IT services in India were pioneered by the yesteryear business and industrialist stalwart Sir JRD TATA. He envisioned and had the foresight of the importance of an IT company based in India. Thus, foresightedness stuck and due to his visionary outlook, Tata Consultancy Services (TCS) was born. The crown jewel not only of the Tata Group but of India as well.
The Indian IT boom had enormous growth in the last 2 decades which is specified during the period of the 2000s to the 2020s. Today, India has 3 gigantic organizations in IT viz., TCS, Wipro, and Infosys. These three companies are the flag bearers of the Indian IT services market in the recent few decades.
Rise of the Indian IT Ecosystem
The global IT spending of the Indian IT ecosystem (CAPEX) in the past 2 decades has witnessed a significant rise in the market share. According to the study, there had been a 2.5% share for the same in 2001 when compared to the tremendous 19.2% share in 2021. This includes 2 years of the global pandemic that accrued to huge losses in the Indian IT services market. The numbers would have been anywhere between 22%-25% with an optimistic outlook.
This has shown a lot of promise and potential by the foreign IT players and investors looking for diversification in the market. The YoY growth is quite positive when compared to most of the matured or saturated markets.
Quality Availability of Software Developers in India
The most important factor of all is the quantum and size of the most efficient developers with a highly cheap pay scale as per the global standards for MNCs to invest in India. The cost savings with the influx of the huge number of IT graduates that are readily available for foreign players is a huge capital gain in itself. The average salary in India for a software developer is around US$ 9500 while for the same qualification and experience it is US$ 266,000 in the US. This is almost nothing but 28% lower than the global average. In perspective, US$ 9,500 should be INR 750,000 when compared to INR 19,000,000.
The Indian IT service market size gets a huge boost over a period of time by having a skilled workforce for the companies to get absorbed. The state and the central government are set to benefit massively in economic terms. This on the other hand is a huge cost saving for the MNCs where efficient employees can be payrolled. This is the major reason that the Indian IT services market is quite lucrative for global players to start a shop and set up their global bases.
New-Age Tech Startups in India
India has witnessed a huge number of tech startups that are further growing at a significant pace in an ever-changing dynamic economy. The Indian IT services market is an industry that is absorbing talented and low-cost efficient candidates and is very important for the government and its scheme of things.
India has 65 unicorns and the total valuation is around US$ 288 billion. 44 unicorns out of the total are valued at around US$ 91 billion from the last year that is 2021. 4 unicorns valued at around US$ 4.7 billion are from 2022 itself. This data presents that India is leading the tech startup industry and is becoming the leading destination for global investment in the Indian IT sector.
- This shows an almost 66% of YoY growth in the unicorn tech startup ecosystem being added to the Indian IT sector, specifically after the year 2017.
- Changing government policies and formulating more suitable policies for the industry as a whole.
- SaaS is one vertical in the Indian IT sector that is looking quite promising for the future.
The future of the IT sector is not only looking promising but is ripe for significant investments and growth trajectory. The government in India with its go digital push, and a new impetus and outlook for the sector are what is lucrative for the global and domestic players. Indian IT players are looking to spread their wings into more mature markets with their pool of talent, diversity, and work ethic.
On the other hand, global tech companies do not want to miss the fastest-growing market (India) and the fastest-growing region (APAC) to increase their probability.
The demographic dividend in sheer economic terms and the magnitude of which India possesses at present is unparalleled and should be capitalized by both the Indian and the global players.
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Co-founder and Director at RationalStat
Ujjwal is a thought leader and recognized expert in the market research and consulting field. He is the co-founder at RationalStat, a leading global market research & procurement intelligence firm with 10+ years of industry expertise.