When JRD Tata asked F C Kohli to set up TCS in 1969, it marked an important event in history. It paved the way for the Indian IT industry, that stands tall in global order. India’s IT and business services market is projected to reach USD 19.93 billion by 2025 and is expected to contribute to 10 per cent of GDP by 2025.
Through the years, the industry has withered several storms, yet with its wide footprints across the world, it has been able to have a steady hold and grow consistently. As an estimate, India’s IT export revenue rose by 11.4 per cent in constant currency terms to USD 194 billion in FY23. Exports from the Indian IT industry stood at USD 178 billion in FY22. The industry added about 2.9 lakh new jobs taking the workforce tally to 5.4 million people in FY23.
Early years
Five distinct phases have shaped the IT industry in our country. A nascent India was just then beginning to charter its developmental path. In 1960s, the IITs and other higher education institutions were set up to foster this dream by creating quality engineers and scientists. The batches that passed out were ambitious and set out to create a new path for India. That was when IT was developing across the world. TCS that was offering management solutions then expanded to implement their solutions using technology. This led to the birth of the Indian IT industry itself. Then, companies were addressing domestic demand using technology and were trying to find a place in global markets.
The boon of the Y2K problem
When liberalisation opened doors to the world in the 1990s, the sector got a massive opportunity to provide offshore services to several companies that were present in Europe and the US. Regulations were removed and India allowed foreign direct investments to the sector. 1999 marked the turn of a century and also a major year for the computer-based industry. As the world was benefitting from the power of computing, Y2K problem hit shore. In the developed world, major sectors like banking, transportation, stock markets, electricity, airlines, retailers, insurance were all computerised. A tiny glitch in the coding of systems threatened to stall all operations. Earlier, year was represented by two digits, like 98, 99,… It was done so, to save memory space! Everything was fine until the year 2000 turned up. It would be represented by 00. The issue arose, how would the computer differentiate 00, between 1900 or 2000? All hell broke loose, almost terming it as an end of civilisation. Computer programmers and experts were burning the midnight oil. Cobol, an old programming language had the solution to change the year representation to four digits. India cashed in on the opportunity. It built a talented pool of English-speaking engineers who could resolve the issue at a competitive price and high quality. Several companies reached out to India for help. The reliable services impressed them and soon started to outsource their back-office work to India. India’s software export crossed USD 1 billion and went upto USD 6.2 million in just four years’ time then.
Back office for the world
India’s reliable and cost-effective services made it a hub for software development, maintenance and support. Companies like TCS, Infosys, HCL, Wipro amongst others gained global recognition for their quality and services. Soon the domain was expanded to include IT consulting, business process outsourcing and knowledge process outsourcing. The Indian industry was well balanced and was even able to withstand global shocks like the financial meltdown and the Satyam saga. By 2010, the need to upskill and transform was realised and companies started to invest in R&D. Startup ecosystems mushroomed on the sidelines and was finding a strong footing. Digital transformation to latest technologies like cloud computing were embraced by the industry
Changing demands
The pandemic triggered yet another digital revolution. Today, especially in India, IT has become the horizontal that links several verticals. Many traditional industries have embraced the change and are embarking on their own digital journey. IT industry has been a major enabler for this. At this important fork, several challenges and opportunity await the industry.
Focus on innovation: IT industry has matured and will need to expand beyond a service provider role. Innovation will be the key. To be at the top of this, companies must constantly reskill and upskill employees. This will be crucial for staying competitive in a rapidly changing technological landscape. According to a report published by Microsoft, Bain & Co Internet and Mobile Association of India (IAMAI), India produces 16 per cent of the entire world’s AI talent pool. This is the third highest in the world.
Remote work and collaboration: The COVID-19 pandemic accelerated the adoption of remote work and virtual collaboration tools. The IT industry must embrace the change, else it will have to face the problem of women leaving workforce. Now they form about 35 per cent of workforce. At a time when their contribution is much critical and must be increased, losing them would create a major disadvantage to the industry.
The industry’s strength is well proved across the globe, future will be of strong partnership with global organisations that could lead to joint ventures, acquisitions or collaborations resulting in higher market presence and access to new technologies.
Emerging technologies and cyber security: Data analytics, AI, blockchain, quantum computing, 5G are on the rise and poses great opportunities to the industry. Shift to cloud services and agile development have quickened the delivery of products and the way it is deployed. Increasing digitalisation creates demand for cybersecurity solutions.
Sustainable technology: In a climate sensitive world, IT will also play a major role in mitigating carbon emissions. Green IT solutions, energy-efficient data centers and eco-friendly technologies will be major in the future.
The industry has contributed significantly to India’s GDP, employment and global recognition. It has played a crucial role in positioning India as a technology hub and has fostered a culture of innovation and technical expertise. The industry’s future lies in its ability to adapt to emerging technologies and navigate the changing landscape of the global IT market.
