In the beginning itself let it be clear that scope
of the study is to find out mainly the net foreign exchange earnings on account
of Information Technology Sector and to address the concern that technical
manpower getting more and more deployed to software and associated services
even at the cost of the bright students not available even for research and
development activities in other core areas.
Though study has focused on traditional software
services as usually covered by Nasscom or other IT departments of Government
but Imports and Exports of converging fields like Telecom, Media, Entertainment
and Strategic Electronics have also been covered in this report. Such coverage
help to indicate balanced net foreign exchange earnings. These converging areas
are referred in the report, as Hardware .It is so because all these imports
/exports are available as a physical quantity and also in the data bank of
Directorate General of Foreign Trade.
It is true that exports of IT services and IT
enabled services are growing and so the imports of hardware. And within IT
software and services, off shore exports are growing more than on
site jobs. Though rate
of foreign exchange earning over last few years not increasing significantly
the net foreign exchange earning on account of IT (software) exports has
been growing. This is because of the fact that off shore jobs are
growing and at the same time on site jobs are incurring lower
expenditure. But on the other hand, Software products have not been given
adequate attention in the country and its exports have not grown, even declined
last year. There is hardly any significant R&D effort in developing
Hardware products and their import contents are increasing over the years.
Here is a sample calculation to arrive net foreign
exchange earning for whole IT sector in the year 2002-03. This year saw imports
of 28,698 crores of Hardware as against exports of 46,100 crores of software.
Exports of Hardware were just 5600 crores as against of foreign exchange
outflow (import) for software services as 3372 crores. In one way net foreign
exchange earning for all converging IT sectors put together was just Rs. 19,718
crores in the year 2002-03 less than 40% of projected 46,100.
However,
the country becomes net importer in the coming years. As projected by MIT,
Government of India that total equipment and components requirements in the
hardware sector would be cumulative US $ 220 billion by year 2008. These requirements have been worked out on the basis of
very ambitious growth targets in terms of telephone density (5 times the
current level by 2008), PC penetration 10 times, TV penetration 3 times and
strategic and professional electronics 12 times the current production level.
On the basis of even most conservative level of 40% imports, one can safely
assume import bill to exceed US $ 88 billion by 2008! The 40 % import level may
become more as in the year 2005 India gets into ZERO duty regulation.
Considering these aspects, India will be net importer even on the basis of 50
billion-export target of IT services and ITES as projected by Nasscom.
As regards with
manpower diversion let us focus our attention for the time being to IT sector
only. IT sector needs lower skilled jobs for ITES (IT Enabled Services like
BPO, Call center, etc) where prime need is English speaking educated person.
Lower skilled jobs are also needed for the IT services and Hardware sector with
degree /diploma/certificate who can install, support, maintain Software
Applications/Networks /Hardware systems. They are also required in
manufacturing and commissioning Hardware. Higher skilled jobs are counted among
those who can study system requirements, prepare system requirement
specifications, design software products/applications/Networks; reengineer the
software applications, write codes, maintain Operating systems, RDBMS/ERP
packages, design chips, write embedded software, etc.
Growth of ITES
has created demand for lower skilled jobs. Ratio of jobs in software
development (IT Services) to ITES has been decreasing, as it is likely to be
1:1 by 2008 as compared to 6:1 in.1999. Hardware is also another source of
employing lower skilled jobs. Ratio of jobs in software development to Hardware
production and maintenance has been projected as 1:4 by 2008.
The situation
is so alarming that even within IT sector we are not able to retain higher
skilled persons Total strength of engineering graduates in IIT and IISc is about
12000 and Post Graduate review committee set by Govt of India found that here
is migration of non-IT technical manpower to IT streams to the extent of
80-90%. Further it is established about 20% of total manpower absorbed in the
country in IT sector has been migrating to abroad. All such IT professionals
acquire skills and training within the country. IT professionals
with higher skills are taken by MNCs for their Indian R&D centers. It
is all resulting in neglect of development of indigenous hardware and brand
equity in software products. The plight of other industries can be well
imagined! When it is difficult to retain manpower in the IT sector itself which
is paying much more in wages then how to ensure retaining talent for other
sectors need to be addresses by our planners. This issue gets more serious when
we realize that India is going to be net importer by 2008 in IT sector.
India has to
travel many miles before even aspiring to become IT super power. India’s
share in global market in 2002 was as
·
IT services – 3.0%,
·
ITES - 0.2%
·
Software products - 0.28%
These figures in 2008 are likely to grow to 9%, 2%
with no projections available for software products.
India has been able to sustain and grow in IT services because of availability
of quality knowledge workers. ITES is also growing because of availability of
large number of English speaking manpower. However in addition to manpower
requirements, growth of ITES and other off shore able works depend on the
availability of international standard infrastructure facilities. India has
still to go long way to offer these facilities at par with most of the
developed economics. Government policies and liberalization in the
telecommunication sector have been helping the cause. The competitive economics
like China and Philippines score much better marks on this account.
In view of
galloping import bill of Hardware and declining export of Software products
some hard decisions need to be taken by policy makers. Our suggestions in this
regard are as follows:
1.
Grading of tax incentives and sops within IT
segment.
2.
Income tax concessions under80 HHE to continue for
income on account of software products even beyond 2004-05
3.
Income Tax holiday under section 10A/10B to continue
for companies developing software products within free trade zones even beyond
2009-10
4.
Incentive and sops available presently to IT and IT
enabled services may be extended to companies manufacturing Hardware in free
zones if net foreign exchange earnings in that year are more than 60%.
5.
Incentives provided under EXIM policy of Government
should now onwards clearly distinguish between just export industries and net
export earning companies in IT sector.
The study
report has been organized in
four parts. Its coverage has been confined to traditional approach that is
Software and Systems. Export/Import figures of other segments of Converging IT are
available in the report but not discussed in details as presently these are
converging technologies and as the further developments take place we may cover them all in our next report!
Data collection has been confined to Internet sites; personal visits to Reserve
bank of India and Ministry of Commerce offices in New Delhi. A questionnaire
with interview guide was prepared and sent to four major IT companies that is
TCS, Infosys, Satyam and Wipro. A copy of the same has been enclosed in
Annexure –I. These companies by and large expressed unwillingness to discuss
the matter and advised us to contact NASSCOM to get information about them.
This study report has therefore made liberal references to NASSCOM material
“The IT Industry in India Strategic Review 2004” and further we take this
opportunity to express our sincere thanks to National Association of Software
& Services Companies (NASSCOM) for the excellent helping material.
First part
describes evolution of Information Technology in India .It also covers briefly
Government initiatives and incentives to get IT sector grow in the country. The
supply and demand pattern of the manpower in IT sector over many years has also
been covered. Employment potential of Hardware sector has also been touched.
Growth of IT in the
country in second part of the report covers imports and exports
of IT Sector, manpower planning to meet ever-growing demand of IT . It
describes as how net foreign exchange earnings have been increasing mainly on
account of growth of off shore delivery model. It tells as how demand of lower
skilled jobs is growing and where all higher skilled manpower is going. It also
has indirect reference to the fact that IT boom in the present form shall led
to growth of lower skilled jobs as compared to higher skilled jobs.
To assessment of the
export potential has been done by studying structure of growth of IT in the
country and covered in third part. It analysis the growth of on
shore and off shore models of delivery. It also analysis the growth of IT
services and IT enabled services along with emerging fields of software
products, R&D services and Embedded software. It covers the infrastructure
strengths in terms of capacity and cost within the country and as how it
compares with other economics. It also covers the issue of manpower from the
view of planning, quality and required skills .
Last chapter
sums up all the issues and address some of the concerns as given under terms of
reference of study.
1. INTRODUCTION
The beginning of IT revolution in India could be
traced back to early 1970s, when usage of Integrated circuits and
Semi-conductors commenced in large number in the sectors like
Telecommunication, Broadcasting and Defense. And multinational companies
like Texas, Fairchild and National exported
chips in large number to India. Since
then the Chip revolution better known as Micro electronics evolution made rapid
progress in indigenous R&D efforts in hardware applications as well as in
chip design and fabrication. Whereas
Continental Devices Ltd. in private sector and Bharat Electronics Ltd.(BEL),
Semi-conductors Ltd., in public sector were pioneers in chip making; Indian
Telephone Industries (ITI), BEL , ECIL, HAL were few among those companies who
successfully made use of Microelectronics in the development of hardware in
diverse applications.
Till mid 80s, all efforts were directed to make
Indian Hardware Industry self sufficient through indigenous R&D efforts and
also import substitutes so as to contain foreign exchange outflow. Departments and Ministries of Government
were mainly concerned with foreign exchange controls rather than the
promotional activities. IBM exited in 1977 from India though for a different
reason.
Software development efforts prior to 80ies were all
confined to dedicated scientific applications and to some extent in educational
institutions and private sector where software programmers were appointed to
develop customer specific applications.
The computer policy of 1984 explicitly outlined the
importance of software development and under took the institutional and policy
support. Almost at the same time,
liberalisation in telecom sector was
also initiated by taking a small but significant step to allow manufacturing of
EPABX in private sector. Imports of inputs
needed for software development were made more liberal. At the same time, the rapid growth in the
world demand for software pointed in general towards export potential. Considering these developments software
policy of 1986 identified software as a key sector of India’s potential exports
and set agenda for export promotion.
1.
Government Initiatives in IT
Export Promotion
·
1986 Software policy
It facilitated simplification of existing procedures, provided incentives like tax holidays, tax exemption on the income from software exports, export subsidies and duty free import of hardware and software.
·
STPs
Establishment of Software Technology Parks(STPs) took place in the first place at Pune, Bangalore and Bhubaneswar in August, October and December, 1990 respectively. In 1991, four more STPs were opened by DOE at Noida, Gandhinagar, Trivandrum and Hyderabad. As on date, 39 STPs are operating in the country.
A software Technology Park (STP) in all respects is
similar to a free trade zone exclusively
for the Computer Software. These
play a significant role in the export of software from the country. The infrastructure facilities made available
by Government in these STPs include
among many other things, modern computers and communication network, which are
probably beyond the reach of individual firms.
·
Export Processing Zones (EPZ)
Similar to STPs for software, Export Processing Zones(EPZ) offer incentives and sops to other sectors of IT like hardware manufacturing, etc. Besides EPZs, Government took initiatives to set up Special Economy Zones (SEZs) in April,2000 to provide a conductive and duty free environment for not only manufacturing but also trading activities related to exports. Domestic Tariff Areas (DTA) are normal industrial areas but additionally special Export Promotion Capital Goods (EPCG) scheme of the Ministry of Commerce is also applicable in these areas. A comparison of exports generated from these special zones has been compiled in Figure-1 (Ref:http://www.escindia.org/export_statistics.PDF)
·
RBI Incentives for Software Companies
Besides tax subsidies as mentioned in 1986 software policy and later modified from time to time under various Exim policies of Govt. of India, Reserve Bank of India (RBI), also offers foreign exchange control sops to IT sector.
·
Information Technology Act 2000
The act legalised the acceptance of electronic records and digital signatures in government offices and agencies. It provides a legal framework for electronic commerce transactions, electronic filing, maintenance of electronic records and electronic government transactions. Information in electronic form in India is considered valid and deemed legal effects.
·
Copy Right and IPR Laws for
Software in India
The Indian Copyright law protects the intellectual property of computers software. But there is no provision for software to be patented. This could be one of the reasons as to why IT companies in India fear to develop and market Software products.
·
Telecommunication
Initiatives
Telecommunications is one of the prime support services needed for rapid growth and modernization of various sectors of the economy. It has become especially important in recent years because of enormous growth of Information Technology (IT) and its significant impact on the rest of the economy. India is perceived to have a special comparative advantage in IT and in IT-enabled services. However, sustaining this advantage depends critically on high quality telecommunication infrastructure.
Indian Telegraph Act 1885 and Indian Wireless Act 1933 were among initial laws regulating operation of telecommunication services predominantly in Government sector till on set of liberalisation in 1993. Indian Telephone Industry (ITI) the first public sector industry of post independent India was opened in Bangalore in 1948 to manufacture telecom equipments for Indian P&T, Indian Railways and Defence.
In spite of long waiting list for even a basic
telephone and mounting import bills, first ray of liberalisation in telecom
sector had to wait till 1984, when Government allowed entry of private sector
to manufacture, install and operate EPABXs.
In 1991, service sector was opened up by licensing private operators for
services like mobile and paging communication. Growth of mobile communication
has been phenomenal as 2.2 crores connections were added just in 5 years
(May,1999 -January,2004) as compared to only 12 lakhs from 1993 till
April,1999. The Tele-density in rural areas is only 1.14 against 10.16 in the
urban areas (all India average as 4.4 telephones per 1000 as on 31st
march, 2002. Additionally, even viewed from the general accessibility point of
view about one-third of the total villages in the country are yet to be
connected by basic telecom facility. As per the NTP-1999, the Government was
committed to provide voice and low speed data services to all the remaining
villages by 2002.But it has not been achieved. A comparison of Tele-density and
its growth in India to other countries is given in Table-1. Telecom facilities
in the country mainly in metro and medium sized towns though improving to meet
international standards yet remains far from satisfactory levels in other parts
of the country.
As regards with data communication, Government in 1998 licensed and allowed Internet Service providers (ISPs) other than the state carriers and also allowed them to set up International gateways in 2000. International Long Distance (ILD) sector along with Internet telephony was also liberalised in 2002. Beside these initiatives, Telecom Regulatory Authority of India (TRAI) was set up which helped in smoothening many operational issues. The most important initiative of Government of late has been commissioning a project called National Internet Backbone (NIB) covering all the states. NIB intends to provide high – bandwidth domestic backbone infrastructure by linking 400 cities by 53000 km routes of fiber-optic network. Phase – I of the project, connects already 33 cities covering 17,000 routes kms and Phase – II completed in Sept. 2003, connects 150 cities by means of 36,000 kms of fiber. NIB is bound to reduce Internet bandwidth requirement as most of the Indian Internet traffic is bound to travel on this Backbone as more and more Internet Exchanges are being set up.
The formation of STPs and series of incentives offered and Regulatory Act, need to be seen as an attempt to attract more resources (both local and foreign) in the field of Information Technology as to increase India’s share in the fast growing software/IT export market., These policies have certainly helped F D I (Foreign Direct Investment) to grow rapidly in telecom sector as the same in this sector since 1993 has been estimated to come to India as US $3,355 million.
2.
Manpower Supply
It is true that Government initiatives and policy measures led to a substantial improvement in capital deployment and infrastructure facilities. However supply of right type of technical manpower in the areas of I.T remained a major concern to planners and policy makers for a long time
IT in general and software development in particular is a skilled intensive activity – the degree of intensity of skill varies. The skill required in preparing SRS, SDS, Coding and testing of a Software product/application shall be far higher than that of implementation, maintenance and operational activities.
It is believed that requirement of technical
manpower in the country was felt when civil/construction works were taken up in
the 19th century by the British. Opening of engineering colleges in
India to produce Civil Engineers was preferred over bringing manpower from
England.. Engineering colleges earlier had only three branches of engineering
namely Civil, Electrical and Mechanical.
Post independence industrial revolution in the country needed
continuously large number of technical manpower and therefore new engineering
colleges including five ITI’s the centres of technical education excellence
were opened. I.I.Sc., Bangalore was upgraded as to continue to produce quality
research work in Science & Technology.
Polytechnics and Industrial Training Institutes (ITIs) were also
opened in large number to provide technical manpower support to ever growing
demand of industries and various Govt./Public sectors
The advent of Micro electronics revolution brought a need for a new set of technical manpower which was met by technical institutes by offering seats specializing in fields of Computer Science/ Application, Electronics & Communication, Instrumentation, etc. On the other hand departure of IITs abroad in large number for greener pasture is well known even during 70’s and 80’s. Though departure of IIT engineers cut across all branches of engineering but percentage as high as 58% in the fields of computer science was reported during 1964-84. Migration of such engineers from other colleges and institutions must have also significant. This large scale of migration suggests though indirectly the availability of technical manpower with lower skills in the country more so in the areas of IT.
It is also true that till 1990’s the main source of IT professionals have been the public sector educational institutes like IITs, RECs, Polytechnics, IITs and the other engineering colleges. But then to meet ever growing demand many engineering colleges more so in South India were opened. Department of Electronics (DOE) started the accreditation scheme to meet certain objectives of IT Task Force set up by Government to tackle the manpower bottleneck. As a result a large number of private organisations were set up for providing training ranging from three weeks to one year or even more. These courses were directed mainly to product professionals required to design, develop, produce, commission, operate and maintain IT systems. However, mid 1990s brought the need of a different set of manpower to support IT enabled services (ITES). The medical transcript like activities need English speaking graduates. One has to therefore, understand the different set of skills required for ITES and that within IT itself.
In
pursuance of the challenges of meeting IT manpower demands in 21st
century and also in accordance with the desire of Prime Minister of India in the First National Conference of IT Ministers on 15th July, 2000, a ‘Task
Force on Human Resource Development (HRD)’ in Information Technology (IT)
was set up by HRD Ministry. Reference to the Task force recommendations shall
be freely made subsequently in this study report. Ref:(http://www.education.nic.in/htmlweb/pub.htm
The
recommendations emphasis on re engineering of the technical education and
training system of the country with focus on IT education The cost-effective
options with shorter gestation periods and improvement of critical
infrastructure for education and training like computer and networking facilities,
faculty, curriculum, courseware were also recommended. In exceptional cases,
support for very pressing physical infrastructure such as hostels, classrooms
and laboratories would be provided. Whereas a cautious approach proposed
for self-financing institutions, the premier institutions shall be encouraged
and facilitated to increase intake in IT / IT related programmes, introduce new
programmes and use new technologies for increasing their reach and enhancing
effectiveness through a networking approach. New ‘Institutes of Information
Technology’ have been opened under these recommendation.
A multi-pronged approach for increasing availability, improving
quality and retaining quality faculty in IT is proposed. These initiatives
would form the ‘IT Faculty Development Initiative’. A flexible and
modular approach in curriculum design to facilitate student mobility both
horizontally and vertically, developing a mechanism of equivalence of
programmes / courses, special emphasis for courseware in Indian languages and
for laboratory activities and web-based courseware has been proposed.
The Task Force also recommends immediate implementation of recommendations of the PG Review Committee for promotion of postgraduate education and research in all fields of engineering and particularly in IT/IT related areas. Continuous review of trends in IT manpower, both for the IT hard-core sector and IT enabled services is recommended. This would create public information on IT manpower so that the system can make periodic adjustments. Instead of following a gap filling approach between demand and supply, there shall be a thrust on producing surplus IT manpower at the higher end, so that the country is able to record even better rates of growth in software and services than has been hitherto been projected by the capturing of a larger share of the global markets.
Manpower demand in IT & ITES over the last few years has been steadily increasing. It has grown from a mere 56,000 in 1990 to 0.813 million in 2003 and expected to grow to 1.12 million in 2008.
(http://www.nasscom.org/download/it_industry.pdf)
It means further requirement of 5 lakhs manpower in next 5 years. A comparison of manpower demand in IT and ITES from 1999 to 2003 as given in Table-2 suggests that manpower demand in ITES sector has been growing at much faster rate just over 600% in just 5 years. Where as the demand in IT services has grown just at 235%, suggesting that jobs with lower skills are required more and more in the IT segment. Does it mean even more and more migration of higher skilled knowledge workers to foreign countries?
As regards with manpower supply, India seems to be placed comfortably. Accordingly to University Grant Commission (UGC) there were about 253 Universities and 13500 colleges at the end of March 2002 producing more than 2,460,000 graduates every year which includes 2,90,000 engineering degree holders and engineering diploma holders. However gaps have been noted in training and retaining of right type of skill in India
In
light of policy reforms and institutional support, IT has certainly grown in
last 15 years. The growth has no doubt been phenomenal in terms of
volumes. The convergence of many
diversified areas like Broadcasting, Entertainment, Instrumentation, Strategic
Electronics & Telecommunication under one umbrella of IT has been another
significant event. Our assessment however remains with the traditional segments
of IT. An overall picture of exports and imports of various converged areas as
given in Table-3 demonstrate the wide disparity in export earnings in IT
/Software sector to hardware sectors. Computer hardware sector export has even
shown negative growth of 17% during last year. Exports in other areas are not
at par with IT & ITES. Imports are growing
and net foreign exchange earned on these sectors is diminishing in spite of all
incentives available in special export zones created by Government. We
attempted to collect import data (from RBI and Ministry of Commerce) of the
converging IT fields as compared to export data as available in Table-3.The
data of all items which physically record able at entry points is available at
the site of Directorate of foreign trade as import/export data base. Ref: (http://dgft.delhi.nic.in/) Whereas RBI does not have item wise
information. We were however not able to get confirmation from DGFT/NIC about
our classification of codes in to the broad categories. Assuming our grouping
including less number of items and not including all the codes, the imports
shall be still higher than as reported in Table–4. Imports which were only 3721
Crores in 1997-98 has increased to 28,698 Crores in 2002-03. Comparative
figures of exports for the same years were about 746 crores and 5600 Crores.
Though imports of Hardware have increased by 25,000 crores the exports have
increased only by 4800 Crores. It is also worth to note the total turnover of
these items in the years 1997-98 and 2002-03 were about 12,507 and 36,056
crores. Import content of the Hardware items is increasing over the years, from
40% in the year 1997-98 to 80% in the year 2002-03.
Miscellaneous
income for software shown in RBI publication for balance of trade (Bulletin
Number 43) figures and as given below shows that about 10% of export earnings
(in foreign exchanges) is spent by IT companies on various accounts while
export figures of RBI almost match with NASSCOM figures. Expenditure shown
includes expenses by Indian companies in paying wages, allowances for onsite jobs;
expenses incurred in offices located outside India but excludes expenses on
account of traveling and business development. Foreign exchange remitted by
companies based in India on account of dividends, royalties are also included
under the same head. Separate account
details for foreign exchange expenses by Indian companies and foreign companies
(operating in India) are not available. It has however become amply clear that
FE expenses, which used to be about 50% of earnings in 1990ies have been coming
down and net FE earnings share being progressively increasing. This observation
is in line with the current trends of growing share of off shored jobs.
It
is further observed that FE expenses of 591,672 and 737 million US$ in the years 2000-01, 01-02, 02-03
respectively have not gone up incommensurate with the on site exports. It is
also in line with general observation that as global rates falling, IT
companies are paying less to their employees and saving other expenses for
onsite jobs.
Software Earnings and Expenses
All in US $ Millions (Source:RBI)
|
Year |
Earnings |
Expenses |
Net Earnings |
|
2000-01 |
6341 |
591 |
5750 |
|
2001-02 |
7556 |
672 |
6884 |
|
2002-03 |
9600 |
737 |
8863 |
All
in Indian Rupees Crores(RBI)
|
Year |
Earnings |
Expenses |
Net Earnings |
|
2000-01 |
29,014 |
2906 |
23,308 |
|
2001-02 |
36,036 |
3202 |
32,834 |
|
2002-03 |
46,417 |
3372 |
42,755 |
The
growth of IT & ITES from a meager export of 128 million US $ in 1990 to
staggering 12.2 billion US $ in 2004(E), i.e. 94 times sums up the success
story of IT sector of India. Let us
examine reasons for this outstanding performance and structure of the growth.
The phenomenal increase in the IT export growth has to be viewed, interalia,
in terms of the growing world demand, comparative advantage that India has on
account of the highly skilled, English speaking manpower at relatively low cost
and the time difference between US and India.
As
per IDC,. Worldwide IT services spending has been 350 US $ billion in 2002 and
projected as 454 US $ billion in 2007. US in general accounts for nearly 50% of
worldwide demands. Table-5 gives an over all region wise projections. India’s share in global market in the field
of IT in 1980ies was just less than 1%, quite dismissal. It got raised
to about 3% in 2002. Share has been
further planned to go to 9% by 2007-08. Even net foreign exchange earnings have
been increasing as a result of more and more off shored jobs coming to India.
Absolute export earnings has however to take into consideration the value in
term of Indian Rupees of incentives and other export sops being made available
by the Government. Foreign Exchange expenses by IT sector generally fall under
three categories. FE. is spent by Indian Companies on wages, remuneration to
its employees and other miscellaneous expenses for on-shore projects and offices. Secondly dividends and royalties sent abroad
by MNCs engaged in India in the business of either IT/ITES services or selling
software products like RDBMs, ERPs, CAD/CAM, e-business suites .
In
addition to world demand growth, availability of IT manpower at relatively low
cost as compared to prevailing cost elsewhere has even been also the important
consideration in growing export earnings. Indian knowledge worker availability
at cheaper rate is true from developed economics perspective. But the average
salary to an IT professional within the country has been much higher as to
prevailing wages & salaries in other sectors of Indian economy. Such a
situation has resulted in talents from other streams rushing to IT jobs. According to PG Committee findings, in case
of IITs more than 90% of non-IT graduates migrate to IT sector. The figures
from other institutions may also be more or less conforming to the same
percentage
(Ref:http://www.mit.gov.in/human.asp)
.
This
also has again led a situation of availability of second best for other
sectors. Does it also imply that though cream of students opt for IT streams
yet even the best left for other streams also finally get into IT sector?
It
is also worthwhile to analysis the jobs profiles of IT (or non-IT drawn into
IT) professionals. It has been seen that proportion of ITES in overall manpower
deployment has been ever growing.
Table-6 indicates that ratio of IT to ITES professionals has decreased
from about 6 times to 2.4 times in a period of 5 years. By the year 2008, this ratio is projected to
be just 1:1 as per Nasscom-Marketing Study and 1:2 as per MIT study. This comparison does not take into account
professionals engaged directly or indirectly in hardware sector. As per MIT study details given in Table-7,
hardware sector needs shall be about 4 times of ITES professionals in
2008. Without getting into the exact
numbers, it can be seen that for every one professional in IT, there shall be a
need of 1 person in ITES and 4 persons in Hardware sector. In one way, are we not saying that boom in IT
sector in the present form shall be generating more demand of IT professionals
in lower skilled jobs.
Further,
it is estimated that nearly 20,000 teachers in the formal tertiary education
sector with PG or research qualifications would be required. Assuming a very
realistic target of all secondary schools providing computer education by 2008,
requirement of teachers for school sector would be in the range of 100,000.
This would be largely fed by BCA and equivalent degree holders. It is expected
that there will be significant use of computers and Internet even at the
primary and pre-primary level by 2008. There would be additional teacher
requirement for the purpose.
Let us further examine even the job pattern in
the IT sector itself.
The
jobs performed in the IT sector can be segmented in the following manner:
1. System Analyst / Designers
2. Computer Programmer / Coders / Developers
3. Network Engineers
4. Hardware Maintenance Engineers
5. Data Base & System Managers / Administrators
6. Data center operation staff.
Above
classification covers the jobs performed as a web designer, e-mail / Internet
administrator, system integrators, etc.
We found it difficult to asses on macro level the percentage of
professionals in each of the categories as stated above but looking in annual
report of one of the major IT companies of India, those figures were
_____________.
It
is therefore safe to conclude that higher
skilled jobs available for every 10 IT professionals are not more than___. Or it
can be also said that IT boom has generated employment opportunities in IT
sector but mostly in lower skilled jobs in spite of the fact that best of our
technical manpower (even non IT) found reasons to get into IT sector. We shall
examine later as how this shall led or not led the country to stay focused in
the continuous export boom.
5. Structure
of Growth of I.T. Exports
Having
examined the growth of IT exports, net foreign exchange earnings and manpower
requirements, let us address the issue of structure of IT exports, manpower and
infrastructure required to sustain the IT export boom.
Nasscom
has classified the segments within IT & ITES in the following categories
.The classification is mainly for standard comparison of factors like growth,
export potential and employment opportunities. :
1. IT Consulting
2. System Integration
3. Custom Application Development &
Maintenance
4. Network Consulting & Integration
5. IT Training & Education
6. Hardware Support & installation
7. Packaged software support & installation
8. Processing Services
9. IS Outsourcing
10. Application Outsourcing
11. Network Infrastructure Management
12. IT Enabled Services
13. R & D Services
14. Product Development & Design
15. Embedded Software
Further
to reflect on the prospects of Indian IT exports., we shall examine the current
structure of Indian exports.
Out
of IT and ITES, later has been growing at much faster rate, roughly @54 to 59%
during last two years (Refer Table 2).
Exports of ITES are estimated at 3.54 billion US $ in 2004(E).and has
the potential to grow to 19 billion by 2008 US$. Whereas the
global market of 773 billion is estimated to grow to 1 trillion US $ by 2006,
Indian ITES share currently being just 0.2% may increase over to 2 % by 2008.
Looking
at the future prospects, continuing pressure on cost bases at a time of growing
competitiveness is driving foreign companies to look at offshore outsourcing as
a strategic alternative, much similar to 60ies and 70ies, when developed
economics shifted their manufacturing bases to the countries with cheaper
labour.
The
Indian IT enabled Services industry in the current past has passed through
three distinct phases. The first wave
saw the establishment of MNCs such as GE and American Express setting up large
centers in India. The second phase
witness the emergence of a number of VC backed third party vendors.
In
the third and current phase, a number of established software services
companies have ventured. List excluding
established Indian software companies but those of key foreign companies has been
listed in Table-8 However Indian ITES sector has also challenges up to their
hands to meet export targets. Some of
them could be like shirking profit margins, infrastructure challenges, ability
to quickly achieve scale and finally the most important the ability to move up
the value chain. Most of ITES activities
are done within Indian but hidden foreign exchange outflow on account of
Internet bandwidth apportion, foreign travels and business development expenses
in FE need to be also accounted.
The export potential of IT services has to be viewed from the ‘Delivery
Model’ being adopted. Besides delivery
mode, segmented efforts / exports have also to be examined. Trade in software is carried out mainly through
–
a. On-site services
b. Off-shore services &
c. Off-shore products and packages
On
site services popularly known in the industry as ‘body shopping’ occur when the
software manpower exported to assist users in their IT projects. The ‘exported’ manpower is engaged in
activities mainly implementing solutions and less skilled jobs like operation
& maintenance of data center(s). Under this mode of export, net foreign
exchange earned is much less as part of foreign exchange earned will have to be
spent on wages, remuneration and other expenses on software personnel working
abroad.
The
second mode of delivery is off shore where software is developed off shore and
exported to the users. However, even in the offshore model, limited visits of
software personnel abroad for study & gathering users requirements and on
site support in installation are included.
Other
mode of delivery is completely off-shore based solution. Products and software packages catering to
specific applications and system are developed at off-shore centers and then
exported as a total solution.
Customisation could again be taken up by users themselves or through
assistance from the developers.
The
share of the on-site services, which was as high as 61% of total IT exports in
1995, has been coming down over the years. It was just 41% in 2003. Off-shore growth is mainly due to increasing
share of ITES.
All values in Rs. ‘000 Crores
|
|
99-00 |
01-01 |
01-02 |
02-03 |
03-04(E) |
|
On
Site |
9.85 |
15.90 |
16.506 |
19.70 |
22.500 |
|
Off
Shore |
7.30 |
12.45 |
20.00 |
28.40 |
33.01 |
|
Total |
17.15 |
28.35 |
36.50 |
46.10 |
55.51 |
The
growing share of off-share development compared with on-site service is also
one of the reasons for declining growth rate of Indian software exports.
Off-share exports are characterized by lower turnover for the same efforts for
on-site but with higher profits. Lower bill rates and higher manpower expenses
make on site works less profitable.
Export earnings for on-site works shall still be lower if net foreign
exchange earnings are considered.
Let
us now focus on the structure of exports within IT services itself. Table-8
shows that, development & maintenance of customized application along with
application outsourcing constitute 88-89% of total export, though still it is
around 18% of global demand. This segment
has highest offshore able work, more than 85%, and Indian companies are
concentrating here to generate more profits.
The other significant sectors are R&D services,
Product Development and Embedded software.
A brief discussion about these segments along with list of key players
is given in Annexure-II. The Software products sector has the highest share of
world IT demand somewhere in the range of 200US$billion in 2002 and growing at
compound rate of 10% over last 4 years, with India’s share just being at 0.56
billion US$ or 0.28% .The matter of concern is that software products export has decreased
in 2002-03 from the previous year that
is 1500 crores to 600 crores(INR). The other higher skilled jobs performed in
IT sector in the country mainly in offshore model are development of Embedded
software and R&D services. This sector is crowded with MNCs making use of
Indian technical manpower to develop products for their parent companies. It is
satisfying to note that a few patents have been registered by these centers for
companies like Texas, Cisco, Intel, Adobe and Novell but unfortunately overall
rights still remain with the parent companies. These developments may be
bringing FDI to the country, more export earnings due to sell of these products
and services and creating further islands of higher wages but not helping the
cause of sustaining exports on long term basis. Till Indian companies are able
to develop brand equity in software products on global basis, lower end skilled
jobs shall continue to dominate IT sector.
A
number of Indian software and service companies have managed to make a niche
for them in the global packaged software market. They have done so in the face
of intense competition, by creating innovative and cost competitive solutions
that found ready customers across the globe. There has been a substantial
growth in the number of Indian companies in the software product development
space and as of now, there are approximately 300 companies in this pace. What
is needed to forge ahead in this area is focused attention by policy makers. A
broad policy framework is needed urgently.
For most of the IT enabled services, a high level
of IT literacy is not essential and short duration skill-based training is
being provided by the ‘IT Enabled Service Providers’ themselves. Therefore, it
is realized that IT education in future would be more as an enabler having
relevance in all fields of human activity. For this purpose, there is a need
for broad-basing IT education and integrating it at all level in education. For the IT enabled services,
non-formal sector itself has a capacity of 5 lakh as per Ministry of
Information Technology (MIT) estimates (growing at a rate of 20%). BCA, BIT
courses in recognised institutions, distance education programmes of open
universities and correspondence course institutes add another 60,000 per annum
(growing at 15%). All this together would add up to several times the actual
manpower requirement projected for the IT enabled services including teacher
requirement for the school sector.
It shall however remain to be
seen as how demand for higher skilled jobs grow within the country and how the
job position and VISA regulation in the countries abroad get changed over the
years. As per study conducted recently by Hewitt/ Nasscom, 13% PhDs/ M Techs/
MBAs/ CAs; 67% BE/ MCA; 2%; Diploma holders/ graduates were working in the
software sector in the country in 2002.A demand of 1,40,000 by 2008 has been
projected by Nasscom in higher skilled jobs of products development and
services.
In addition to national demand, there would be international demand in view of
intrinsic quality of Indian Software Professionals
and therefore premium attached to them.
However, notionally, we
could take it as 20% of the overall manpower requirements. The demand for
IT professionals from USA under HIB Visa has been increased to
around 2,00,000 from the present level of 1,14,000. Similarly Germany, UK,
Ireland, Japan are likely to permit immigration at a level between 20,000 to
30,000 per annum for IT professionals. IT being English-Intensive, we presently
enjoy an advantage due to our large English speaking population, but this may
soon be lost in view of concerted efforts by other nations like China to catch
on. Presently, many non-English speaking countries are forced to meet their
requirements only from their local markets because of the language barrier.
This offers immense opportunities in countries like – Japan, Germany, France
and Korea, which could be exploited, if we are able to bridge the language and
cultural gap. Software houses have recommended that this could be done
integrating training in language – cultural skills of potential countries in
our regular engineering programmes in the 3rd and 4th year by tying up
with the general university system and the foreign missions of those countries
here in India.
HRD
task force report recommended
that formal sector of education need strengthening of computing &
networking infrastructure, faculty development, curriculum and courseware
development, modernization/ digitisation of libraries etc., and asses an
investment of Rs. 2000 crores spread over next 6-7 years for IT education to
ensure adequate and quality IT manpower is available
It has further projected of
availability of about 10.60 Lakhs manpower by 2008 as given below. It has also
addressed the demand of various types of skills in IT jobs, all reproduced
below:
|
AVAILABILITY OF POST GRADUATES (INCLUDING MCA) |
2.63 LAKHS |
|
AVAILABILITY OF GRADUATES |
7.85 LAKHS |
|
IITs, IIITs, IISc |
0.12 LAKHS |
|
TOTAL AVAILABILITY (PG, MCA, UG) |
10.60 LAKHS |
ASSUMPTIONS:
1. 50% from Electronics and 30% from other Engineering Disciplines migrate to IT.
2. Increase in intake/new courses 35,000 seats added during 2000-2001
IT SKILLS IN DEMAND
Programmers/Engineers/Analysts/Computer
Scientists 41%
Internet & E-Commerce Applications 19%
(Web Developers/
Design)
Database Administrators/Developers 11%
Network Specialists/Developers
/Communication Engineers 14%
Digital Media & Technical Writing 05%
IT-Enabled Services 10%
(Ref:http://www.mit.gov.in/human.asp)
Above discussion is only to re emphasis the fact
that there should not be any concern as to worry about the number in immediate
future. However planning to make available right type of manpower in Products
development both in Hardware and software has to be ensured. That is the key
for sustainable IT growth.
Infrastructure is another
important segment identified with the growth of IT exports. It was not so
visible till offshore delivery model became more prominent.
The demand for Bandwidth is increasing to carry data
within the country as well as abroad. Present capacity of 16 Gigabits/sec seems
to be adequate for the present demand but average growth of about 150% every
year for next 4 years shall be a big task for Indian service providers.
Initiatives have however been taken to augment the capacity through submarine
cable route. Cable systems in existence are SEA, ME, WE II/III, Flag .It is
estimated that India will have a supply of 100 GB of International Bandwidth by
2008. Additionally National Backbone Network (NIB) along with setting up of
Internet Exchanges shall take care of bulk of Internet traffic remaining within
India itself which means less International Bandwidth requirements.
The other area of concern however in the data
communication is the cost and reliability of data links as compared to
international standards. The prices of international bandwidth in India has
declined over theyears.2 MBPS full circuit link cost has come down from
98000US$ to 62000 in one year. However the prevailing cost is still higher to
other competitive destinations like Philippines and China. It has also been reported (vide BPO:
Overcoming Bandwidth barriers published in Feb,2004 issue of Dataquest)
submarine cables land in India has linear threads and do not have self-healing
features. It results in BPO to design the network with 100% redundancy leading
to cost inflation. However entry of private companies like Bharati, Reliance
etc has recently led to signing agreements to increase capacity through better
cable systems like Network i2i, SAFE(South Africa Far East).
As ITES booms ahead, operators in metro cities come
across with limited supply of manpower and also with problems like commutating
and other familiar urban life blues. This led to opening of ITES facilities in
smaller towns. However future challenges lie in getting all the required
infrastructure of international standards
across all these cities.
5
Summing Up
Exports of IT services and IT enabled services are
growing and so the imports of hardware. Within IT software and services, off
shore exports are growing more than on site jobs. Net foreign exchange earning
on account of IT(software) exports has been growing because of less growth of
on site jobs coupled with lower expenditure in terms of foreign exchange.
Software products have not been given adequate attention in the country and
exports have not grown, even declined last year. There is any significant
R&D effort in developing Hardware products and their import contents are
increasing over the years. Year 2002-03 saw imports of 28,698 crores of
Hardware as against exports of 46,100 crores of software. Exports of Hardware
were just 5600 crores as against of foreign exchange outflow for software
services as 746 crores. In one way net foreign exchange earning for all
converging IT sectors put together was just Rs. 22,344 crores in the year
2002-03.
As
per projections of the MIT, total equipment and components requirements in the
hardware sector would be cumulative US $ 220 billion by year 2008. These requirements have been worked out
on the basis of very ambitious growth targets in terms of telephone density (5
times the current level by 2008), PC penetration 10 times, TV penetration 3
times and strategic and professional electronics 12 times the current
production level. On the basis of even most conservative level of 40% imports,
one can safely assume import bill to exceed US $ 88 billion by 2008! Can we
calculate net foreign exchange out flow in the year 2008 with 50 billion-export
target of IT sector?
Growth of ITES has created demand for lower skilled
jobs. Ratio of jobs in software development (IT Services) to ITES has been
decreasing, as it is likey to be 1:1 by 2008 as compared to 6:1 in.1999.
Hardware is also another source of employing lower skilled jobs. Ratio of jobs
in software development to Hardware production and maintenance has been
projected as 1:4 by 2008.
There is migration of non-IT technical manpower to
IT streams to the extent of 80-90% Migration of IT professionals with skills
and training acquired within the country continues unabated to foreign land. IT
professionals with higher skills are taken by MNCs for their Indian R&D
centers. It is all resulting in neglect of development of indigenous hardware
and brand equity in software products. The plight of other industries can be
well imagined!
India has to travel many miles before even aspiring
to become IT super power. India’s share in global market in 2002 was as
·
IT services – 3.0%,
·
ITES - 0.2%
·
Software products - 0.28%
These figures in 2008 are likely to grow to
9%, 2% with no projections available for software products. India has been able
to sustain and grow in IT services because of availability of quality knowledge
workers. ITES is also growing because of availability of large number of
English speaking manpower. However further growth of all off shore able works
depend on the availability of international standard infrastructure facilities
across India.
Indian IT exports shall remain to grow but to sustain on its own needs to re look at
presently available incentives and bottlenecks in development and exports of
software products
ANNEXURE-I
Questionnaire
Introduction
India is widely
perceived as a global leader in Information Technology(IT) and from national
perspective it is recognised as a big
net foreign exchange earner. IT sector is also commonly believed as a big
employer and a boost to employment specially in the segment of highly qualified
engineers and technologist in the country. The objective of this study is to
critically examine these aspects in details and bring forward the facts and
figures so as to strengthen or expose
the commonly believed perceptions.
Facts
collection sheet
1. Name: Mr/Ms/Mrs -----------------------------------------------------------
1) Designation& email --------------------------------------------------------------
2) Organization --------------------------------------------------------------
3) Address
Ř
Postal -----------------------------------------------------------
-----------------------------------------------------------
E-mail Address
-----------------------------------------------------------
·
Web Address
-----------------------------------------------------------
·
Telephone Numbers ------------------------------------------------------------
2.
Business of your company or associated
company(ies) (please tick / the appropriate boxes). Please see the annexure-III Annexure-III
3.
Details of your associated companies
Company 1
Ř Name of
the company with location address
Ř CEO
with email address
Ř Main
Business(as per list available at Sl no 2)
Company2
Ř Name of
the company with location address
Ř CEO
with email address
Ř Main
Business(as per list available at Sl no 2)
Company 3
Ř Name of
the company with location address
Ř CEO
with email address
Ř
Main Business(as per list available at Sl no 2)
4. Number
of employees year wise engaged in the
business activities as listed above for your company(ies) including associated
companies. Please indicate against each activity as applicable as per details
given in AnnexureIII Annexure-III.
Activity Number As
on 31-12-2003 31-12-2002 31-12-2001
5.
Please indicate percentage (%) of total
employees in each of the following categories(Please refer to annexure II for
categories):
2001 02
03
1.
Consultants -----------
2.
System Designers Developers -----------
3.
Programmers/Coders -----------
4.
Business Developers and Marketing -----------
5.
System Maintenance -----------
6.
Operation(Data Centers, Facility Centers,
Networks) ------------
7. Hardware
Maintenance -----------
6.
Main reasons for employees leaving your
organization(Please rate them on a scale of 5 with most prominent reason
scoring 5 and the least only 1)
1) For
better salary and perks [ ]
2) For
higher studies in India [ ]
3) For
jobs abroad [ ]
4) For
better job satisfaction [ ]
5) For
marriage and family reasons [ ]
6) On the
grounds of fraud, sexual harassment or on any
Other disciplinary actions [ ]
7 Please indicate approximate number of
employees at the following levels in each of the business activities as listed
in annexure-I Annexure-I
1.
Consultants
2.
System Designers Developers
3.
Programmers/Coders
4. Business
Developers and Marketing
5.
System Maintenance
6.
Operation(Data Centers, Facility Centers,
Networks)
7.
Hardware Maintenance
8.
Please indicate percentage(%) of total employees
in each of the following categories of Qualification:
01 02
03
1.
Doctorate
-----------
2.
Masters(MBA,M.Tech,MS with IT specialisation) -----------
3.
Masters(MBA,M.Tech,MS without IT
specialization) -----------
4.
Engineering graduate with IT specialization -----------
5.
Graduates(Other engineers,CA,MCA and
Professional) -----------
6.
Diploma and Certificates(Networks,MCSS,etc) -----------
7.
Others -----------
9 Please indicate percentage(%) of total
employees with experience in each of the following categories:
7) <1
years ---------
8) 1<yr>3 ---------
9) 3<yr>10 ---------
10) 10<yr>20 ---------
11) >20
yrs ---------
10 Is your company making profits in last 3
years YES/NO
1.
Do you maintain separate accounts for companies
based in India and outside YES/NO
2.
Please indicate following for all of your
companies either in Indian Rupees or US
$
2000-01 2001-02 2002-03:
·
Gross Total Earnings
·
Gross Earnings in Foreign Exchange
In each activity as given in
annexure-III
·
Total expenses in Foreign Exchange
1.
Remuneration to employees
posted abroad
2.
Import of the following
·
Consultancy
·
Computers and Peripherals
·
Networking Equipments
·
Packaged software(Licenses,Media,etc)
·
Electronic Components/Sub assy.
·
Internet Services/Bandwidth
·
Any other item(s)
3.
Net Earnings in FE
4.
Export earnings projected in next 3 years 2004 2005 2006
5.
Import and other FE expenses projected
in next 3 years, (activity wise
as given in annexure-III)
11 Does
your company have business plan for next 3 years YES/NO
If YES, please indicate :
1.
The item(s) proposed to be added/deleted from
the
present list of activities as indicated in Annexure-III 2004 2005 2006
AnnexureIII ------- ------ ------
2.
Number of Employees and categories proposed to
be
added/deleted
from the present list as indicated at Sno 6 ----- ----- -----
(Aneexure
–IV)
a.
Consultants -------- -----
------
b. System
Designers Developers ------ ------- ----
c.
Programmers/Coders ------- ------ -----
d.
Business Developers and Marketing ------ ------ ---
e.
System Maintenance -----
------- ----
f.
Operation(Data Centers, Facility Centers,
Networks)--- ------- -----
g. Hardware
Maintenance ----- ------- -------
3.
Projected/planned investments
Indian
Rupees ----- ----- -----
US $(FE) ----- ------ ------
4.
Projected Total Export earnings ----- ----- -----
5.
Projected Total Imports ------ ----- ------
6.
Strategies for increasing export net
earnings for next 3 years and becoming one of 5 top IT global companies
12 Name major 3 competitors each in
Indian and abroad for your each of your major activities:
India Abroad
Name Activities Name Activities
1 1
2 2
3 3
13 Name 3 major
hardware/products/packages developed
through your R&D efforts and indicate their presence in term of
sales in India and Abroad:
India Abroad
1
2
3
14 Name major products under development
15 Expenses towards meeting social
obligations 2001 2002 2003
1.
Primary Health
2.
Primary Education
3.
Computer Learning
4.
Relief Funds
5. Any
other (Pl specify)
INTERVIEW GUIDE
1.
Annexure-I is an important card. Please make a separate sheet for each
question related to Annexure-I
2.
Please give one set of questionnaire to the interviewer and then
politely ask reply to questions one by one.
3.
Each reply must be filled by YOU only
4.
Q1 reply must be filled if interviewer is readily agrees to.
5.
Q2 reply must be noted down carefully. In case, if any other activity
is noticed please add the same for all other interviewers and for all other related
questions.
6.
Q3 reply must be looked from the background that software companies
have set up associated companies registered outside India or have acquired
foreign companies. They have also Divisions/Associated companies abroad with
the status of independent cost centers. The reply must bring out clearly the
existence of such companies.
7.
Q4 reply must provide number of employees engaged in each of the
activity. This will establish the fact that large percentage of employees is
engaged in lower skilled jobs in IT sector.
8.
Q5 reply brings out the answer to whether higher skilled persons are
leaving India to settle abroad.
9.
Q6,Q7 replies should bring out the levels of IT professionals engaged
in various IT activities.
10. Q8 reply brings out the
profile of qualification of IT professionals in India.
11. Q9 reply brings out the
profile of experience of IT professionals in India.
12. Q10 reply brings out the net
Foreign Exchange earnings(Earnings-Expenses) as during last 3 years in IT
segment.
13. Q12,Q13 reply brings out the
clearly the projected Foreign Exchange earnings and Employment in IT segment in next 3 years. It also provides
reply to the question about competitors in India and abroad to Indian major IT
companies.
ANNEXURE-III
Q1 =Your activities; Q11=Items
to be added/deleted Q1 Q11
04 05 06
I.
Consultancy IT [
]
II.
Application Software
design,development&implementation [
]
III.
Turn Key Solutions(System Design ,Development,
Integration) [ ]
IV.
System software
design,development&implementation [ ]
V.
Computer Hardware manufacturing, installation [ ]
VI.
Communication Hardware manufacturing,
installation [
]
VII.
Network Hardware manufacturing, installation [
]
VIII.
Internet
Service Provider(ISP) [
]
IX.
Telecom Operation(TELCO) [
]
X.
BPO(operation) [
]
XI.
Design of call center software . [
]
XII.
Setting up Call center and its Operation [
]
XIII.
System Auditing [ ]
XIV.
Marketing of Hardware,System
Software(ERP,OS,RDBMS,etc) [ ]
XV.
Maintenance of System(ERP.OS,RDBMS,etc) [ ]
XVI.
Maintenance of Hardware
XVII.
Embedded software development [ ]
XVIII.
Bio-Informatics development [ ]
XIX.
Package software customization, installation,
maintainace [ ]
(OS,RDBMS,ERP,GIS/Engineering
,etc)
XX.
IT Training and Education [ ]
XXI.
SCADA software [ ]
Q4(Employees
as on 31st March)
2001 02 03
Consultancy IT
Application Software
design,development&implementation
Turn Key
Solutions(System Design ,Development, Integration)
System software
design,development&implementation
Computer Hardware
manufacturing, installation
Communication Hardware
manufacturing, installation
Network Hardware
manufacturing, installation
Internet Service Provider(ISP)
Telecom Operation(TELCO)
BPO(operation)
Design of call center
software .
Setting up Call center
and its Operation
System Auditing
Marketing of
Hardware,System Software(ERP,OS,RDBMS,etc)
Maintenance of System(ERP.OS,RDBMS,etc)
Maintenance of Hardware
Embedded software
development
Bio-Informatics
development
Package software
customization, installation, maintain ace
(OS,RDBMS,ERP,GIS/Engineering
,etc)
IT Training and
Education
SCADA software
Q7(Level of employees) 1 2 3 4 5 6 7
·
Consultancy IT
·
Application
Software
·
Turn
Key Solutions
·
System
software design
·
Computer
Hardware manufacturing
·
Communication
Hardware manuf.
·
Network
Hardware manufacturing
·
Internet Service Provider(ISP)
·
Telecom
Operation(TELCO)
·
BPO(operation)
·
Design
of call center software
·
Setting
up Call center and its Operation
·
System
Auditing
·
Marketing
of Hardware,System Software
(ERP,OS,RDBMS,etc)
·
Maintenance
of System(ERP.OS,RDBMS,etc)
·
Maintenance
of Hardware
·
Embedded
software development
·
Bio-Informatics
development
·
Package
software customization, installation,
maintainace(OS,RDBMS,ERP,GIS/Engineering
)
·
IT
Training and Education
·
SCADA
software
Q10 = Gross FE earnings
activity wise
Q12 Q10
Activity Competitors Competitors 01
02 03
India Abroad
·
Consultancy IT
·
Application
Software
·
Turn
Key Solutions
·
System
software design
·
Computer
Hardware manufacturing
·
Communication
Hardware manuf.
·
Network
Hardware manufacturing
·
Internet Service Provider(ISP)
·
Telecom
Operation(TELCO)
·
BPO(operation)
·
Design
of call center software
·
Setting
up Call center and its Operation
·
System
Auditing
·
Marketing
of Hardware,System Software
(ERP,OS,RDBMS,etc)
·
Maintenance
of System(ERP.OS,RDBMS,etc)
·
Maintenance
of Hardware
·
Embedded
software development
·
Bio-Informatics
development
·
Package
software customization, installation,
maintainace(OS,RDBMS,ERP,GIS/Engineering
)
·
IT
Training and Education
·
SCADA
software
Q11 =
Projected/planned FE Earnins/Expenses
Exports Imports
04
05 06 04 05 06
·
Consultancy IT
·
Application
Software
·
Turn
Key Solutions
·
System
software design
·
Computer
Hardware manufacturing
·
Communication
Hardware manuf.
·
Network
Hardware manufacturing
·
Internet Service Provider(ISP)
·
Telecom
Operation(TELCO)
·
BPO(operation)
·
Design
of call center software .
·
Setting
up Call center and its Operation
·
System
Auditing
·
Marketing
of Hardware,System Software
(ERP,OS,RDBMS,etc)
·
Maintenance
of System(ERP.OS,RDBMS,etc)
·
Maintenance
of Hardware
·
Embedded
software development
·
Bio-Informatics
development
·
Package
software customization, installation,
maintainace(OS,RDBMS,ERP,GIS/Engineering
)
·
IT
Training and Education
·
SCADA
software
ANNEXURE- IV
·
Consultants
·
System Designers Developers
·
Programmers/Coders
·
Business Developers and Marketing
·
System Maintenance
·
Operation(Data Centers, Facility Centers,
Networks)
·
Hardware Maintenance
Annexure – II
(source:Nasscom)
Software
Products, Embedded Software and R&D
As
the export earnings getting more off-shored, a new awakening since 2000-01 by
climbing up the value chain has arrived in the IT software industry. Indian companies have been providing global
support in installation and maintenance of third party developed software
packages for a few years (Refer Table-8 for export figures), but with the large
global market (200 billion US$ in 2002) potential, sincere attempts have also
been make during last 3-4 years for local development. Total revenues from
software products for Indian companies in 2002-03 were Rs.1000 Crores
accounting for a meager 0.2% of global software product. However, exports from software products
decreased from around Rs.1500 Crores in 2001-02 to just Rs.600 Crores in
2002-03. This has to be viewed from the
fact that international players like Microsoft, Oracle, People soft, Adobe,
etc. continue to grow in the country with the
total combined packed software turnover of Rs.1,996 Crores in
2002-03. Indian products share being
just 8.7%.
The
software product range may include –
·
Embedded
Software
·
R&D
Services
·
Software
Products (Shrunk, wrapped & enterprise products)
Embedded Software
Embedded
software is a combination of hardware, micro code drivers, an operating system
and application that delivers functionality within traditional non-computing
devices (i.e. devices other than computers and services). Software for embedded systems should be able
to run on very small amount of memory and often to have work in real time.
The
major application areas are Telecommunication, Data communication, Process
Automation, Consumer Electronics, Avionics.
The familiar applications are smart cards, cell phones, PDAs, Blue tooth
chips, Digital TV, Interactive TV, etc.
The
global market for embedded software solutions has been estimated at US $ 21
billion in the year 2003 and expected to grow at a CAGR of 16%. Indian exports have been 1.10 billion in
2002-03 as compared to 910 million in 2001-02, a growth of 20%.
A
large number of multi-nationals such as Texas Instruments, STMicro-electronics,
Motorola, Intel, Cadence Design, Synopoys, Philips, Analog Devices and National
Semi-conductor have set up design centers in the country. Indian software companies have also set up
design facilities to cater to embedded software solutions to over 60
independent software vendors (ISVs) including Samsung, Texas Instruments,
Delphi and Honeywell industrial controls, etc.
R&D Services
It
is certainly satisfying to note that major global IT players have either set up
development centers for product development in India or have been outsourcing
product development activities. Major
clients for India include Nortel, Lucent, CISCO, HP, Intel, Alcatel, Texas
Instruments, Sony etc. Additionally
since the beginning of 2001, about 230 multi-nationals have opened offices in
India. Some companies like Microsoft,
Oracle, IBM, Texas Instruments, Adobe, Novel, SAP, Intel, CISCO have already
opened up development centers.
The
exports were just US $ 1.21 billion in 2001-02 which increased to 1.66 billion
in 2002-03 and likely to reach 11.0 billion in 2008.
Software Products
Developing
software products and selling them to a mass clientage is one of the most
difficult tasks in the software industry.
Only a few companies in the world have done so far. A dozen or more companies have succeeded in
crossing the critical US $ 1.0 billion make turnover in 2000.
Products
like Tally, Flexcube, Finance – Suite, Bankware, Marshall are some of the known
Indian software products. Exports
increased from US $ 300 million in 2001-02 to 560 million in 2002-03, but
exports based on pure Indian products decreased from around 1500 Crores (INC)
to 600 Crores ((INC). Overall figure may
include export of products developed in India by MNCs.