was sent abroad by courier and source code was faxed
ESOPs:
• Infosys one of the first companies to offer ESOPs (1994)
• This was to create respect for the company in the minds of the employee and have a sense of
accountability
Y2K Challenge:
• Capitalized on the opportunity with a separate team looking into just Y2K

28.  IBM, Cognizant, Microsoft, Capgemini, Accenture, SAP, Oracle & many more
IBM India
 Founded in the year 1992, re-entered after an exit in the 1970s
 IBM's Indian employees generate $35 billion of IBM's global revenues
 IBM revenues from Indian clients are approximately $3.2 billion
 Facilities in Bangalore, Delhi, Kolkata, Mumbai, Chennai, Pune,
Gurgaon, Noida, Chandigarh, Indore, Bhubaneshwar, Coimbatore, Visakhapatna
m & Hyderabad
 Employees increased from 9,000 in 2003 to 1,50,000 in 2015, that is over
1000%
 IBM is planning to open new data centres in India
 India to receive a major portion of the $1.2 billion investment planned by IBM in
the coming years to expand its cloud services

29.  In Feb 2015, IBM signed a 9 year deal with Birla Sun Life Insurance for IBM’s Mobile,
Analytics, Cloud, Research and Software Expertise to transform its business processes
and reduce cost
 In April 2014, Bharti Airtel renewed IBM outsourcing contract for five years, to maintain
infrastructure and application services for Airtel. The deal is valued at $500 mn.
 Ceat joined hands with IBM in 2007, to implement SAP across all locations of Ceat India
 Indian Railways, the world's largest railway has an automated crew management system
that provides information about the crew at all times & allocates them to different types
of trains
 The Central Ministry uses IBM Software to combat fraud in the financial system
Acquisition Date Company Value
Apr 7, 2004
Daksh e-Services, to enhance its ability to deliver CRM and back-office
services
$170 million
Nov 10, 2005
Network Solutions Pvt Ltd, to expand its reach in the domestic market,
especially in the infrastructure services

30.  UKTI (UK Trade and Investment), NZTE (New Zealand Trade and Enterprise), IDA,
SDI (Scottish Development International), Austrade (Australian Trade Commission)
 Help understand business opportunities, markets, financial skills, training support,
partnering and collaboration opportunities, government, industry and academic
contacts
 Organization is able to globalize, export to neighbouring countries, access to
skilled and educated population, good infrastructure, tax incentives
IDA Ireland - Aditi Technologies, Synowledge, HCL Technologies, Wipro, TCS,
ArisGlobal and Firstsource
 Aditi Technologies created 40 jobs in Dublin with 50% growth YOY since 2007
 Synowledge helped create 35 new jobs in Dublin
 IDA is aiming to have more than 50 Indian companies and have about 6,000 jobs
in Ireland in the next five years
SDI Scotland – Wipro and TCS, Axsys Technology, Corus and Hero ITES

31. Where is IT used in India?

32.  Banking
 Telecom
 Manufacturing
 Media, Publishing & Entertainment
 Retail
 Insurance
 Healthcare

34.  INR 18,500 crores IT spend
 National private banks &
foreign banks leading IT
adoption followed by
nationalized and old private
banks
 Key opportunities
o Customer relationship
management
o Back–end management
o Data warehousing
o E–payments and mobile
banking
o Payment systems
o Outsourcing of ATMs
o Solutions to cater to RBI
regulations
 INR 15,000 crores IT spend
 High level of IT adoption—
multiple applications,
infrastructure and business
process outsourcing
 Large strategic outsourcing
deals are the norm in
telecom
 Key Opportunities
o Need for analytical tools to
capture usage trends as well
as those tracking service
levels
o Enterprise solutions catering
to the needs of the large,
mid– sized companies as well
as the SMBs
 Focused on increasing
penetration—web–
based portals and
mobile applications
 Various enterprise
applications like CRM
and business
intelligence tools
 Key Opportunities
o Cloud–based services to
reduce costs
o Web 2.0 to improve
customer services and
increase customer reach
o Integration of various
platforms to provide
seamless services through
service oriented
architecture

35. What are the employability aspects in the IT
industry?

36.  As per ‘2015 India's Best Companies to Work For’, 8 of the Top 25 companies are IT firms
(Source)
 Indian IT companies trying to adopt work culture of foreign IT companies
 Relatively younger workforce
compared to other industries
 Work culture in established IT
companies v/s startups
 Training Programs for cross-skilling
 However, attrition rate is high in companies like Infosys (20.4% in Q2 FY14-15), TCS(15.9% in Q1
FY15-16) and others

37. What are the emerging trends in the IT industry
and what is the road ahead?

39. Philippines
 The IT & BPM space is
growing rapidly & the
industry generated $ 18.4 Bn
in revenue in 2014
 Factors behind the growth of
IT industry in Philippines –
 Low Cost
 Skilled workforce
 Growing population &
young labor force
China
 China is the emerging IT
services destination
 In FY14-15, China’s
Software Industry generated
revenue of $ 593 Bn
 The key factors for this
growth have been initiatives
like ‘Internet Plus’, ‘Made in
China’
 The Government is also in
process of coming out with
favorable policies to
encourage young talents to
start their own businesses
 India faces tough competition from countries such as Philippines, China &
Vietnam in Asia, Mexico in Latin America & Belarus, Russia & Ukraine in Europe
Mexico
 Mexico’s IT industry is
growing at a rapid clip
 There are more than 2000 IT
companies in Mexico &
around 6 Lakh people are
employed in this sector
 Mexico spends heavily in its
education system thus
enabling the IT companies to
find the right talent

40.  India and USA have agreed to jointly explore opportunities for collaboration on implementing
India's ambitious Rs 1.13 trillion (USD 18.22 billion) ‘Digital India Initiative’. Also agreed to
hold the US-India Information and Communication Technology (ICT) Working Group in India.
 Bengaluru has received USD 2.6 billion in venture capital (VC) investments in 2014, making it
the 5th largest recipient globally during the year, an indication of the growing vibrancy of its
startup ecosystem. Among countries, India received the third highest VC funding worth US$
4.6 billion.
 India continues to be the topmost offshoring destination for IT companies followed by China
and Malaysia in second and third position
 Social, mobility, analytics and cloud (SMAC) collectively provide a US$ 1 trillion opportunity.
◦ Cloud represents the largest opportunity under SMAC, increasing at a CAGR of approximately 30 per cent to around
USD 650-700 billion by 2020.
◦ Social media is the second most lucrative segment for IT firms, offering a US$ 250 billion market opportunity by
2020.

41. Thank You