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Market Reports

IT and BPM Industry in India

Market Reports: IT and BPM Industry in India
1Overview: India’s IT and BPM Industry
2Quick Facts: IT and BPM Industry of India
3Information Technology (IT) Hubs in India
4Revenue Trend: IT and BPM Industry
5India: Thriving IT and BPM Export
6Megatrends: Impacting India’s IT & BPM Industry
7India’s IT & BPM Industry: Prominent Investments
8Team

Overview: India’s IT and BPM Industry

Robust Demand

  • IT-BPM industry growth is fueled by the increasing adoption of emerging technologies such as artificial intelligence (AI), machine learning (ML), blockchain, the Internet of Things (IoT), and big data analytics.
  • India’s IT and BPM sectors are expected to contribute around 10% of India’s GDP by 2025.

Attractive Opportunities

  • Increasing global demand for digital transformation services such as cloud computing, cybersecurity, and AI/ML solutions will be creating high demand for the IT-BPM industry.
  • According to NASSCOM (National Association of Software and Service Companies), the industry is anticipated to grow at a CAGR of around 8-10% till 2030.

Policy Support

  • Government initiatives like ‘Digital India’ promote digital literacy, infrastructure development, and ease of doing business. Digital India aims to connect rural areas with high-speed internet and has reached over 700,000 villages with broadband connectivity.
  • Tax incentives for IT exports and policies facilitating ease of setting up businesses and operations in India. Software Technology Parks of India (STPI) offer tax and other benefits

Competitive Advantage

  • Cost-effective labor presence in India compared to developed economies, offering competitive pricing for IT services. Indian IT firms can provide cost savings of up to 60% compared to their counterparts in developed countries.
  • Over 75% of Fortune 500 companies choose Indian IT firms for outsourcing due to their scalable and reliable service delivery. 

Quick Facts: IT and BPM Industry of India

  • According to the Ministry of Electronics and Information Technology, India’s IT-BPM industry (excluding e-commerce) reached INR 20.3 lakh crores at the end of FY 2023-2024, marking a significant milestone in the IT industry market.
  • India is the third largest and the fastest growing hub for technology startups.
  • In FY 2023-2024, India’s IT export revenue increased by 4% to over INR 16 lakh crores.
  • Domestic revenue of the IT sector stood at INR 4.3 lakh crores.
  • The IT-BPM industry of India has contributed around 7.5% of the country’s GDP.
  • In 2024, IT spending in India is projected to record a double-digit growth of 11.1%.
  • In FY 2023-2024, the total number of employees in India’s IT sector, including IT consulting, stood at 54 lakhs, with an addition of 60,000 people over the previous year.
  • Women employees account for 36% share of total industry employee base
  • India holds a 57% market share in the global services sourcing industry, making it the top sourcing destination in the world.
  • India acquired a share of around 38% in the overall BPM sourcing market.
  • Around 60% of firms use India for testing services.
  • IT and BPM sectors made up about 38% of India’s overall service exports.
  • In FY 2023-2024, export of IT services was the major contributor, accounting for more than 53% of total IT exports (including hardware).
  • During FY 2023-2024, BPM, engineering, and R&D (ER&D), and software product exports made up 22% and 25%, respectively, of all IT exports.
  • India is a very desirable destination for IT-BPM investments globally, accommodating more than 17,000 firms.
  • IT industry is fuelling the growth of start-ups in India with the presence of around 5,500 tech start-ups.
  • India has one of the lowest data costs in the world with average data costs of INR 10 per GB. India’s IT-BPM industry, including IT consulting, is one of the largest employers in the private sector, contributing significantly to India’s employment landscape.

Information Technology (IT) Hubs in India

Market Reports-Information Technology (IT) Hubs in India
  • Bengaluru, the fourth-biggest information technology (IT) hub globally and the largest in India, is a major center for startups-in India. Contributing over 30% of IT income, Bengaluru is widely known as the ‘Silicon Valley of India.’
  • Tidel Park in Chennai is one of the largest software parks in Asia, housing major Indian IT firms
  • Chennai contributes about 14% of the total goods produced by programming organizations in India
  • Gurugram is one of the fastest-growing IT regions. This area is one of the preferred options for IT companies because of its amenities and space
  • Kochi is home to Infopark, a 260-acre IT park filled with numerous multinational IT and ITeS enterprises

Revenue Trend: IT and BPM Industry

Market Report-Revenue Trend-IT-BPM industry
  • The revenue trend of India’s IT-BPM (Information Technology-Business Process Management) industry has shown robust growth over the past few decades, driven primarily by factors such as outsourcing, digital transformation, and global demand for IT services.
  • Total revenue of the Indian IT-BPM industry was valued at INR 15.3 lakh crores in 2019-20, and at the end of the 2023-24 financial year, the industry was valued at around 20.3 lakh crores.
  • India’s IT-BPM industry experienced a CAGR of 7.4% between 2019-2024
  • Indian IT firms, including those in IT consulting, expanded their global footprint, with major companies establishing offices and operations in various countries.
  • Services expanded beyond traditional software development to include IT consulting, system integration, and increasingly, BPM (Business Process Management) services.
  • Companies prominent focus is on emerging technologies like AI, blockchain, and IoT, which continue to shape service offerings and revenue streams.
  • Industry witnessed high growth rates annually, driven by increasing demand from the US, Europe, and other markets.
  • During this period, the industry primarily focused on software services exports, including software development, maintenance, and testing.
  • The IT industry market is expected to continue growing at a more moderate pace, driven by ongoing digital transformation initiatives globally.

India: Thriving IT and BPM Export

Market Report - IT BPS Exports By Country-2023
  • The Indian IT/ ITeS industry has a leading position globally and has been progressively contributing to the growth of exports and the creation of employment opportunities.
  • Indian IT/Software industry offers cost-effectiveness, great quality, high reliability, speedy deliveries, and, above all, the use of state-of-the-art technologies globally.
  • USA, UK, and Europe remain the major markets for India’s IT Consulting, IT software and services exports.
  • Demands from Asia Pacific (APAC), Latin America, and Middle East Asia are growing, and new opportunities are emerging for expanding in continental Europe, Japan, China, and Africa.
  • India’s exports include a wide range of IT services such as software development, maintenance, system integration, IT consulting, and outsourcing services like Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO).
  • Major Indian IT firms, often called “IT giants,” play a crucial role in driving these exports. Companies like TCS (Tata Consultancy Services), Infosys, Wipro, Infosys, HCL Technologies, and Tech Mahindra are among the top exporters.
  • The Indian government has historically supported the growth of the IT sector, including IT consulting, through policies encouraging exports, tax incentives, and investments in infrastructure.
  • India’s IT exports are increasingly focusing on emerging technologies such as artificial intelligence (AI), machine learning (ML), blockchain, Internet of Things (IoT), and cybersecurity, contributing to its competitiveness in the global market.

Megatrends: Impacting India's IT & BPM Industry

Rise of Global Capability Centers (GCCs)
  • GCCs are often focused on cutting-edge technologies such as AI, machine learning, blockchain, and cybersecurity, and IT consulting service.
  • Establishment of GCCs has significantly increased employment opportunities in India.
  • Provide IT consulting service, training and development programs.
  • Presence of GCCs contributes to the growth of local IT ecosystems by fostering partnerships with local vendors, startups, and service providers.
  • GCCs often focus on high-value services like strategic IT consulting service, advanced analytics, and specialized research.
Digital Transformation
  • Adoption of cloud computing
  • Emphasis on cybersecurity and data privacy
  • Integration of AI and machine learning
  • Expansion of IoT applications
Emergence of Industry 4.0
  • Automation of processes and operations
  • Implementation of robotic process automation (RPA)
  • Use of blockchain in supply chain and finance
Remote Work and Global Workforce
  • Shift towards remote and hybrid work models
  • Global sourcing of talent and distributed teams
  • Importance of collaboration tools and platforms
Regulatory and Compliance Challenges
  • Compliance with international data protection laws (e.g., GDPR)
  • Cybersecurity regulations and frameworks
  • Impact of geopolitical tensions on outsourcing

India’s IT & BPM Industry: Prominent Investments

  • In July 2024, Natural Environment Solutions Pvt. Ltd. (NES) announced it would be entering the Indian data center market with a 5 MW facility at Hinjewadi, Pune, Maharashtra. Additionally, the business intends to leverage India’s burgeoning digital infrastructure and regulatory backing for data center investments by scaling up to over 100 MW of data center capacity across the nation in the next three years.
  • In June 2024, Global tech consulting company Tech Mahindra announced the launch of Project Indus, its indigenous foundational model designed to converse in various Indic languages and dialects. The initial phase of the large language model (LLM) is created for the Hindi language and its more than 37 dialects to expand globally.
  • In June 2024, Persistent Systems established a long-term strategic partnership with Google Cloud for expanded reach across India and globally. The company intends to use Google Cloud’s Gemini models along with other cutting-edge Google technology to produce industry-specific solutions that would promote widespread adoption of GenAI. It will produce cutting-edge solutions specifically suited for the BFSI, communications, media and telecom, healthcare and life sciences, consumer tech, and hi-tech sectors.
  • In May 2024, India surpassed Singapore, Australia, South Korea, Japan, and Hong Kong to become the data center leader in the Asia-Pacific (excluding China), with 950 MW of installed capacity and an expected addition of another 850 MW by 2026.
  • In March 2024, The Cabinet approved an allocation of over INR 10, 300 crores for the India AI Mission, marking a significant step towards bolstering India’s AI ecosystem. Additionally, the Cabinet approved the INR 17,000 crore budgeted PLI Scheme – 2.0 for IT Hardware.
  • In Oct 2023, CapitaLand Investment Limited (CLI) commenced operations for phase 1 of International Tech Park Chennai. CLI has invested over INR 4,500–5,000 crores in Chennai and plans to invest over INR 3,000 crores over the next five years across a variety of asset classes, with a special focus on data centers, IT parks, and logistics.
  • In June 2023, UK’s one of the largest financial services company, Lloyds Banking Group (LBG) announced it would be setting up a technology center in Hyderabad. Lloyds Technology Centre will hire 600 highly skilled data, technology, and cyber specialists.
  • In June 2023, Bharti Airtel and Alphabet, the parent company of Google collaborated to pilot delivering high-speed internet services across India’s rural and remote regions via a new laser technology that uses light beams.
  • In May 2023, BAM Digital Realty, a joint venture between Brookfield Infrastructure and Digital Realty announced that it is planning to invest over INR 2,000 crore to develop a 35 MW IT load data center in Mumbai’s Chandivali locality. The joint platform has acquired 2.2 acres of land in the Mumbai suburb to build its second data center in India.

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