INFRASTRUCTURE SYSTEM

E – Infrastructure

Indian ICT Sector Overview

Sector Profile & Developments
Economy
2nd fastest growing economy in the world
At US$ 800 billion economy grew 8.2% in year 2005-06
Among top 10 FDI destinations
Tele density increased from 8.62% in Dec 2004 to 17.16%
in 2006
The gross telephony subscribers reached 189.93 million
as on December 2006
Stable govt. with 2nd stage of reforms in place
Major tax reforms including implementation of VAT
US$ 130 billion investments plans in infrastructure over
the next 5 years
Retail represents 9% of India's GDP
fastest growing sectors
in India
Revenues (USD Bn.) • Revenues ~ USD 36 billion (2006 Est.)
40
CAGR - 30%
36 • CAGR (FY 2004-06) - 30 %
28
20
22
• Contribution to GDP up from 2% in
2000 to 5% in 2006
0
2004 2005 2006 (Est)
• Exports ~ USD 23.5 billion (2006 Est.)
• CAGR (FY 2004-06) - 35 %
Exports (USD Bn.)
20
• Has nearly doubled in last three years
CAGR - 35% • Domestic Market - USD 13 billion (2006
10 13
11 Est.)
9

0
• CAGR (FY 2004-06) - 22%
2004 2005 2006 (Est) • Buoyed by an economy growing at
nearly 8% per annum over the last 3
years Source: NASSCOM
nearly 65 % of IT sector
revenue
Segment wise revenue trend
40 19% 100% = USD 36.4 bn

13% 48%

35
100% = USD 28.5 Year 2006 (E)
bn 20%
21%

30
47%
100% = USD 21.7 14%
bn IT services
23% 48% Year 2005
25 18%
ITES- BPO
13% Engg Services, R&D and
Year 2004 products
20
16%
Hardware

• IT services and ITES-BPO revenue largely export driven

• Exports contributed 75% of IT services and 87% of ITES-BPO revenue
• Share of services in domestic market increasing
• Revenue from services up from 43% to 47 % in the last 3 years

Source: NASSCOM
Overview
India stands among the top ten leading ICT markets in
the world.
Current market size about US$ 42 billion
Sector contributes approx. 4% to India's GDP (2008
projection-7%)
100% FDI allowed
No import duty on software imports
No income tax on profits for 10 years
India has emerged as a global player IT and IT enabled
service with exports of US$ 80 billion in 2005 -06.
Of the fortune 500 Companies 220 outsource their
software from India.
India: ICT Overview
80 out of world’s 117 SEI CMM level-5 companies are
from India.
Turnover of the top three companies namely TCS,
Infosys, Wipro are over one billion dollars each.
Exports of computer software & services reached
US$ 17billion
The value ITES -BPO exports from India exceeded
US$ 6 billion mark in the year 2005 -06.
According to NASSCOM, by 2008 they are expected to
reach US$ 21-24 billion.
North America is the major market for this sector
followed by the EU countries, Asia and the Middle
East.
India: IT Exports
India currently exports electronics, software and
services to around 198 countries.
USA, UK, Netherlands, Japan and Singapore accounted
for 81.68% of India's total electronics and computer
software / services exports in 2005-06.
The next 5 countries (UAE, Germany, Canada,
Switzerland And Hong Kong) account for 91.2%.
Exports to rest the 188 countries accounted for 9.20%.
India ranks second among the Top 10 across the world
on total skill certifications in 2005.
 Initiatives
Implementation of the national e -Governance plan
Data Centers
State Wide Area Networks
Common Service Centers
Establishment Of National Internet Exchange of India
Establishment Of Center of Excellence in Wireless
Technologies.
National Electronic/ IT Hardware Manufacturing Policy.
Setting up of Software Technology Parks of India (STPI)
Information Security
Broadband Policy- 2004
Other areas of opportunities
 India: IPR Law
Data Privacy and Protection Laws
in India
Copyright > Yes

Patent > Product Patents 2005

Data Protection > Comprehensive Framework 2004

Digital signatures > Yes

Hacking > Yes

Privacy > Yes

 India: Market Challenges
Technology Innovation is Fragmented & Segmented
Infrastructure is barrier for many segments
Global Competition
Govt regulation is problematic.
Need to constantly upgrade the skilled manpower.
Overburdened infrastructure in existing hubs of IT –BPO
activity- Need to develop Tier 2 Cities
Bridging the digital divide in the country.
 India: Rising Confidence
ICT Industry has emerged as a key driver for growth
Becoming a major base for IT enabled services
Direct and Indirect employment
Sustained public growth in public finances
Consumption demand
Reversal of brain-drain
Reduced dependency ratio
Urbanization
Poverty alleviation
Rural education- bridging the digital divide
 India has emerged as the fastest growing IT hub in
the world, its growth has been dominated by IT
software & services such as

Application Management
IT Outsourcing
Infrastructure Management Services
Software Testing
Service-oriented architecture &
Web Services
Custom Application Development & Maintenance (CADM)
System Integration
IT Consulting

CAGR of 28 per cent during the last 5 years, the IT-

ITES industry’s contribution to India's GDP has
risen from 1.2 per cent during 1999-2000 to 4.89
per cent in 2005-06.
Huge & Growing IT Market

Size (2002-03)  US$ 24 billion

Size (2005-06)  US$ 42 billion

 1.4% of GDP
Share of IT & BPO
7%
2008 projection
 Over 650,000
employment
(Second largest employer in IT service sector)

Forex reserves has risen from US$ 42 bn (2001) to US$ 133

bn (2005)
Future Growth

USD 35 billion
domestic
software market

By
2008
17 million people
available
Moving up the Value Chain

Consulting
Embedded Software
Network Security
Network Management
Application
development
Package
Implementation
Package
Facilities Implementation E-business
management Applications

migration & Re- Web Enabling

Unix-based engineering legacy
coding
Maintenance
Maintenance
 196  mainfram  Client/Serv  Internet
0 e er

Aligned to technology needs

Model

100%

80%

60%
Onsite Services
40% Offshore Devlopment

20%

0%
1991-92 2001-02 2002-03

Alignment to business
needs
Future Growth

Utilities
Targetin
g new Transportation
Vertical
Healthcare
s

Beyond Financial Services

tradition Telecom
al Equipment

sectors Manufacturing
Industries
Invest in India

Advancing on the value

chain
Package Software Implementation
System Integration
R & D Engineering
Network Management
Partner with India

Venture funding
activities
2001-02  US$ 1,100 million
2007-08  US$ 10,000 million

Venture funding activities to increase 9 folds by

2007-08
Export from India

product
Services O utsourcing Services

H ard w are su p p o rt & A p p licatio n

In stallation M an agem en t
Packaged so ftw are N etw o rk an d
su p p o rt & In stallatio n Deskto p O u tso u rcin g

Professional Services

ISConsulting
SystemIntegration
Customer Applications
The India Advantage

Quality
Manpower

pro active Specialized

policy organizatio
framework ns &
facilities

State-of-
the-art High
Infrastructu Quality
re Services
 The Intellectual Advantage
 Human sophistication: Workers Skill

80%
70%
60% India
50%
China
40%
30% Indonesia
20% Philippines
10%
0%
Skill Surplus
level

India is today a mature region for IT offshore Work

 The Intellectual Advantage
 Vendor Sophistications: no. of vendors,

100%

80%
USA
60% UK
40% Germany
France
20%
vendor Quality

0%
End-UserCountries

Human sophistication: Number of Workers,

labour Cost
The Intellectual Advantage

25%
20%
15% Ireland
10% Singapore
5%
0%
Regional Hubs

Enhancing the Consumption & improvising the

outsource needs
 Advantage
 Standardizing Testing & Quality Certification (STQC)
programs
 One-Stop solution to all quality requirements of
electronics industry
Software
Technology Parks

No Single
Exemptio Up to Single point
corporate
n from 100% window custom
income
local Foreign governme bonding
tax up to
duties Equity nt and export
March
and taxes permitted clearance certificatio
2010
n