Stats and Insights of Indian IT and Software Industry in 2019

FY19: Indian IT and Software Industry 5 min.   |   13th Feb., '19

History of IT and Software Industry in India

In existence since the 1960s, software potential rise with Personal Computers (PC) in 1970s and expanded its reach with the growing market for application, games and utility development, and in the 21st century with the rise of Software as a Service (SaaS) the software market is ever expanding. Today, Indian software companies are contributing to the growth of the Indian economy with a compounded growth of 60% each year offering IT services to more than 95 countries all around the globe.

India is an abundant house of technical manpower being home for the world's finest IT service provider companies from major cities of India such as - Bangalore, Delhi, Mumbai, Kolkata, Chennai, Pune, and Hyderabad. Today, India is the 3rd faster-growing market for software enterprise.

Overview of Indian IT and Software Industry

Technology has rapidly evolved for the past decade and so is the demand for Information Technology services and products leading to the industrial revolution in the Indian market. IT helped represent India as a big player in the global market is one of the finest growing economies in the world providing the high-end business solution and opening new export verticals.

Today, with 75% of global technological skilled profession India has become a global hub for the digital sourcing market and IT solutions.

IT and Software Services

IT Sector is broadly categorized into Software, IT Services, and Information Technology enabled services (ITeS) and IT Hardware segment.

I. Software

Software industry comprises of software products, engineering and R&D services serving Small, Medium and Large organization with simplified business solutions.

Software Products:

Infrastructure Software serving to connect the people with systems to efficiently execute business processes, such as Business Intelligence (BI) Tools, Security software, Application Development, Database Management Systems, IT Operations, Operating-System Software, etc.

Enterprise Software designed to solve business problems, such as Consumer Relationship Management (CRM), Human Resource Management (HRM), Enterprise Resource Planning (ERP), Supply Chain Management, Content Management System, Project Management System, etc.

Software Engineering (SE):

SE services deals in finding the application of engineering to the development of software products.

Research and Development (R&D):

R&D service concerns to creating new software product innovation targeting cost cutting, efficiency, strategies formulation, participation, etc.

II. IT Services

IT Services are oriented into two segments:

Project-Oriented Services:

Services catered towards clients requirement, onsite or offshore.

  • IT consulting focusing on advising organization toward the use of Information Technology (IT).
  • System Integrations to deploy various system according to the client's need, such as integration of the business process, database management, logistics, software or hardware, etc.
  • Software Testing to ensure the quality of the service following response testing, security testing, and load testing.
IT Outsourcing:

One organization serves another for the need for deploying or managing its IT architecture and systems.

Training and Support:

Services to install, configure and maintain hardware and software solutions into the client's system or to educate the process of the IT system.

III. IT-enabled Services (Web-enabled/Remote/Tele)

These services are delivered offshore using a means of software and internet transmissions covering the whole range of IT for refining productivity such as - Financial & Accounting, Human Resource, Knowledge Process Outsourcing, Business Process Outsourcing, etc.

Insights of Indian IT and Software Industry

The software industry has faced major disruption in traditional business modal with the introduction of digital transformation technologies like artificial intelligence, internet of things (IoT), cloud computing, big data and so forth. However, the Indian IT industry scaling up to the value chain offering more end-to-end solutions, digital revenues and government's scheme like Make in India, Start-Up India, and Digital India.

The digitally skilled manpower is also increasing rapidly with wage level being lower than most countries resulting in the unmatched value proposition. The highly qualified pool of technical manpower, government's initiative, and digital technologies have shown a greater impact in the software market with a revenue of 5.8 billion US dollars in FY2018 [1].

Key Insights:

  • India has become one of the largest global outsourcing destination across the globe with a 55% market share.
  • IT industry contributes to 3rd ranking Foreign Direct Investment (FDI) share.
  • India has a 35% share in Business Process Management (BPM) share.
  • IT sector contributes to 7.7% to India's GDP.
  • India has more than 5000 startups with 1200 startups being added in 2018.

Characteristics of Indian IT and Software Industry

India is considered to be one of the major IT force in the global software market with advancement in education, government initiatives, investment opportunities, and skilled manpower charactering following:

  • Young and skilled IT Development manpower attributes to Indian software development growth.
  • Indian IT wages are lower as compared to other countries.
  • The quality of work form India is more robust and efficient as compared to others.
  • Indian education and global exposure contribute to a high-quality IT professional.
  • Software industries are backed by Government initiatives.
  • Academics and institute contributing to the research and development of IT.
  • Banking and financial services aiming toward new investment opportunities.

Threats to Indian IT and Software Industry

  • Increased demand for IT and Software causes a shortage of skilled professionals.
  • Increasing competition from other nations.
  • Over-dependency of Indian IT and Software industry on the USA (62%), UK (17%), Continental Europe (11%), Asia Pacific (8%) and 2% rest of the world.
  • India specializes in IT-enabled Services and losing its focus on IT and Software products.
  • Companies neglecting Engineering and R&D services.
  • Emphasizing too much on low-end ITeS services.
  • No focus on the hardware manufacturing sector.

Summary and Conclusion

  • India has become one of the topmost investment destinations in the IT industry.
  • Indian IT industry has grown five-fold in FY17-18.
  • Cost competitiveness is India’s USP in the global market.
  • India holds a 55% share as an outsourcing destination.
  • IT industry contributed more than 7.9% in Indian GDP in FY17-18.
  • India has more than 1000 deliveries center in about 200 cities and 80 countries for IT services.
  • Market Sector Breakup for FY18: IT Services ($86bn), BPM ($32bn), Software Products and Engineering services ($33bn) and Hardware ($15.40bn).
  • Indian IT Industry Market Size for FY18: Domestic ($41bn) and Export ($126bn).
  • IT industry contributes to 37% of venture investment and equity funds in India.
  • IT industry is expected to add another 100k job in FY19.
  • Indian IT industry is expected to grow up to US$350bn by 2025.


[1] Indian enterprise software market revenue from 2013 – 2018:


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