International Journal of Research and Scientific Innovation (IJRSI) | Volume V, Issue VIII, August 2018 | ISSN 2321–2705

Problems and Prospects of Indian IT Industry

Rohit Madhukar Panhale
Pacific Academy of Higher Education & Research University, Udaipur, Rajasthan, India

I. INTRODUCTION of Indian IT industry was the result of effective teamwork

between the Government and the Industry, taking into
Information technology [IT] includes those forms of
consideration, the performance of Indian Software industry
technology which are mainly used for creation, storage,
the Government of India provided massive support including
exchange and using of Information in various forms like
fiscal benefits, easy availability of high speed data
business data, motion pictures still images, voice
communications, and infrastructure facilities, and also ensured
conversations, multimedia presentations etc. It fact IT has led
red –tape free system of administration. Fiscal benefits
to the ‗‘Information Revolution‗‘, so that 21st century has
included trade—free zones, Software Technology Parks
been characterised by application are advancement in
schemes zero import duty on software‘s and 100/ exemption
Information technology ; Now IT has become an integral part
of profits from software exports. Fortunately, for India, the
of our daily life. According to Information technology
phenomenon of ‗‘reverse brain drain ‗is enriching its work-
Association of America, IT is defined as ‗‘the study, design,
force, with people having diverse international experience,
development—application, implementation, support or
knowledge of state of art technology, management skills and
management of computer based information systems.‘‘
much more. This has made it easier for Multi National
Advancement and application of IT has been rapidly
Corporations [MNCs] to establish their back-up offices in
progressing resulting in to development of cloud computing
India.‘‘[1] Several sectors of Indian economy, such as
,mobile application, revolution in uses interfaces, analytics
Insurance bank, energy financial Institutions, Government
etc. Thus it can be said that the influence of IT has been
administration, defence, Tax system, posts, customs, Telecom,
growing continuously and it will contribute significantly
education, small offices, large companies and also individuals,
towards servicing customers by the business units in a better
way.
III. CHALLENGES FACED BY INDIAN IT
II. DEVELOPMENT OF IT INDUSTRY IN INDIA
The history of Indian Information Technology
During the later part of 1990‗s the Software boom [IT] industry is characterised by a series of challenges.
started in India. Initially most of the Indian Software Initially it had to face a challenge when ‗‘Y2K work of
companies were providing limited software services such as rewriting the software codes of large computers to enable
the banking and engineering software. The emergence of them to handle new millennium which enabled Indian
Y2K problem stimulated software boom as a large number companies to gain an entry into the bellowed precincts of
of skilled personnel were required to meet rapidly increasing large western firms. Indian IT faced this challenge
demand for data base correction to meet the challenges with successfully but soon came the bursting of the dotcom and
the advent of new millennium. When the first generation telecom bubbles, preceded by huge technology spending that
computers were made they had a very small memory. In created opportunities for Indian companies to write lots of
order to save space the four digit year was reduced to last new code. It was followed by 9/11 which gave sharp bow to
two digits. But this war suitable for 20th century. During the global business. After a period of rapid growth came the
21st century two digit approaches was found to be period of financial crisis of 2008 and its impact on spending
inadequate. It was at this time Indian Software professionals of IT which continued even during the period that followed.
got a golden opportunity to show their skills in solving the
In spite of these challenges, the entrepreneur ---driven
Y2K problem, although it was not highly technical still it
Indian Software industry evolved, from writing codes simply,
called for huge data entry. Thus the Y2K problem provided
to undertaking systems integration and managing clients. IT
an opportunity for Indian Software professionals until the
infrastructure, initially on site and later on remotely.
end of the year 2000. After this period many Indians lost
Simultaneously there was growth of the use of automated
their jobs. The terrorist attack in US worsened the situation,
tools delivering more sophisticated products and engineering
as it led to inevitable mass lay off Indian professionals. In
software design services and achieving higher levels of
the year 2000 it was estimated that about 70,000 Indian
domain knowledge by way of acquiring niche players. Next
Software graduates were employed in US but the number
challenge was caused by cloud computing which implied
declined to 30,000 in 2002 after the terror attacks.
using servers located elsewhere. IT reduced the need for firms
In India software industry continued to be successful to go in for enterprise—wide IT systems that are licensed and
especially as Indian economy was growing at average rate of specially designed for individual clients. In order to overcome
6 percent per annum since 2006—07.The successful progress this challenge Indian software firms started acquiring niche

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International Journal of Research and Scientific Innovation (IJRSI) | Volume V, Issue VIII, August 2018 | ISSN 2321–2705

firms with technologies that will be relevant tomorrow .For The table No1 deals with the performance of Indian IT sector
example, Infosys acquired Panaya using automation which shows that the share of output which was 29% declined
technology. Later on it acquired Skava a mobile e---commerce to 10% in 2001-02 but stood at 28% in 2006-07 and it stood at
technology firm. Similarly Wipro acquired the Danish firm. 12% in 2011-12 and 17% 2014-15. Thus it shows decreasing
Design it, which was offering design advisory and design tread to which attention need to be paid. However, in terms of
innovation services. TCS also acquired Alti a firm specialising experts the share in total output was 19% in 1991-92 which
in system integration with S A P solutions. Thus Indian shows continues rising trend so as to reach at 81% in the year
software companies acquired larger share in business by way 2014-15, indicating more than 4 times increase during the
of optimum utilisation of staff, and adopting practices like period of two and half decades.
price discounts. During 2013—15, Infosys, Cognizant and
Wipro maintained their operative profit margins, through IV. DOMESTIC IT PRODUCTION
increasing use of automation, improving productivity and
price discounts. The extensive use of automation resulted into IT production for Indian domestic market and domestic
lower rate of hiring which according to NASSCOM was about IT consumption are different. For example domestic computer
hardware production 2013-14 was about US $3 billion, where
15 percent to two lakhs during 2015—16, after recording
as domestic IT consumption was U S [s] 12.4 billion,[4]
increase of six percent in the earlier year. On account of fall in
because two figures have different things to count, as
recruitment, the capabilities to carryout IT jobs also
consumption figure includes peripherals , network kit, storage
decreased. Indian companies started retraining their staff
extensively and those who could make the best use of it got etc. In spite of fact that Indian domestic market of IT being
higher level of composition. Still the declining rate very large and growing, production for exports has been
growing at a higher rate than that of production for domestic
employment emerged as a challenge for Indian government.
market.
According to the H R D expert the recent job cuts Indian IT sector output level has been fluctuating
in IT sector have been largely blown out of proportion, widely, as it reflected 29/ increase over the earlier year, but
‗‘emplacing that, as industries mature employees must be also this rate declined to 10/ in 2001-02 ,then it increased at 28/ in
to keep up with delivering high quality performance.[3] But 2006—07 and recorded 17/ increase over the earlier year in
IT firms argued that they have reduced their head counts‘‘ for 2014-15. [Table-1]
building a high performance based work culture. ‗When the
industry has to face challenges of many changes and use of V. INDIAN SOFTWARE EXPORTS
new technology, it becomes necessary to meet evolving
standards of performance. In an effect to encourage managers The share of IT sector in Indian exports has been
‗‘to be at the forefront of disruptions parts and changes, in the steadily rising as it increased by 19% in 1990-91, and
work environment , the Infosys in June 2017,rolled out continued to increase over the following years so as to react at
‗Manager Quotient [MaQ] a platform that utilised crowd 81/ in the year 2014-15.
sourced feedback and analytics to personalise the learning The contribution of Indian Software in exports has
journey . The programme uses data collected from company been more significant as stood at US $ 75bn in 2014 and IT
surveys through the year, exit interviews and employee was US $100bn if BPO services are included. Regarding over
feedback to enable managers to know about now they are all pattern of growth ,it has been steadily decreasing ,for
performing on certain core competencies .The programme example the ten year annual growth rate average was 40% in
aims at achieving more accountability among managers for 2002, that declined to 30/ in 2008 and 20/ in 2014. Secondly
performance and deliverables. The company also rolled out market diversification for Indian Software has remained
compass, a digital platform that allows employees to mobilise limited to USA, UK and Europe mainly.
available opportunities on career path, learning and networks.
It also runs the Zero Distance Programme among early Even the location of production has changed as
initiatives of CEO which aimed at innovation in projects during early 1990‗s about 75% of work was taking place on
undertaken by the company. site, 25% in India. [5] But by the end of 2013-14, it was
observed that only 20 percent work took place on site and 80
Table1. Performance of Indian IT sector percent in India, [6] which implies that net foreign exchange
Exports share Share of earnings have raised significantly.
Year Output Level
in total output GDP in %
1991-92 - 19 -
Regarding productivity ,as measured by average
revenue per employee , in the Indian Software sector has also
1996-97 29 35 -
increased from US $ 7000 per head in the mid 1990‗s to US
2001-02 10 60 - $16,000 in the late 1990‘s and to US $ 38,000 in 2014 .[7].
2006-07 28 66 -
2011-02 12 76 7.5 VI. THE EMERGING TREND IN INFORMATION
2014-15 17 81 - TECHNOLOGY
Source- Richard Hicks, CDI Uni-Manchester.

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International Journal of Research and Scientific Innovation (IJRSI) | Volume V, Issue VIII, August 2018 | ISSN 2321–2705

According to Information Technology Association of Thus IT has been characterised by rapid changes and
America, Information Technology is ‗‘ the study, design, each changing field of IT has led to great advancement
development application implementation support or especially during the last decade. Its impact on business has
management of computer ---based information systems,‘‘ The been growing significantly which will help business
21st century has been described as wider ‗application and organisations to serve customer in a better way.
advancement of IT so that it becomes an integral part of our
daily life. It has brought about revolution in different aspects VII. MORE TECHNOLOGY MEANS MORE JOBS
of business and society and provided tools for resolving
socio—economic issues. IT industry has been characterised In the present digital age, consumers and business
organisations are using technology in an increasing scale, so
by rapid advancement and widening application of
more technology means more jobs. When technological
Information technology .Some of the emerging trends in the
progress takes place, it calls for new type of skills, to handle
IT are discussed below.
new technology effectively .But the rate of new skill
6.1 Cloud Computing: formation when lacks in keeping pace with new technology it
results in surplus labour specialised in older skills. In order to
Cloud computing deals with utilisation of computing
survive and grow under the new Digital Age there is
services, i.e. Software and hardware as a service over a
competition among companies to get the required tech talent
network. This network is the Internet. It offers three types of
needed to help them transform. In the past technology was
services, mainly infrastructure as a service [I a a s], Platform
used to refine and shape every process in the organisation that
as a service [P a a s]and Software as a service [S a a
helped companies to be efficient and optimise their
s].Advantage of cloud computing include 1] reduction in
operations. In digital world process maturity has become table
Infrastructure cost of the company ,it promotes virtualisation
stakes. Now data has become the most valuable resource for
that enables sever and storage device to be utilised throughout
business. As data increase in every business the demand for
the organisation, and it also makes maintenance of hardware
data related skills is increasing at a higher rate, from back
and software easier as installation is not required on each end-
office systems to supply chains, from logistics to customer
user‘s computer .Main issues relating to cloud computing are
facing roles .Thus every job has become data driven and
privacy, security, compliance, legal, abuse, it governance etc.
requires more IT support which will lead to increase in huge
6.2 Mobile Application: demand for technology talent. Rapid progress of digital
adoption has resulted into higher spending on IT which is
Mobile app is designed to run on Smartphone, tablets,
estimated to increase to $3.5 trillion in 2017 which will be
and other mobile devices. They are available as a download
2.9% over that in 2016.Software sales are expected to increase
from various operating systems like Apple, Blackberry, and
by 7.2% in 2017 while IT services spending will grow by
Nokia etc. Some mobile apps are available free, while others
4.8% in 2017.As a result of continuous increase in investment
are available at download cost. The revenue collected is
in technology which led to increase employment of a large
shared by app distributed and app developer.
number of skilled employees and increase up to $150 billion
6.3 User Interfaces: revenue of IT industry in 2016. It created 3.7 millions of
direct IT jobs and 10 million in direct jobs. Industry is
User interface has been revolutionised since the expected to provide 7 million IT direct jobs and 25 million
Introduction of touch screen, which has revolutionised way indirect jobs by 2025.But it rest calls for increase in the
end-users interact with application .Touch screen enables the
technology related skills in other industries also. Even the
user to directly interact with what is displayed and also
initiatives like Digital India which is estimated by the
removes any intermediate hand held device like the mouse.
government at [s]1 trillion by 2014,from [s]270 billion in
Touch screen capability is utilised in smart phones, tablet,
2017.India‘s investment in technology has been below one
information kiosks and other information appliances. percent to Gross Domestic Product as compared to the global
6.4 Analytics: average of 2.5 to 3%. However with Digital India technology
investment will increase significantly, giving rise to increase
Analytics is a process that helps in discovering the in employment and new micro entrepreneurship opportunities.
informational patterns with data. The field of analytics is a In order to achieve these goals, it is necessary to pay attention
combination of statistics, computer programming and towards developing required skilled manpower. [8]
operations research. Analytics is expensively used for data
analytics, predictive analytics and social media analytics .Data India‘s Outsource progressed during Y2K crisis of the
analytics is a tool used to support decision making process. It late 1990‗s as there was urgent need to repair corporate IT
converts raw data into meaningful information .Predictive system. With the advent of tablets and smart phones and their
Analytics is used as a tool for predicting future events based applications in the 2010‗s user got access to better technology
on current and historical information .Social media analytics than the IT departments of the companies could provide. They
is a tool used by companies to understand and accommodate could download ‗‘cheap, elegant and powerful apps on their
customer needs. tablets that made their corporate system look primitive.‘‘
Companies such as Amazon, Microsoft and Google, with the

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International Journal of Research and Scientific Innovation (IJRSI) | Volume V, Issue VIII, August 2018 | ISSN 2321–2705

help of cloud computing began to take over the functions of frame where the IBM Global services Model was popular.
data centres. As a result out sourcing declined rapidly. The second was the client server model [the desktop era]
Modern applications are user –customisable and can be where the companies like Accenture played a dominant role.
anybody having basic programming skills. Although technical The third was the Internet Services that saw the rise of off
progress has affected Indian IT adversely, it also provides new shoring and global sourcing and rise of the companies like
opportunity for reinventing itself and even gets support of U S TCS, Cognizant, Wipro, HCL, and Infosys. Now it is the
A who is modernising its old infrastructure and bringing fourth wave where business are becoming digital and are
manufacturing back from China. ‗Technologies such as viewing transformation due to the use of technologies and
robotics , artificial intelligence and sensors enable platforms like social ,cloud , mobile ,and analytics. Thus as
development of smart cities ,automated factories and result ‗‘there will be fewer jobs ,more automation, decreasing
wholesale upgrading of national infrastructure .‘‘ size of deals ,start-up will take on multibillion dollar services
players more aggressively ,according to industry stakeholders
According to Malcolm Frank, chief strategy officer
and tech analysts.‘‘[10]
at Cognizant,‘‘As the world becomes more technical and the
clients are digitizing then there should be more services.‘‘ ‗‘If
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