New Delhi: February 04, 2021
The information technologyenabled services (IT-ITeS) industry has become one of the significant growth catalysts for India. India continues to maintain a leadership position in global sourcing, accounting for above 58 per cent of the total global sourcing market (excluding engineering services and R&D) in 2021. The IT business process management (BPM) sector (excluding hardware) is estimated to have grown by 10.3 per cent in 2021. Of this, exports with a major share of 81.9 per cent grew by 13.0 per cent while domestic revenues fell by 1.0 per cent in dollar terms. Domestic revenue is estimated to have increased by 9.63 per cent in rupee terms.
Gradual revival in consumer confidence leading to return of discretionary spending and increased demand from the US and Europe is helping drive exports. India continues to lead in cost competitiveness. Flat entry-level salaries, flattening employee pyramid, and fast career growth are helping India stay seven-eight times cheaper than source locations and 30 per cent cheaper than the next nearest low-cost country. However, challenges around protectionism, increased competition, currency volatility, wage inflation, and inconsistent levels of customer confidence have to be addressed.
A report by ICTpost says that in post covid-19, this sector is still a big employment generator with direct employment in the IT services and business process outsourcing (BPO)/ITeS segment projected to reach 10 million in 2021-22. Indirect job creation is projected at 10.0 million during this year, says ICTpost. The Indian information technology and business process management industry had over 15 million directly and indirectly employed personnel during financial year 2017.
R & D Services
Among business services, R & D occupies second position in India’s GDP. Its growth has been consistently high at near 20 percent in the last few years; in 2018-19 growth has been at 20 per cent. The US$ 1.6 trillion global gross expenditure on R&D (GERD) in PPP (purchasing power parity) terms is a more than US$ 50 billion increase over the previous year. In this enormous activity, India’s share is around 3 per cent with GERD projected at US$ 44 billion, which is around five times lower than that of China.
According to the Global Competitiveness Report, India’s capacity for innovation has been lower than that of other BRICS countries (Brazil, Russia, India, China, and South Africa) except Russia. Though India scores better than China, Brazil, and Russia on quality of scientific research institutions, the research undertaken in such institutions is not percolating down for commercial usage. This is exhibited through its poor score on university industry collaboration on R&D as compared to some other BRICS nations like China and South Africa. Though India scores better than all BRICS nations on availability of scientists and engineers, owing to its large population, the country has one of the lowest ratios of scientists and engineers per million people. Part of this shortage is attributed to lack of quality higher education institutions. Even with a large population base, India is projected to have 25 per cent shortage of engineers in the country by 2025. In terms of patents granted per million population, India fares badly compared to other BRICS countries. In terms of company spending on R & D also India is far below China.
