IDR : VOL. 10, NO. 1, ( JANUARY-JUNE, 2012) : 19-34 ISSN : 0972-9437 SOFTWARE INDUSTRY IN INDIA Pramod Jugale * INTRODUCTION Software industry started its operation during mid-70. The rise of software industry over the 1990s represents most spectacular achievement for the Indian Economy. The industry has grown at an incredible rate of 54 per cent per annum; the net result has been that the ratio of gross ICT sector output to GDP rose from 0.38 per cent to 5.4 per cent during the period 1990-91 to 2006-07. Software industry encompasses all the activities and businesses involved with development, maintenance and distribution of computer software. Software industry also covers the activities like software servicing, training and consultancy. The sector had revenues of $101 billion in the year 2008-09, employed 2.8 million people, contributed 7.5% to India s gross domestic product and has up to 25% of the share of total exports. The sector does business in 70 countries and employs 40,000 non Indians. The 4C s (customer, cost, competition and change) are driving the software market. India retains its number one position as the world s leading sourcing location for IT-BPO services, despite the rise of several alternative sourcing locations, with a share of over 58 per cent in 2011. India-based resources are estimated to account for about 60-70 per cent of the offshore delivery capacities across the leading multinational IT-BPO players. The purpose of this paper is to identify the role and significance of the industry in India. The study of importance and prospectus of the software industry directs the education and employment policy in India. TYPES OF SOFTWARE Software development is broadly classified into custom developed software and packages or generic software products. Customized Software concentrates on a particular vertical market segments or domain areas, like retail, banking, and manufacturing. Some aspects of the software can be classified into; (a) packed applications, which are made for business purposes and are written for mass distribution, (b) Enterprise software are basically made for big corporations for their production or selling purposes, (c) System software are specially made for system * Software and Web Designer, Arth, H. No. 625, Sahayognagar, Vishrambag, Sangli 416415.
20 PRAMOD JUGALE (computer) related functions like; operation system software and (d) Other types of software includes utility software and application software etc. EMPLOYABILITY The Indian software industry continues to add jobs despite the threat of a slowdown during the beginning of the 21 st century. For the year 2012 IT industry revenues are set to grow at 16% but the number of people added is likely to grow only by 10%. Indian software exporters earn nearly 90% of their revenue from Europe and the U.S., which are faced with major economic challenges. The industry is estimated to close fiscal 2012 with an addition of around 230,000 jobs for the coming fiscal; the industry has already made about 100,000 jobs offers on campus. But revenues are growing faster than people added, indicating that the shift towards non-linearity in revenues is beginning to happen. The sector was hit hard through 2011 as clients delayed decisions because of economic problems, political turmoil and natural disasters. Industry is highly export oriented, has established India as an exporter of knowledge intensive services in the world, and has brought in a number of other spillover benefits such as creating employment and a new pool of entrepreneurship. Exports from the sector may grow 11-14% in the year that starts on April 2012 to $76 billion-$78 billion, compared with an estimated $68.7 billion this fiscal year, an increase of about 16% (National Association of Software and Services Companies). Table 1 Employment in IT-ITeS Industry Year/Item 2001-2002- 2003-2004- 2005-2006- 2007-2008- 02 03 04 05 06 07 08 09 IT Services & Exports 0.17 0.21 0.30 0.39 0.51 0.69 0.86 0.92 BPO Exports 0.11 0.18 0.22 0.32 0.42 0.55 0.70 0.79 Domestic Market 0.25 0.29 0.32 0.35 0.38 0.38 0.45 0.50 Total Employment 0.52 0.67 0.83 1.06 1.29 1.62 2.01 2.21 Source: Department of Information Technology, NASSCOM, http://www.mit.gov.in GROWTH OF SOFTWARE INDUSTRY IN INDIA The software is part of the IT sector. The IT sector includes software, hardware, peripherals, maintenance and networking. NASSCOM (Nov, 2011) describes three waves in Indian IT industry. The first two waves are in Indian IT services market and BPO focusing on cost arbitrage and off shoring; the third wave is the software industry. One of NASSCOM s initiatives which started eight years ago was the Product Enclave forum aiming at helping software product startups and entrepreneurs in the third wave become more successful. Today, more and more Indian entrepreneurs are availing networking opportunities and services offered by this forum to create an image for their products. India has a total of 2400 product development companies spread across Bengaluru, Mumbai, Pune, NCR, Hyderabad, Chennai, Pune and Kolkata out of which 55% of them are concentrated in Bengaluru and NCR region. According to NASSCOM reports, this industry today stands where Silicon Valley was in 1997-98. The industry
SOFTWARE INDUSTRY IN INDIA 21 has grown by 22% in the past five years. The interesting facts of the software industry in India are enumerated below; 1. India won recognition for its software writing skills in the late 1990s. 2. Cheaper salaries which are almost equal to one fifth of the salaries paid to US and European IT counterparts have helped outsourcing companies like Infosys, Tata Consultancy Services and Wipro. 3. The software industry in India was hit hard by the controversial fraud at Satyam Computers. 4. IBM employ s about 70,000 workers in India. 5. The IT industry accounts for 5 per cent of India s GDP. The main characteristics of the India software industry are as under; 1. Custom Business solutions 2. Collaborative Content Management 3. Internet Marketing 4. Web Branding Services 5. Database Migration services 6. Customization Services 7. Application Development 8. Outsourcing 9. ERP solutions 10. iphone Apps development 11. Collaborative Commerce 12. Programming Services 13. Quality assurance and testing services 14. Multimedia offering 15. Consulting Since India has a very big middle class of nearly 220 million families; of which around 88 million families belong to the upper middle class families. There are high expectations about the growth of software industry in India. These families are very interested in the computer related education. Besides, these families try to entertain the enterprising activities in IT sector. Internet has created a flat market for products and people do not look at where the product was developed anymore, but at what features it has and whether they suit their requirements. This is not the only driving a force in the industry, but is actually going to trigger more events in this space by opening up of Indian domestic market particularly in Middle India; where it is estimated that nearly 300 million Indian users have become computer and mobile. The IT sector (NASSCOM) earns revenue from software, hardware, peripherals, maintenance and networking. Table 2 provides database regarding total revenue (Domestic + Export) earned by the IT companies India.
22 PRAMOD JUGALE Table 2 Growth of Indian IT Market Year Rs. Crores US $ Million As per centto GDP 1990-91 1215 243 0.38 1994-95 6345 2041 0.63 1997-98 18641 5021 1.22 1998-99 25307 6014 1.45 1999-00 36179 8357 1.87 2000-01 56592 12410 2.66 2001-02 65768 13783 2.87 2002-03 79337 16494 3.15 2005-06 104100 23600 4.95 2006-07 141800 31300 5.40 2007-08 2008-09 2009-10 2010-11 2011-12 101000 7.5 Source: NASSCOM, IT Industry in India: Strategic 2003 Review & IT India, and Annual Reports. According to Ministry of Communications and Information Technology, the year 2006-2007 witnessed a revalidation of the Indian Information Technology- Business Process Outsourcing (IT-BPO) growth story, driven by a maturing appreciation of India s role and growing importance in global services trade. Industry performance was marked by sustained double-digit revenue growth, steady expansion into newer service-lines and increased geographic penetration, and an unprecedented rise in investments by Multinational Corporations (MNCs) in spite of lingering concerns about gaps in talent and infrastructure impacting India s cost competitiveness. While the US and the UK remain the dominant markets for software and ITES exports, contributing to 67 per cent and 15 per cent of total exports respectively, firms are also keenly exploring new geographies for business development, and to strengthen their global delivery footprint. Banking, Financial Services and Insurance, and Technology (Hitech/ telecom) are the main verticals, accounting for nearly 60 per cent of the total; Manufacturing, Retail, Media, Utilities, Healthcare and Transportation follow-also growing rapidly. India offers a unique combination of attributes that have established it as the preferred offshore destination for IT-BPO. The visibly higher preference for India is driven by its unmatched superiority when measured across a range of parameters that determine the attractiveness of a sourcing location. The IT revenue earned during 1994-95 was of Rs. 6345 crores ($2041million), which has jumped to Rs. 1,41,800 crores ($31,300million) in 2006-07, as a proportion of GDP, it grows from 0.38 per cent to 5.4 per cent and annual average rate of growth in revenue records 54 per cent, which is a remarkable achievement indeed. The revenue during the year 2010-11 has grown to Rs crores, with the share of % in GDP.
SOFTWARE INDUSTRY IN INDIA 23 Figure 1: Share of Software Product Companies in India Source: ipott.com/softtrend/wp-content/uploads/12012/02/productdevgraph1.png. It is inferred that around 75% of the product companies in India are in digital, business and productivity software domain. India is the largest market for cell phones in the world, and therefore opportunities for software products in mobile space are larger as mobile phones are integrated into the business in India. About 64% of the digital companies are into marketplace and mobile area (NASSCOM, 2011). Considering the technological innovations in ICT demands from the clients form different segments is continuously growing. There is an increase in demand for software products in banking, healthcare, telecom, e-government and ERP. It is estimated that Unique Identification Numbers (UID) Project is the largest biometric project with revenues of $4 billion by 2015. UID could provide product developers the reach and access to several services that they earlier did not have (NASSCOM). The changing trends in technology like, Cloud Computing and Virtualization are acting as enablers of idea realization and creating space for cloud startups as they need lesser money as opposed to Software-as-aservice (Saas) model; which do have lucrative markets around the world. But such technology is not cost efficient in terms of initial investment. These factors affect the choices of entrepreneurs. Consequently, it acts as a driving force in product development. Emerging markets such as parts of Asia and Africa are witnessing very little Western competition and it is the right space for Indian companies to penetrate into as the market conditions are very similar to India and the innovations required to adapt to growing IT demands is similar. For instance in certain parts of emerging markets the infrastructure capabilities are comparable to India s and the means used in India to adapt can be replicated in these areas as well to integrate technology into business processes and everyday life. Companies such as Intel, Cisco Citrix, IBM and Microsoft are identifying the potential of current entrepreneurial growth. As a result initiatives are being rolled out into the market to tie-up with product entrepreneurs and to gain entry into new product markets or in assisting them to incubate their ideas.
24 PRAMOD JUGALE Product Connect is one such joint initiative between NASSCOM and Intel Corporation (Suma Reddy). The National Association of Software and Services Companies (NASSCOM) recently released the key performance findings of the Indian IT-BPO sector for FY2011-12. The emerging technologies and changing customer demands are promptly considered by the industry for re-inventing the business models for the universal clients. The findings are; (a) India s share in global sourcing is 58 per cent in 2011; it is up from 55 per cent in 2010. (b) Exports (excluding hardware) increased at USD 69 billion with growth of 16.3 per cent during the period as above. (c) Domestic (excluding hardware) market increased at Rs 918 billion with growth of 16.7 per cent. (d) Export revenues are expected to grow by 11-14 per cent in the first quarter of the year 2013 with the domestic growth by 13-16 per cent in the same period. The current year 2011-12 is characterised as a landmark in the collection of aggregate revenue for the Indian IT-BPO sector; which is estimated to cross USD 101 billion. The exports accounted for USD 69 billion, growing by 16.3 per cent over the last fiscal year. Despite challenges in the global market conditions, India has sustained its growth trajectory. Some of the growth factors include new business models, organization efficiencies, services around disruptive technologies such as cloud, mobility, analytics, social media, and flexible product portfolios and verticalized solutions. The export revenues are expected to grow by 11-14 per cent during the year 2013, while the domestic revenues will grow by 13-16 per cent. According to the NASSCOM s estimation, the IT-BPO sector continues to be one of the largest employers in the country directly employing 2.77 million professionals, with over 230,000 jobs being added in 2012. The industry impact shows the GDP share of 7.5%, mercantile exports to the tune of 26% as compared to last fiscal year, and the services revenue is expected to grow by 11% during the year 2011-12. The export of IT services is having a fastest growth at the rate of 19% with value of USD 40 billion. The BPO export is growing at 13% with value USD 16 billion. Similarly the engineering services and products are growing at the rate of 15% with a value of USD 13 billion. The growth of domestic market is faster than export market with growth rate of 16.7%. The NASSCOM claims that, the industry performance for 20111-12 demonstrated the sector s ability to innovate and deliver differently in order to maintain the growth trajectory. The Indian IT companies are investing in building platforms and productized solutions to drive future growth opportunities. More importantly, the industry is expanding into newer geographies and verticals where the growth is 1.4 time that in the mature markets. Emergence of a vibrant start-up product ecosystem creating solutions for India and the world also enhanced the product opportunity for India. It
SOFTWARE INDUSTRY IN INDIA 25 was further told that, Indian IT-BPO firms have matured from being service providers to strategic partners to their customers-highlighting their importance in enabling growth of customer businesses. Verticalisation, operational excellence and an expanding global delivery model were internal priorities for the industry in this year. The domestic market for the last couple of years has been growing faster than the exports sector and would continue to be a key thrust area for the industry. FUTURE OF THE INDUSTRY The NASSCOM Perspective 2020 report identifies the industry s long term certainties and opportunities arising from them. It has outlined specific measures that the industry, NASSCOM and the Government will need to realize the opportunities over the next 12 years for the industry. Several global mega-trends in economic, demographic, business, social and environmental are expected to create new opportunities for the industry by 2020, particularly in the areas like; 1. New verticals: Public sector, healthcare, media and utilities (which have adopted global sourcing only to a limited extent). 2. New customer segments: Small and medium businesses (SMBs). 3. New geographies: Greater outsourcing in BRIC, GCC, Japan and Rest of the World (ROW). The ICT driven solutions during the next decade for the sectors like; health, finance, education and public services are expected to grow. More than 50% of Indians do not have access to primary healthcare. IC Technology can deliver the healthcare facilities at half the cost as on today. More than 80% of Indian households do not have bank accounts. The bankable population in India is hardly not more than 39%. Technology can enable access to 220 million families, who belong to the lower to upper middle class in India. Like wise India faces a 3-fold shortage in teachers. Technology can address this through remote solutions. Simultaneously, more than 40-50% of public food distribution in India doesn t reach the targeted groups. Technology can ensure equity, justice and transparency in food security. These new opportunities will result in export revenues of USD 175 billion by 2020. On this background, the Indian domestic industry will experience significant growth and record a four-fold increase in revenues from USD 12 billion in 2008 to USD 50 billion by 2020. The NASSCOM s evolved landscape of 2020 presents the transformational opportunities for the Indian technology and business services industry. India will emerge as a top three global innovation hub with a focus on clinical research, mobile applications and energy efficiency/climate change solutions. Through innovative business models, this sector will also redefine its customer value proposition and capture growth from currently untapped markets. In addition, harnessing ICT based solutions will help drive inclusive growth by uplifting 30 million citizens each year. The impact on India economy is estimated to 6% of annual GDP growth and 28% of annual export of the industrial products. An
26 PRAMOD JUGALE employment opportunity to more than 30 million urban (direct and indirect) people is expected during the coming decade. Significant job opportunities are also available in rural and non-metro areas. Of which at least 50% of workforce will be women. The global career opportunities will also rise due to location independent models. Similarly the infrastructure growth is possible to 8-10 satellite townships around Tier-1 cities. CHALLENGES OF THE INDUSTRY There are four major challenges exist today, which includes employability, infrastructure, favourable policies and competition from other low cost countries. Low employability of existing talent with only 10-15% employable graduates in business services and 26% of employable engineers in technology services continues to be a major bottleneck. Infrastructure development is largely constrained to the nine cities, which contribute more than 95% of India s exports and development of tier 2/3 cities has not taken off in a planned manner. The lack of a supportive fiscal environment with a long-term policy framework is also leading to competition from other low-cost countries including China, Philippines and from Eastern Europe with potential erosion of the India opportunity. The industry has the potential to generate revenues of US$ 225 billion in 2020; a portion of this opportunity is at risk if continuing problems are not tackled soon (Noshir Kaka, Director, McKinsey & Company). Around 40% of previous priority initiatives, especially structural changes e.g. tertiary education reform, have not been implemented yet and employability remains low as a result. Other areas of public infrastructure and business environment also need a concerted effort to ensure that India s long-term opportunity. The industry in next decade should urge the stakeholders needs in an unprecedented manner. Success for the industry requires an action plan anchored on a five-fold vision. It is imperative that all the stakeholders work in close collaboration and drive swift and sustained reforms in all critical areas. (Ranjit Tinaikar, Partner, McKinsey & Company). FIVE FOLD VISION Build a pre-eminent innovation hub in India Increase the number of PhD holders to 200,000 by 2020 Allocate 2% of national budget for research Catalyzing growth beyond today s market Industry to focus on new geographies, verticals and capabilities Build the domestic market Trusted global destinations for professional services World class standard in governance and risk management Build urban infrastructure in 10-15 Tier II, III cities. Harnessing ICT for inclusive Create National Information Infrastructure Blueprint for IT enabled solutions for public services efficacy
SOFTWARE INDUSTRY IN INDIA 27 High caliber talent pool of over three million professionals Enhanced private participation in education Build specialized talent pool/global workforce. EXPORT OF SOFTWARE The Indian software exports, as is well known, have grown from less than $100 million before 1990 to over $5 billion in 2000. What is not well known is that revenue per person per year has grown from less than $20,000 to over $50,000 in most large companies in the last five years. This is not simply due to inflation. Though the industry is still focused on tapping the huge software services market, most of the big players have moved from lower value services to higher value services. One survey report by US Census Bureau reveals the fact that System software publishing earned total revenues of $31,497 $31,459 $31,842 for the year 2003, 2002 and 2001 respectively. The application software publishing earned a total of $38, 492 $37, 473 $37, 297 for the year 2003, 2002, and 2001 respectively.the Indian software and services industry has grown at a phenomenal compound annual rate of growth more than 50 per cent through the 1990s, from a modest revenue of US$195 million in 1989-90 to evolve into an over US$61.40 billion industry in 2006-07. Furthermore, the industry has earned 73.35 per cent of its revenue ($ 51.95bn) from exports. India offers a unique combination of attributes that have established it as the preferred offshore destination for IT- BPO. Over 2001-06, India s share in global sourcing is estimated to have grown from 62 per cent to 65 per cent for IT and 39 per cent to 45 per cent for BPO. China s enterprise software market is forecast to maintain its strong performance, with an estimated compound annual growth rate (CAGR) of 14.6 per cent from 2008 to 2013 the highest growth rate in the world, according to Gartner, Inc. By 2013, China s share of the software market in Asia/Pacific is expected to reach 30 per cent, representing US$9.4 billion in revenue or 3.3 per cent of total worldwide software market revenue. However, India has a long way to go before it can catch up with the developed countries. Table 1 provides information regarding the use of various instruments of IT in selected countries. Table 3 Communication & Information Status in Selected Countries (2002) Per 1,000 persons Country Radios Television Telephone Mobile Personal Internet Sets Land lines Telephone Computers Users USA 2117 938 646 488 659 551 UK 1445 950 591 841 406 423 France 450 632 569 647 347 314 Japan 956 785 558 637 382 449 Canada 1047 691 635 377 487 513 China 339 350 167 161 28 46 India 120 83 40 12 7 17 Source: World Development Indicators (2004) and Human Development Report (2004).
28 PRAMOD JUGALE From the above table it is clear that, Although IT is penetrating in India. It has not accessed the masses and is thus the preserve of only the rich and elite in Indian society. Therefore, India has to adopt IT revolution. BROAD COMPONENTS OF IT EXPORTS The IT market for 2006-07 reveals that software services exports account for Rs. 1,41,800 crores, i.e. 73 per cent of revenue. Besides this, domestic software services account for Rs. 37,800 crores, i.e. 27 per cent of revenue. Component wise IT export is shown in Figure 2. Figure 2: Component Wise Distribution of Indian IT Exports Source: Complied and computed from the data provided by NASSCOM, Strategic 2003 Review It is clear from the above figure that software services exports with hardware, peripherals and networking accounts 82 per cent of the total IT revenue. SHARE OF IT SOFTWARE EXPORTS IN TOTAL EXPORTS Table 4 provides information about the share of IT software exports in total Indian exports. There is five fold jump in the export from 1997-98 onwards. Table 4 Share of IT Software Export in Total Export Year IT Export Total Export 2 as % of 3 US $ Million (2) US $ Million(3) 1997-98 1759 35006 5.02 1998-99 2600 33219 7.83 1999-00 3962 36822 10.76 2000-01 6217 44560 13.95 2001-02 7647 44035 17.37 2002-03 9600 51720 18.56 2003-04 12200 63840 19.11 2004-05 17300 79250 21.83 Source: As of Table 3
SOFTWARE INDUSTRY IN INDIA 29 It may be noted that whereas IT exports (in dollar terms) accounted for 5 per cent of total Indian exports in 1997-98, its share increased to 14 per cent in 2000-01 and further shot up to 21.8 per cent in 2004-05. Obviously, IT exports have become a very significant revenue earning industry for India and if the same trend continues, this item may emerge as the most important foreign exchange earner for the Indian economy. DESTINATION OF SOFTWARE EXPORTS North America (USA & Canada) and Europe together account for 89 per cent of our IT software exports. Details regarding destination have illustrated in Figure 3. Figure 3: Destination of Software Exports Source: Complied and computed from the data provided by NASSCOM, Strategic 2003 Review More dependence on any particular country or region is not good for the sustainability of any industry. For example, On Jan. 23, 2004, the US Senate approved a legislation that prevents private companies doing subcontracting work for the government departments of treasury and transport from outsourcing to companies outside America, badly affected Indian IT industry. INCREASING INTERNATIONAL ORIENTATION OF INDIAN COMPANIES Indian software exporting companies themselves are sufficiently global in their outlook. As many as 212 Indian software companies have set up 509 overseas offices or subsidiaries; 266 of these 509 offices had been set up in North America, 122 in Europe, 59 in Asia (excluding India) 25 in Australia, 25 in Africa (NASSCOM 2000). Indian companies are working as Multinational Corporation in the global market. Some Indian companies have got themselves listed on American Stock Exchange.
30 PRAMOD JUGALE INTERNATIONAL QUALITY ACCREDITATIONS The process quality and expertise in service delivery has been a key factor driving India s sustained leadership in global IT market. Since, the inception of the industry in India, players within the country have been focusing on quality initiatives to align themselves with international standards. Over the years, the industry has built robust process and procedures to offer world class IT software and technology related services. Today, India-based centers (both Indian firms as well as MNC-owned captives) constitute the largest number of quality certifications achieved by any single country. As of December, 2006, over 440 Indian companies has acquired quality certification with 90 companies certified at SEI CMM level 5 higher than any other country in the world. DOMESTIC SOFTWARE MARKET Indian domestic software market is also picking-up showing definite signs of braking out of the trend of hardware linked growth with the contribution of software and services exceeding that of hardware for the first time in 2005-06. The total size of domestic market was expected to cross to Rs. 37,800 crores in 2006-07, a growth of 28 per cent over 2005-06. Table 5 Domestic Software Market in India Year/Item 2001-2002- 2003-2004- 2005-2006- 2007-2008- CAGR 02 03 04 05 06 07 08 09 IT Service 2.1 2.4 3.1 3.5 4.5 5.5 7.9 8.3 19.5 ITeS-BPO 0.1 0.2 0.3 0.6 0.9 1.1 1.6 1.9 44.5 Software Products, 0.4 0.4 0.4 0.7 1.3 1.6 2.2 2.2 23.7 Engineering Services Total IT-ITeS 2.6 3.0 3.8 4.8 6.7 8.2 11.7 12.4 22.2 Source: NASSCOM. The above table gives the data related to Domestic Revenue Trends in IT-ITES Industry in Indian Domestic market. Though the IT-BPO sector is export driven, the domestic market is also significant. The revenue from the domestic Software and services market is estimated to have grown from US $2.6 billion in 2001-02 to US $12.4 billion in 2008-09 a CAGR of about 22.2 per cent. Foreign IT firms are growing fastest in India (Business Standard, 13 Dec. 07) for many like IBM it s where they have the biggest staff (53,000) and are getting big returns ($ 2.8bn). Firms like Cisco are said to have crossed the billion-dollar mark ($4.2bn) in domestic sale in 2006-07 and a player like HP India, it is estimated has a turnover of $ 2.5 billion in India. As far as domestic firms are concern, Tata Consultancy Services (TCS) is the only player to come anywhere close, with its domestic turnover totaling a little over $600 million. The process quality and expertise in service delivery has been a key factor driving India s sustained leadership in global service delivery. Since the inception of the industry in India, players within the country have been focusing on quality
SOFTWARE INDUSTRY IN INDIA 31 initiatives, to align themselves with international standards. Over the years, the industry has built robust processes and procedures to offer world class IT software and technology related services. Today, India-based centres (both Indian firms as well as MNC-owned captives) constitute the largest number of quality certifications achieved by any single country. The Indian IT-BPO sector is committed to extending its unmatched reputation in quality, to information security and is working on a four-pronged programme to achieve this objective. This comprises: (a) Engaging key stakeholders (policy makers, industry players, enforcement agencies, etc.) to build a common understanding of the key issues relating to information security in the context of global service delivery; (b) Educating industry constituents about developments in information security policies and practices; (c) Enactment of policy reform required to ensure compliance; and (d) Addicting in the effective enforcement of policy frameworks by encouraging the practice of periodic security audits and certification, developing and maintaining an incident response database and facilitating greater cooperation with enforcement agencies. The country s nascent cloud computing market, a platform where software applications and related resources can be shared online, is expected to touch USD 1 billion in the next five years, says a survey. India s cloud computing market will be around USD 1 billion over the next five years, consulting firm Zinnov Management Consulting said in a report. Cloud computing, which is Internet-based, facilitates sharing of technological resources, software and digital information. The emerging field would function on a pay-per-use model, helping technology companies to bring down cost. The cloud computing platform is expected to mainly benefit enterprise SMB (small and medium business), SOHO (small office, home office) and consumer segments. A recent study, sponsored by IT infrastructure firm EMC, said that rising growth in the digital information space would create a significant market opportunity for both the cloud computing and storage. Digital information includes data, text and media elements. Going by EMC estimates, the storage market in India will be over USD 1 billion in the next five years. Digital information in India will grow from 40,000 petabytes to 2.3 million petabytes (one petabyte equals 1,000 terabytes) over the next decade (2010 to 2020), twice as fast as the worldwide rate (Economic Times, 10/09/10). Reducing India s software piracy rate is likely to create over $4.6 billion in new economic activity over the next four years in the country, global market research firm IDC and Business Software Alliance (BSA), business software products association has found in a recent study. According to the study, titled The Economic Benefits of Reducing Software Piracy, a reduction of 10% in software piracy rates from the current 65% over the next four years would create over 59,728 high-tech jobs, and close to $512
32 PRAMOD JUGALE million in new taxes by 2013. 76% of those benefits were expected to remain in the local economy. The same reduction over the next two years instead of four would boost the economic activity and tax gains by a further 32%. India would then produce $6,132 million in new economic activity by 2013 instead of $4,662 million and generate $676 million in new tax revenues instead of $512 million, the report stated. This study clearly demonstrates that a slow pace in piracy reduction affects the overall economic growth of the IT industry in India, de-incentivises local product companies innovation efforts, undermines government s ability to collect legitimate taxes from legitimate software sales and fuels organised criminal activity linked with piracy, (India BSA Committee chairman Keshav S Dhakad). In terms of direct threats, it impacts users, including individuals, small and medium businesses, corporate and governments who face a serious threat to their PC security. The study (Dhakad,) which covered 42 countries globally, looked at 13 economies in Asia Pacific, including Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam. Globally, reducing software piracy by 10% over the next four years would produce $142 billion in new economic activity in the 42 countries studied, with more than 80 per cent accruing to local industries, the report added (The financial Express,08/10/10). GPU or a Graphics Processor Unit was first introduced by NVIDIA in 1999. It was since then that computer graphics emerged with a new meaning. GPUs are extensively used in Games, Visual effects in movies, 3D designs or modeling and high performance computing such as the petaflop supercomputers. The combination of CPU with GPU has resulted in increased efficiency, and many recent supercomputers are integrating these two to arrive at energy efficient designs which are climate friendly. According to the latest Green 500 list in November 2011, five of the top 10 energy efficient supercomputers belonged to IBM and employed the idea of using many low-powered processors like IBM BlueGene/Q or using energy efficient accelerators such as NVIDIA GPUs complemented with CPUs from Intel and AMD. It has been found that supercomputers employing GPUs for acceleration have shown significant increase in efficiency. The overall idea of integrating GPU with CPU to arrive at a heterogeneous supercomputer is that, parallel GPUs can be used for performing graphics and data intensive bits of programming while CPUs can be used for sequential bits of programming. According to NVIDIA s recent reports, 5 of the top 10 world s most efficient systems and 22 of the top 30 efficient systems combine GPUs with CPU. According to December 2011 reports from Indian Institute of Science, Bangalore the fastest in India is EKA created by Computational Research Laboratories, Pune and can go up to (RPeak value) 172.60 TeraFlops. Reports from Centre for Development of Advanced Computing or CDAC in July 2009 indicated that they were building a new high-speed PARAM which is likely to break the 1 PetaFlop barriers in 2012.
SOFTWARE INDUSTRY IN INDIA 33 According to IDC, Indian HPC market is estimated to be around $200 million and is growing at an annual rate of 10%. As researchers are realizing the ease of cutting cost, increasing efficiency and performance by adopting hybrid computing there is a massive potential for growth in this area. Increasing awareness about GPU s in the market could result in massive changes in underlying hardware designs which could be a source of opportunities for 3D Games and Apps, Chip design, System software and Client-server product companies (Suma Reddy). CONCLUSION Growth of ICT industry is one of the most spectacular achievements for the Indian economy. The Indian ICT industry has grown at a phenomenal compound annual rate of growth more than 50 per cent through the 1990s. Furthermore, the industry has earned 73.35 per cent of its revenue from exports. However, India has a long way to go before it can catch up with the developed countries. Indian software services exports with hardware, peripherals and networking accounts 82 per cent of the total IT revenue. IT exports accounted for 5 per cent of total Indian exports in 1997-98, its share increased to 21.8 per cent in 2004-05. Obviously, IT exports have become very significant for India and may emerge as the most important foreign exchange earner for the Indian economy. North America and Europe together account for 89 per cent of our IT software exports. Indian software exporting companies themselves are sufficiently global in their outlook. India-based centers constitute the largest number of quality certifications achieved by any single country. The total number of IT and ITES-BPO professionals employed in India is 16, 30,000 in 2005-06, growing by over 3, 40,000 in the last year alone. Foreign IT firms are growing fastest in India for many like IBM it s where they have the biggest staff (53,000) and are getting big returns ($ 2.8bn). Firms like Cisco are said to have crossed the billion-dollar mark ($4.2bn) in domestic sale in 2006-07. As far as domestic firms are concern, Tata Consultancy Services (TCS) is the only player to come anywhere close, with its domestic turnover totaling a little over $600 million. The industry has demonstrated its continued resilience and ability to transform itself. With strong fundamentals and need for technology adoption across the globe, we are confident on the continued growth prospects for the sector. The Indian IT industry is in the midst of unprecedented times because of the current economic environment. India expects the next few quarters to be extremely challenging with companies doing everything required to effectively overcome the challenges. India s value proposition remains strong for sustained long term growth. Around 80% of the incremental revenue growth by 2020 will be driven by opportunities outside of the current core markets, verticals and customer segments and the industry needs to redefine its value proposition to capture these.
34 PRAMOD JUGALE Business Standard, 13 & 18 Dec. 2007 References Govt. of India, Department of IT, Ministry of ICT, Annual Report 2006-07 Govt. of India, Department of Telecommunication, Ministry of ICT, Annual Report 2006-07. Joseph, K. J. and K. N. Harilal (2001), Structure and Growth of India s IT Exports: Implications of an Export-Oriented Growth Strategy, Economic and Political Weekly, 36 (34), 3263-70 NASSCOM (National Association of Software and Service Companies), 2000, The IT Software and Service Industry in India: Strategic Review 2000, New Delhi. NASSCOM (2003), IT Industry in India: Strategic Review 2003, New Delhi. NASSCOM-BCG, Innovation Report 2007, New Delhi. Saith A & Vijayabaskar M. (2005), ICT and Indian Economic Development: Economy, Work, Regulation (ed), SAGE Publication, New Delhi. Telecom Regulatory Authority of India, Annual Report 2005-06 Websites www.mit.gov.in www.nascom.org www.dotindia.com www.itu.int