Political, Economical, Social & Technological (PEST) Analysis of IT Sector in India by Nitesh Singh Patel, IMT Nagpur

1. PEST ANALYSIS ON IT SECTOR OF INDIA
Nimisha Agarwal (2013173)
Nitesh Singh Patel (2013178)
Nitin Boratwar (2013179)
Pawan Agarwal (2013195)
Prerna Bansal (2013209)
Priya Jain (2013210)
Section- D
Term- III
Batch 2013-15

2. THE IT INDUSTRY IN INDIA
 IT in India is more visible after globalization in 1991.
 But its development got rooted almost 50 years before.
 Initially the fear of increased “unemployment” & “worker’s redundancy”
 Allowed leapfrogging in technological sector.
 Major reason of economic shift.

3. Top IT Companies Operating in India
1. TCS (Revenue- 48426.14)
2. Infosys (Revenue- 36765)
3. Wipro (Revenue- 31682)
4. HCL (Revenue- 8907)
5. Mahindra Satyam (Revenue- 5964)
6. Tech Mahindra
7. Mphasis
8. Oracle Financial Services
9. Mindtree
10.Polaris Tech

4. Political factors
 Very little influence of political situation including change of government.
 No tax sops to US companies outsourcing IT jobs
 Diverse employment practices-qualification, abilities, gender, skill sets
 Boosting the image of India in global market.
 Certain levels of ambiguity surrounding taxation of IT products and services,
 IT SEZ requirement : Infosys controversy.
 Continuous change of stand on applicability of labour legislations to the sector
 Strengthening of the IT Act- security of data in transmission & storage.

5. Economic
 Stage of business cycle: IT industry is in growth phase and this can
seen through increasing contribution to GDP and employment
 Exchange rate:
 Indian IT sector is dependent on foreign clients, especially US, for
more than 70% of its revenue. So, the fluctuation in the exchange
rate can bring a considerable difference in the performance of a
company.
 IT sector undertakes various measures like hedging exchange risks
using forward and future contracts. This helps them in mitigating
some of the loss due to exchange rate fluctuation but none the less
the impact is substantial.
“Every 1% movement in the Rupee against the US Dollar has an impact
of approximately 50 basis points on operating margins” – Infosys
Annual Report

6. Continued..
 Economic growth: Due to global slowdown, exports of IT and ITeS services
has slightly dimmed but a great opportunity is waiting in India’s domestic
market with increasing technology adoption within the government sector
and the small and medium business (SMB) sector.

7. Socio Cultural Factors
 The social factors affecting IT industry ranges from employee right, language
barriers, race nationality of company or other issues.
 English language being widely spoken in India has help in fostering the industry’s
relationship and interaction in India and on the global stage.
 India is one of the few countries to have an increasing share of working
population, since there is great availability of both skilled and unskilled labour force.
 Immense intellectual capital
 Potential employment opportunity for women in this organized sector.
 EDUCATION : Large number of universities and institutes.
 LABOUR : Indian labour is not only cheap but is technically skilled too.
 CAREER : In the year 2006-07, the industry hired approximately 3, 80,000 people. Out
of these, the ITeS sector hired 2, 00,000 people and the rest were taken by IT sector.

8. Technological factors
 1. Government Research spending : Government IT spending in India reached $6.4 billion US
Dollars (USD) in 2013, a 7 percent increase over 2012, according to Gartner, Inc
 2. New Inventions and Development : National optical fiber network (NOFN)
National Knowledge Network
ADHAR ( Unique Identification Authority of India)
eSeva
Proposed global learning center of the TCS.
 3. (Changes in) Internet : Indian Internet Companies with Innovative business model
Naukri.com
Flipkart
Redbus

9.  4. Lifecycle & speed of technological obsolescence : Desktop to Laptop , Landlines to
Skype , DOS to Windows 8
Reference : http://www.bcri.com/Downloads/Valuation%20Paper.PDF

10.  5. (Changes in ) Mobile Technology : The exploding mobile technology includes
telecommuting, working from partner or client locations, from a plane or train or
simply moving more fluidly around the company's own premise through the use of a
wireless local-area network.

11. Managerial Implications
 Even after facing so many challenges in IT sector, India is able to sustain
itself because not just private but Govt. sector has accepted IT in there
system.
 Not just technically skilled but also linguistically better at English.
 But NASSCOM report says major graduates are not employable and they
need to be trained on hard as well as soft skills.
 Thus we observe that the Indian IT industry has been facing some
challenges but if effective steps are taken then it will surely help it to remain
competitive in the future as well.

12. References.
 http://business.outlookindia.com/pdf/DeloitteIndiaITITeSindustry.pdf
 http://articles.economictimes.indiatimes.com/2013-11-07/news/43776157_1_manufacturing-sector-labour-law-outsourcing-
sector
 http://finmin.nic.in/workingpaper/policy%20Paper%20on%20Services%20Sector.pdf
 http://articles.economictimes.indiatimes.com/2013-10-18/news/43178623_1_largest-overall-spending-category-gartner-ict
 http://businesstoday.intoday.in/story/centre-committed-to-growth-of-it-sector-pm/1/202040.html
 http://www.mckinsey.com/insights/high_tech_telecoms_internet/indias_internet_opportunity
 http://stockshastra.moneyworks4me.com
 http://indiabudget.nic.in/
 http://www.ukessays.com/essays/management/swot-and-pest-analysis-of-wipro-in-india-management-essay.php
 http://www.scribd.com/doc/24650533/PESTLE-Analysis-on-Indian-IT-Sector
 http://www.iosrjournals.org/iosr-jhss/papers/Vol3-issue6/F0364552.pdf
 http://neerajmishra.wordpress.com/2008/07/21/information-technology-it-in-india-the-challenges-future-scope/
 http://www.siliconindia.com/news/business/Indias-10-Best-IT-Companies-In-2013-nid-155198-cid-3.html