When the first satellite dish came trundling on a bullock-cart in 1985, to be installed at the offices of the newly established Indian operations of Texas Instruments in Bengaluru, only few would have bet that it would be the heralding of a revolution in India’s economic growth story.
The satellite dish not only helped the multinational company have a round-the-clock communication link with its US headquarters, but also showcased the potential of what could be done remotely using the then nascent but growing communication technologies.
While India being ahead of the main Western markets like the US, Canada and European markets by about 10-12 hours on the clock was initially seen as a handicap, the local IT industry converted that into an advantage by ‘follow the sun’ model.
For instance, as the US operations of multinationals ended their day, their Indian partners took up the baton to take the work further only to hand it back to their American counterparts the next day and this cycle repeated, thus vastly improving competitiveness, deliverable timelines and efficiencies. This, coupled with the abundant pool of technical talent available at low cost, powered the initial success of the Indian IT industry.
Driven by forces of globalisation in the late 1990s, the likes of GE, Citibank, Amex, British Airways and others set up either captives or started working with local IT service providers leading to the creation of the Indian IT outsourcing industry.
Ahead of the curve
The nimble Indian infotech companies never looked back, seizing opportunities for growth, though expectedly there have been periods of severe challenges and downturns. In the just concluded FY22, the Indian IT sector, according to the National Association of Software and Services Companies (Nasscom), generated a total revenue of $227 billion, including $178 billion of exports.
More importantly, the IT services and Business Process Management (BPM) industry have created five million, high-paying, white-collar jobs. Not only has it ensured broad-based growth, the sector also has been a beacon of inclusion and diversity. Of the five million people employed, nearly two million are women, making it one of the most progressive sectors in ensuring equal opportunity for employment, irrespective of gender, caste, region or religion.
Indian IT companies adapted to changes in the fast-evolving technology landscapes. While the Y2K work at the turn of the millennia provided Indian IT a foot into the door of international markets, things were not always easy. The immediate aftermath of the dot-com bust in the early 2000s as well as the global economic meltdown post-2008, for a couple of years, slowed but could not stop the growth of Indian infotech enterprises.
Also, the Indian IT industry has managed to turn every adversity into opportunity. After the 2008 worldwide economic slowdown, Indian IT companies provided such compelling value that even more work shifted to them, as global companies looked to cut costs.
During the recent Covid-19, when vast swathes of even traditional industries were forced to digitise, as the physical movement of people and goods became a challenge, Indian IT again rose to the challenge. Even as their workforce was scattered and did jobs remotely, the sector ensured that the global economy kept moving and did not grind to a halt. Which is why FY22 was the best year for Indian IT in more than a decade where it grew by 15.5 per cent and added more than half a million jobs.
Just for perspective at the turn of millennia, Indian IT exports were a mere $8.5 billion against $178 billion last year. IT exports from India accounted for 51 per cent share of all services exports from the country. While comparisons might not be apt, for another view on the depth of Indian IT’s prowess, the country earned more from exporting IT services than say, Saudi Arabia did by exporting oil.
Shift and the road ahead
What has changed over the recent past is that from being mere order takers of global companies, Indian IT players have started becoming consultants and partners who work with enterprises to help shape the technological shift. Also, while initially, global players came here for the cost, they have stayed on for the compelling value that India and its technical talent provide. The sector needs to build on that.
However, being at the cutting edge also means that the workforce — existing and potential — needs to be reskilled and upskilled with the latest technologies. While software services and BPM have been a success story, there is huge potential in software products that Indian IT is yet to fully tap. Nasscom estimates that if the full potential is realised software products alone can contribute $100 billion from exports by 2030.
Newer growth opportunities around deep technologies like cloud, artificial intelligence, IoT, machine learning, cybersecurity and robotics could transform the next decade into a techade. With a thriving technology start-up landscape, India could witness the rise of its own next-gen SaaS players, hyper-scalers and specialised, niche technology enterprises which would help propel Indian IT towards a trillion-dollar opportunity.
As India aspires to be a $5-trillion economy and beyond, the IT industry can play a key role in ensuring that the country is able to realise its dream of being an economic super power even as it generates high-paying white-collar employment, thus helping retain some of the best talent in the country.