Revolution caused by IT in India

Impact of IT Industry on India

The IT industry's impact on India is profound. It is a positive contributor to India's revenue growth, talent capability, diversity in workforce, and its digital infrastructure.

Growth in exports.

In terms of revenue and foreign exchange, this sector has transformed India's finances, and is effectively financing a large share of imports. The sector is currently the largest forex earner from exports and accounts for over 25% of the country's total exports. The sector is already contributing over 7.9% to India's GDP.

Capability development and employment creation. No other industry segment has generated as many jobs for the middle class. The sector directly employs over four million people and indirectly supports an additional 12 million jobs. The industry was also a major trigger for the government to push for an increase in output of engineering colleges to over 700,000 graduates a year.

Companies have also set up processes to hire, train, and engage thousands of employees. In fact, Indian IT services companies spend over US$1.6 billion a year on employee training. Large technology companies have set up campuses exclusively focused on training their employees on skills relevant to their global customers. Over 500,000 engineers in India are already equipped with relevant digital skills to drive digital transformation. FutureSkills, an initiative of the National Association of Software and Services Companies (NASSCOM), has an ambitious goal of training another two million people in digital technologies over the next few years.

The extensive engineering education system and the deployed talent pool in the IT industry are also helping improve the digital capabilities of Indian enterprises. The technical and managerial talent from IT companies have moved to Indian enterprises to help them accelerate their digital transformation initiatives.

Female empowerment. 

The industry has been supportive of women in the workforce, an aspect where India has traditionally lagged. Some 30% of the IT sector workforce is comprised of women employees and this has been a trend since the early stages of its development. The sector has not only helped empower women but has also provided them with highly aspirational career options.

Start-up ecosystem. 

The start-up ecosystem in India attracted over US$10 billion in investments from venture capitalists from across the world between 2016 and 2018. US$6 billion has already been invested in Indian start-ups by SoftBank out of its US$100 billion Vision Fund.

Start-ups such as Flipkart, Ola, and Swiggy have helped create or digitally enable millions of jobs such as cab drivers and e-commerce/food delivery professionals. These companies are also empowering the country's 60 million small and medium businesses by digitally enabling their operations. Start-ups such as Power2SME and CapitalFloat are offering innovative financial services for SMBs, including "flow-based lending;" a lending model that provides credit to SMBs based on an analysis of their financial transactions, thereby improving SMBs' ability to invest and grow their businesses.

Digital infrastructure.

Within a span of about a decade, Indian IT companies have taken several services being provided to citizens and corporations and moved them online. Most of these systems have been developed by indigenous IT companies, and many are also maintained and managed by them. Examples include the Ministry of Corporate Affairs system for corporate tax filing, the income tax management system, including e-filing of tax returns, the entire India Stack digital infrastructure, the Goods and Services Tax system, the passport system, the Indian rail reservation system (that books over 200 million tickets annually), the Aadhaar unique identification infrastructurethe largest in the world (whose chief conceptualizer and first CEO, Nandan Nilekani, is a product of the IT industry), and others.

India's global perception. Finally, it should be noted the software sector has perhaps played the most crucial role in changing the global perception of India. Until the 1980s, India was perceived as a poor country that needed support from more developed nations. Today, this view has changed, and India now has a seat at the global table. The world is aware of India's technology prowess and is actively looking to make investments, form partnerships, and tap India's bustling technology ecosystem. Frequent foreign travelers can attest to the fact that the quality of interaction with local people has evolved dramatically over the last quarter century due to the IT industry's widespread impact.

Global Impact

Rising from a position where it was almost impossible for a poor and impoverished country like India to create capabilities around software technology, India has emerged as a software powerhouse serving the world.

The IT sector has helped global corporations optimize their cost, improve quality, create jobs and capabilities worldwide, and drive global business models and technology innovations.

Key Lessons

Observing the growth and impact of the Indian IT industry provides a set of valuable lessons that can be replicated for the development of other industries in India and other countries.

Government involvement:- Minimal government interference coupled with supportive incentive policies was a key success factor. The Indian government did not regulate the industry and created tax incentives for both importing technology and for revenue from exports.

Shilling and development:- Focus on skills and talent development has been instrumental in the growth of the IT industry. Even in their early stages, IT companies spent significant time and money developing the skills of their employees ahead of time. This helped companies rapidly address the changing technology needs of their global customers.

Process orientation:- The heightened focus on process orientation in the Indian software industry has undoubtedly contributed to its meteoric growth and has also enhanced the perception of the industry globally. A strong process and continuous improvement focus is a catalyst for both quality and productivity.

Industry collaboration:- One key factor in the success of the Indian IT sector has been its ability to bring companies together to develop an industry. The sector has created a huge collaboration ecosystem in the form of an industry bodyNASSCOM. The association has helped develop best practices that get disseminated to companies across the sector.

Scale and entrepreneurship:- Widespread industry effort to promote, cultivate, and celebrate entrepreneurship has created an ecosystem for entrepreneurs to conceptualize, fund, and scale IT companies. The first generation of entrepreneurs focused on building and scaling IT services companies, while the second is focusing on building IT products and IP-led services companies.

The Way Forward

The Indian IT sector is in a unique position to lead global technology innovations over the next decade.

The Indian education infrastructure is being rapidly overhauled by dedicated government initiatives. The government has announced the creation of 17 new Indian Institutes of Technology (IIT) across India to further improve the quality of engineering education. IITs have some of the country's best engineering faculty and education infrastructure. The millions of engineers who will graduate in the next few years will be adept at machine learning, cloud computing, and other new-age digital technologies. As a result India will continue to be a source of skilled digital talent and intellectual property for more than 2,000 global enterprises.

India's per capita income is expected to cross US$3,500 by 2025 from the current US$2,000. This will increase discretionary spending by the population, creating a huge consumer market, potentially triggering the next wave of digital entrepreneurs building India-focused technology. Venture capital activities will increase due to massive domestic opportunities and the ability of Indian start-ups to build global products. The availability of capital will catalyze the creation of many companies with valuation in excess of US$1 billion across India.

The government is expected to accelerate the creation of public digital infrastructure to streamline existing citizen services and create new services. The India Stack model will be expanded to create industry-specific initiatives in areas such as healthcare, supply chain, and education. This will result in technology getting weaved into the fabric of the Indian workforce across agriculture, healthcare, education, and other industries. Millions of digitally enabled jobs and job categories will be created in the process.

Further, second- and third-tier locations will join India's software ecosystem due to the strong mobility network, education, and digital infrastructure built over the last decade. Global companies, Indian IT companies, and start-ups will leverage these cities to drive innovation.

Over the last three decades, India has risen as a technology and software trailblazer, and with concerted efforts by the entire ecosystem including Indian IT companies, multinationals, start-ups, and the government, India has the potential to further establish its standing as a world leader in the software sector.

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