India is the second most populated country in the word. Its economy, with a gross domestic product of about 1.8 trillion USD in 2012, is the tenth largest in the world. High growth rates in the IT industry in recent years contributed substantially to India’s economic position of in the world. In 2012 for instance, the Indian IT business process outsourcing industry generated revenues of about 69 billion USD, which is 7.5 % of the 2012 Indian GDP.
However, experts predict a couple of challenges facing this service sector. Upcoming competitors, such as China, or new technology like cloud computing might rearrange the situation (Muncaster, 2013). The goal of the following paper is to focus on the current economic, political, social and technological trends in India. Based on this information, a scenario for Indian IT industry in 2020 will be drawn.
Generally, Indian economy is expected to grow further in the next years. Indians finance minister, P. Chidambaram, predicts his country to be number five by 2020-25 in terms of GDP. Nevertheless, growth rates slowed down in 2012-13 and were the lowest rates since 2003-04. Following, the IT industry might not be able to grow like it did in the past. Furthermore, a couple of hurdles need to be overcome in order to ensure future competiveness. One example is the “linear growth models”.
Task: „Forecast a scenario for the Indian IT Industry in 2020, based on current political, economic, social and technological trends in the country.”
India is the second most populated country in the word, following closely behind China. Its economy, with a gross domestic product (GDP) of about 1.8 trillion USD in 2012, is the tenth largest in the world (The World Bank). High growth rates in the IT industry in recent years contributed substantially to India’s economic position of in the world. In 2012 for instance, the Indian IT business process outsourcing (BPO) industry generated revenues of about 69 billion USD, which is 7.5 % of the 2012 Indian GDP (NASSCOM).
However, experts predict a couple of challenges facing this service sector. Upcoming competitors, such as China, or new technology like cloud computing might rearrange the situation (Muncaster, 2013). The goal of the following paper is to focus on the current economic, political, social and technological trends in India. Based on this information, a scenario for Indian IT industry in 2020 will be drawn.
1. Economic situation
Generally, Indian economy is expected to grow further in the next years. Indians finance minister, P. Chidambaram, predicts his country to be number five by 2020-25 in terms of GDP (John, 2013). Nevertheless, growth rates slowed down in 2012-13 and were the lowest rates since 2003-04 (Moneycontrol, 2013). Following, the IT industry might not be able to grow like it did in the past. Furthermore, a couple of hurdles need to be overcome in order to ensure future competiveness.
One example is the “linear growth models”. Growth was traditionally linked to manpower which “left most Indian companies bloated, out of shape and with declining profitability” (Mishra, 2013). These models worked till now but as Indian IT workers got 9-12 % wage increases last years, nonlinear growth strategies need to be focused (Mishra, 2013). Companies apparently have begun to adapt themselves which involves “huge investments leveraging software frameworks and methodologies to do the same tasks with fewer people” (Muncaster, 2013).
Another challenge is the rising competition of other APAC countries. Experts state that “China is at least 6 to 7 years behind” (Muncaster, 2013). This backlog will stay, if India manages to develop incrementally. The ecosystem of support services is better in India than anywhere else. This can be seen in the following example: “[W]orkers [in China] often need to work in shifts to cater to various time zones, which means workers need ferrying from home to the office at odd hours. This may sound like a low-level activity but in the overall scheme every small thing matters” (Muncaster, 2013).
Furthermore, the Philippines are emerging. Their strength lays in its call center capabilities and in the English language skills; American buyers find it easier to listen to a Philippine English speaker than to an Indian English speaker. However, India’s long-term experience
and its mature services will be the sector where India can still flourish and where India has an unbeatable advantage over other competitors (Muncaster, 2013).
2. Political situation
“The World Bank has identified corruption as among the greatest obstacles to economic and social development” (KPMG, 2011). Corruption is also a major issue in India.
A survey on bribery and corruption and its impact on the economy and business environment, conducted by KPMG in 2011, showed that India’s energy sectors and information technology industry are the most competitive and least corruption prone sectors (KPMG, 2011, p. 2). Nevertheless, the influence of Indians IT industry has become so strong over the last decades that it exerts a dominating influence on the country’s politics (Guhan, 1997, p. 35). However, the survey came to the conclusion, that corruption in India has reached its zenith and might be reduced over the next three years (KPMG, 2011, p. 3).
3. Social situation
Education is seen as India’s “backbone for future growth and development” (Indiaedusummit, 2013). According to The World Bank, India has progressed in its basic education rate and has already decreased poverty by 27 % because of improved education among its people; however, a lot still needs to be done (Sify, 2008).
One problem, is that despite the fact that as many girls as boys tend to attend primary school teaching, the gap between the two sexes widens as they get older. Girls tend to stay at home and get married early. Boys are more likely to attend secondary school. This might also be connected to recent incidents of assaults and harassments of young women; many parents are afraid of letting their female children attend school as they want to protect their girls’ “honor” (Spiegel, 2013).
Another problem is that the quality of basic education is often not as good as basic education in the western world. This is due to of a lack of teachers or not professionally trained teachers (Guardian , 2013). Classrooms are often over-crowded and therefore some parents are forced to pay for private tuition (Guardian , 2013). Consequently, the gap between the poor and the rich is widening.
4. Technological situation
India’s vast IT industry is expected to have moved away from the service sector towards software by 2020. This enables big providers the shift from the intensive human headcount model to a one “utilizing software asset” (Muncaster, 2013, p. 3). Being more a software vendor instead of a human capital provider might help these companies to keep margins and revenues. Nonlinear technology can often be reused with minimal customization such as assets and codes, platform solutions or tools like Six Sigma (Mishra, 2013).
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- Quote paper
- Johannes Köck (Author), 2013, A scenario for the Indian IT Industry in 2020, based on current political, economic, social and technological trends in the country., Munich, GRIN Verlag, https://www.grin.com/document/378117
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