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IT sector Investment- A revolution in Economic growth

IT  sector investment originated  from the 1900s Industrial Revolution that changed the lives of people drastically. The revolution with new manufacturing processes and increased economic activity uplifted the overall standard of life. The rich world – the US, UK, and much of western Europe – leapt to be a developed nation. China is one of the other nations that immensely benefitted from the revolution. 

And the reason it presented itself as a global manufacturing hub to the world. And cheap labour was one of the most critical factors for the western world to shift manufacturing processes to China, saving massively on costs. Therefore it was cheaper for western firms to hire Chinese labour than labourers in their home countries. China will be soon called a developed nation.

Furthermore, the digital revolution is another revolution in the process. It may just be India’s chance this time. To understand why to, let’s first look at the IT sector.

What is IT?

Let example to get a fair idea of what the sector is. Picture this – living in a small town and starting a bakery – the first of its kind in that town. People flock to check it out because of the great baker you are – and they love the place. More than expected, sales soon skyrocket—no multiple accounts to maintain and transactions to take care of. And you begin facing difficulty forecasting demand due to the inability to make an informed decision about orders to the suppliers.  Therefore, the bakery is a mess – but the good kind of a mess. The answer to your problems? Technology! As a business owner, you understand that to concentrate on your business’s crucial facets, and you have to automate repetitive and mechanical processes. And that’s where the expertise of an IT company comes into the picture.

IT sector Investment- A revolution in Economic growth

So you approach an IT firm that helps build software that makes your life easier. For example, they might build software that automatically updates inventory every time you sell something. And another software that helps you forecast demand for the next few weeks. Or anything which requires the use of tech. Information Technology (IT) means storing/using/managing information with the help of technology. Now look, IT firms these days – TCS, Infosys, Wipro, etc. are giants! They, and many like them, offer a host of other services. But the crux of the IT sector is what we just learnt. IT companies build/maintain software so that businesses run more smoothly.

IT in India

They are returning to the analogy of how India may be a part of the digital revolution. China became the manufacturing hub of the world because of cheap labour. Now think about this – India has the highest number of technology graduates globally. Over 25% of the world’s engineers are from here! Plus, we’re a populous nation. Combining those 2 – population and skill – is a sweet deal for a westerner. How? I’ll explain. You see – countries like the US, UK, and others like it face business problems ever so often – hence they require IT expertise quite often. And, hiring someone from their home country is expensive. Estimates suggest that it’s 5-6 times more costly for a US company to hire an IT company in the US than in India. Thus, these firms look to countries like India for their IT needs.

Over the last few decades, we have capitalised on this opportunity. And became the IT hub of the world! We are the world leaders in IT and Business Process Management (BPM) services exports. Globally, India is the leading sourcing destination for IT exports. Approximately 55% market share of the US$ 200-250 billion global services sourcing business in 2019-20. Indian IT & BPM companies have set up over 1,000 global delivery centres in about 80 countries! 

IT sector Investment- A revolution in Economic growth

India’s IT industry contributes around 7.7% to the country’s GDP. And the contribution is expected to rise to 10% of India’s GDP by 2025. Moreover, the IT industry provides direct employment to about 45 lakh people and indirect employment to over one crore. The IT & BPM industry revenue was estimated at around US$ 191 billion in FY20 at 7.7% growth y-o-y, and it is estimated to grow to US$ 350 billion by 2025.

Moreover, 38% of the total industry revenue is expected from the digital segment by 2025. It is estimated that the digital economy to reach US$ 1 trillion by 2025. According to NITI Aayog, India’s annual growth rates are expected to be 1.3% by 2035 through Artificial Intelligence (AI). The substantial usage of AI will result in a 2.5% increase India’s Gross Domestic Product (GDP) in the immediate term.Also, the government has taken initiatives by releasing “Simplified Other Service Provider” (OSP) guidelines to improve the ease of business. Along with Business Process Outsourcing (BPO) and IT-enabled Services (ITeS).

The road ahead

India is one of the top offshoring destinations for IT sector companies worldwide. It has proved its capabilities in delivering on-shore and offshore services to global clients. Moreover, emerging technologies offer an entire gamut of opportunities for top IT firms in India. It’s the ideal chance for India to make a mark on the global stage by playing to its strengths.


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