The software industry is worth US$181 Billion in FY18-19, with exports of IT software and ITeS services crossing US$134 Billion in 2019. Software products and Engineering services form 56 per cent of the market, Business Process Management (BPM) 23 per cent and IT Services make 21 per cent share.
By 2025, the Indian IT industry expects to grow to US$350 Billion, with BPM comprising $55 Billion.
India is well-poised to be a major player in emerging opportunities, as all the major building blocks for tech innovation have evolved and matured over the past three decades.
Where does the industry go from here?
New specializations are opening up in areas like Artificial Intelligence (AI), Machine Learning, Blockchain, Telemedicine, Robotics, Simulated learning, Analytics, Cyber Security, Biometrics, Healthcare, Transportation, Space, and Defence.
In September 2017, RIL Chairman Mukesh Ambani famously called data the new oil, and he is right. China has taken giant strides in harnessing data on the base of the world’s largest population, and India is all set to leverage its advantage.
Mukesh Ambani is investing big on leveraging the power of big data as are other large firms, all gearing up to grab a slice of the merging opportunity. The coming years will see India emerge as the major innovation hub, contributing significantly to the development of technology and services in several specialized areas.
India must learn from the US and China
The United States had electronic records of medical patients for over two decades and has failed to take first-mover advantage to leverage this big data using AI.
China, on the other hand, has been a late entrant to cutting-edge technology but has been clear in its ambitions to emerge a global leader.
Sixty per cent of global investments from 2013 till around 2018 went into the artificial intelligence industry in China. The US is slow to respond.
For instance, China is using Robots powered by AI for news curation and delivery. Large-scale deployment of face recognition tracking and surveillance software is helping the Chinese law enforcement to identify and catch criminals. China is beginning to introduce AI in military applications, something that concerns the US.
However, the US has finally woken up. In 2018, the US attracted US$9.7 Billion representing 53.3 per cent of all investment in AI. The figure is expected to cross US$14 Billion in 2019, comprising 70 per cent of the investment pie.
To remain in the game, India must step up investments in training and offer incentives for R&D, if it wants to leverage the massive potential of big data and a growing domestic market.
A first step has been the announcement by the government this year to set up an AI portal and launch an AI program.
India’s success e-Governance
One area where India has tasted success and is in a position to offer its model to other countries is in e-Governance. The Aadhaar initiative to assign a Unique Identification Number to all citizens as a means of to access various government services is a model maturing rapidly.
India is in a position to offer the model to other countries, as the back-end processes further mature and improve.
The Unified Payments Interface (UPI) is another success India can offer the global community. The UPI enables seamless access and transaction with multiple bank accounts through a single mobile interface. It works 24/7 for 365 days in a secure ecosystem.
India needs the government to facilitate more significant investments in training and R&D in emerging technologies. Thus far, most initiatives in IT have mainly been private sector initiatives. The government’s increased focus and funding in Defence Research and Space are good examples of the government-private sector collaboration can bring. The software industry remains the foundation for all R&D.
The software industry’s journey in India
From a low-end of the value chain provider of back-end IT services to the international business community in the early 80s, India has graduated up the value chain.
In 2014, India incubated around 3,300 tech start-ups. The number has shot up to 8,900 in 2019, with 18 emerging Unicorns (start-ups commanding over US$1 Billion valuations) till 2018. Leading venture capital firms have invested over US$10 Billion in start-ups between 2016 and 2018.
The growth has been phenomenal. In FY18, the total revenue generated by the Indian IT industry was US$177 Billion, a 7.9 per cent share of India’s GDP. The value of exports in 2019 thus far has touched US$136 Billion, commanding a 25 per cent share of the total exports from India. Driving this growth are Indian IT companies like TCS, Infosys, Wipro, HCL, and Tech Mahindra, among others.
The IT industry directly employs over four million and another 12 million indirectly. Of these, women comprise of 30 per cent.
Over 1,250 international companies employing over four lakh engineers have set-up R&D centres in India, a testimony to India’s talent pool in IT, engineering, and research.
Indian software industry’s impact on the world
Around 200 Indian IT service firms operate in over 80 countries, collectively delivering savings over US$500 Billion in the last five years. Silicon Valley in the US, the world’s pioneering hub for tech innovation, has 25 per cent founders of Indian origin.