Indian Electronics and IT Industry Production Profile: 2005

Led by gradual economic recovery and a positive outlook for corporate earnings, worldwide IT-ITES spending witnessed steady growth in 2005. Outsourcing continued to be the primary growth engine with global delivery forming an integral part of the strategies adopted by customers as well as service providers.

Global sourcing is now a key element of corporate boardroom agency. The Indian IT-enabled and Business Services (ITES-BPO) have demonstrated superiority, sustained cost advantage and fundamentally-powered value proposition in ITES. Indian companies are expanding their service offerings, enabling customers to deepen their offshore engagements; the shift from low-end business processes to higher-value, knowledge-based processes is having a positive impact on the overall industry growth.

The software and ITES exports from India grew from US$ 12.9 billion in the year 2003-04 to US$ 17.7 billion in 2004-05. It is estimated that total software and ITES exports from India will exceed US$ 23.4 billion during the year 2005-06. Software and services exports are estimated to grow at 32 per cent in dollar terms during the year 2005-06. The ITES-BPO industry is likely to grow by about 37% in 2005-06 to reach US$ 6.3 billion.

Strong demand over the past few years has placed India amongst the fastest-growing IT markets in the Asia-Pacific region. The Indian software and ITES industry has grown at a CAGR of 28 per cent during the last 5 years. The industry's contribution to the national GDP has risen from 1.2 per cent during the year 1999-2000 to a projected 4.8 per cent during 2005-06.

Recognising the advantages of multi-country service delivery capabilities to better manage evolving customer requirements and execute end-to-end delivery of some new services, Indian companies are enhancing their global service delivery capabilities through a combination of green-field initiatives, cross-border M&A, partnerships and alliances with local players. Global software product giants such as Microsoft, Oracle, SAP, etc., have established their captive development centres in India .

India 's record on information security ranks better than most locations. The authorities in India are maintaining a keen emphasis on further strengthening the information security environment in the country. Specific initiatives underway include enhancing the legal framework through proposed amendments to the IT Act 2000 – currently under review by the Government – increasing interaction between industry players and enforcement agencies to help create greater awareness about information security issues and facilitate mutual support as and when required.

Today, a majority of the companies in India have already aligned their internal processes and practices to international standards such as ISO, CMM, Six Sigma, etc., which has helped establish India as a credible sourcing destination. As of December 2005, over 400 Indian companies had acquired quality certifications with 82 companies certified at SEI CMM Level 5 – higher than any other country in the world.

The total number of IT and ITES-BPO professionals employed in India is estimated to have grown from 284,000 in 1999-2000 to 1,287,000 in 2005-06, growing by over 230,000 in the last year alone. In addition, Indian IT-ITES is estimated to have helped create an additional 3 million job opportunities through indirect and induced employment. Indirect employment includes expenditure on vendors including telecom, power, construction, facility management, IT transportation, catering and other services.

Electronics Production (Financial Year)

(Rs. Crore)