Imagine two persons talking about the growth rate of India! Can they discuss it without the role of Information Technology (IT) and Information Technology Enabled Services (ITES) in Indian Economy? Now, think about another situation. Two persons are talking about the growth rate of India and the year is 1985. So, what do you think, would they be talking about the role of IT/ITES in Indian Economy? I don’t think so. Twenty five years back, no one would have dreamt of India as a major IT exporter. The nation lacking food & money would be a big player in computer sector. Today, it is one of the fastest growing nations and IT/ITES sector is busy writing the success story of India.
Today, India’s GDP is growing at a massive rate of 8.9% (estimated FY2010-11). It is expected that the share of IT/ITES industry in this GDP will be 6.1% as against 1.2% of 1998. For the past 10 years, GDP of India has grown on an average 6-7% every year. If a sector’s share in this growing GDP has increased from 1.2% to 6.1%, what could be the growth rate of that sector? Revenue of IT/ITES of India for FY2010 is expected to be 71.3 billion USD compared to merely around 6 billion USD in 2000. The growth in number of employees here for the past ten years has been 26%, making it largest employer in the organized private sector. Currently, direct employment by this sector is 2.3 million. Out of total Indian exports, 26% is the share of this sector for FY2010 as compared to 4 % in 1998. These are some figures which tell the story of storming by IT/ITES industry for the past ten years.
Indian economy has gained a lot from the development of IT/ITES sector. Research shows that out of every 1 job created in this sector, indirectly 4 additional jobs were created, 75% is for those who are SSC/HSC or less qualified, 15.85bn spent by this sector in the domestic economy in the FY2006, generated an additional output of 15.5 billion.
The development of this sector has not limited itself to Tier-I cities like Bengaluru, Chennai, Hyderabad or NCR. It is going deep into Tier-II or III cities. An example is Bhubaneswar, a Tier-III city where all 4 major Indian IT companies: Infosys, Satyam, TCS and Wipro are present. In 2006-07, Orissa’s exports has raised by 60% over 2005-06. To promote this sector, SEZs are being built around with improvement in roads, retail, entertainment and housing facilities. The ratio of employees – technical to non-technical is 80:20, 4% come from economically backward class, while 58% of total employment is from Tier-II/III cities, and 30 % are in the age group of 18-25 yrs. These data show how this sector is penetrating the national economy and enhancing it right from the root.
India was known for exporting low technology oriented products of low quality. Now, to compete in the global market, IT/ITES companies have adopted high quality standards. This in turn affects other sectors too. In the process, not just India’s IT product is becoming a quality brand. But, overall ‘Made in India’ is getting quality brand recognition. Listing of Indian IT/ITES companies in various global stock exchanges, which requires abiding by strict global accounting norms, has helped build a strong image of companies and sector outside India. Indian IT/ITES industry is taking a key role in different acquisitions and mergers of overseas companies. This sector had highest share, 23% in outbound M&A deals in FY2006.
Till the advent of IT/ITES industry, Indian corporate consisted of only 2 types of companies-either large family owned business or multi-national companies. First generation entrepreneurs were hard to find. Now, the funds are enormous to support them. Their success has given confidence to other middle class individuals to exploit their chance of success. In the process many new first generation billionaires have come up. Some IT/ITES companies adopted the practice of Employees Stock Option Plan (ESOP), which enabled them to share their wealth with the employees to get more effort-based efficient work. Later, other companies too adopted this practice. Thereby, this process created many salaried employees.
ROLE OF IT/ITES
Direct contributions:
• Growing share of the country’s GDP.
• Boosting the foreign exchange reserve of India.
• Employment generation.
Indirect contributions:
• Additional employment generation.
• Driving growth of other sectors of the economy.
• Encouraging balanced regional development.
• Fuelling the growth of PE/VC funding.
• Improving the product/service quality level.
• Spurring 1st generation entrepreneurship.
• Front runner in practicing good corporate governance.
• Boosting the image of India in the global market.
Diversity in employment
• Encouraging employment of differently-abled: 60% of the employees.
• Opening opportunities for non-technical personnel.
• Creating employment opportunities in smaller towns/cities: 33% to 50% employees.
• Promoting women: over 30% and youth employment.
• Creating opportunities for the ‘out-of-the-main-stream’ candidates.
Initiatives for HRD:
• Training of workforce through collaboration with educational institutes.
• Promoting higher education through scholarships and tie-ups with educational institutes.
• Improving work environment by providing recreational facilities and work-life balance.
Socially relevant products and services:
• Education
• Employability and entrepreneurship
• Health
• Bridging the digital divide
Conclusion
The IT/ITES industry has made a beginning and with the encouragement and support of NASSCOM and NASSCOM Foundation, it is on track to set an example that would encourage others to emulate and help changing the face of India. It is apt to conclude with a remark made by Nobel Laureate Dr. Amartya Sen, about the Indian IT/ITES industry, during his key note address at the NASSCOM India Leadership Summit 2007 –
My point is not that the IT industry should do something for the country at large, for that it does anyway. It makes enormous contributions; it generates significant incomes for many Indians; it has encouraged attention to technical excellence as a general requirement across the board; it has established exacting standards of economic success in the country; it has encouraged many bright students to go technical rather than merely contemplative; and it has inspired Indian industrialists to face the world economy as a potentially big participant, not a tiny little bit-player. My point rather, is that it can do even more, indeed in some ways, much more. This is partly because the reach of information is so wide and all-inclusive, but also because the prosperity and commanding stature of the IT leaders and activists give them voice, power and ability to help the direction of Indian economic and social development.
I only want to know if ITES and IT can sustain the growth in a long run..I am an ITES employee and was lucky to get in this sector, but now the salary is stagnant and workload has increased. On the other hand, the govt has increased the salary 5 times in 6th pay commission and in the next 20 years there will be at least two more increase and from the past experience we can get that will be huge increase..but I do not find how this sector will deal with salary increase as still “cost cutting” is the major factor we are doing the job. Before 6th pay commission, a 10th pass in Army had a salary of 6000, but now it is 20000.. When govt increases salary, they do not increase workload or target, but in this sector, it is based on target, but at the end we have only 24 hrs, we cannot work more than that. Please give the solution as how they are going to deal with salary as the years go by.
Look Sandeep, frankly speaking job in IT sector is a job of a researcher or officer. More and more experience means more technical expertise, means better salary. ITES job is job of a clerk. Not much technical knowledge required. Initially some bench-marked knowledge is required. Stereotype jobs. Just like a school teacher. Once you know your job, whatever experience you accrue. It will not result in much increase in salary. Just inflationary growth in salary could be seen.
If you are in ITES try to find better option and switch the sector. Or else, go for MBA course or other such options.
Hi Abhishek, Thanks for replying me back. But that is the point, I want to share.
A school teacher teaching in a private school (not just govt.) will have salary increased as years go by simply because school will increase the fee.
An employee working in a private firm or an auto driver, any one will have their income increased as they will also increase the product price and auto fare as time goes by.
This is not applicable for ITES because we totally depend on businessmen of other countries who are always asking for cost cutting. Now, when Rupee is 59 vs Dollar..and Indian ITES companies are making profit, still they are reluctant to give good hike because of uncertain future.
As per your suggestion, changing the sector means that ITES’ future is uncertain and talented graduates will not go for it and only average will work for ITES in the future. So, it will come down to the same 1985.