Swot Analysis of It Industry

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Indian Software Industry

In 1998-99, the software industry in India was worth Rs. 158.9 billion (US$ 3.9 billion). If the value of in-house development, which is taking place at many large corporates, is added then the figure would touch around Rs. 190 billion (US$ 4.6 billion). This phenomenal growth has not been achieved overnight. The C.A.G.R (Compounded Annual Growth Rate) for the Indian software industry revenues in the last five years has been 56.3 percent. Here the C.A.G.R. for the software export industry has been 60.71 percent while that for the domestic market has been 46.05 percent.

Domestic Software Market

In 1998-99, the domestic software market has been estimated at Rs. 49.5 billion (US$ 1.25 billion) and this does not include the in-house development of software by end users. The domestic software market has shown a C.A.G.R. of 46.05 percent which has been steadily improving in the last few year

The growth rate of the domestic software market was 41.02 percent 1998-99. The domestic software market is expected to gross Rs. 73 billion in 1999-2000. With the rigorous enforcement of Copyright laws, increase in government spending on I.T. it is expected that in the coming years, the domestic market for software can even register more than 50 percent annual growth rates.

Also, the government has implemented zero import duty on software. This is already having buoyant effect on the market and there is a increasing trend of buying software through the Internet. It is expected that by 2008 revenues of Indian domestic software market would touch US $ 37 billion. In the next few years, the prominent growth in the domestic software market is expected to get boost by segments such as banking, E-governance, defence, etc.

Software Export Industry

The Indian software export industry continues to show impressive growth rates. In terms of Indian rupees, the C.A.G.R. over the past five years has been as high as 60.71 percent. The industry exported software and services worth Rs. 0.30 billion (U.S.$ 0.03 billion) in 1985; in 1998-99, a total export of Rs. 109 billion (U.S.$ 2.65 billion) was achieved and it is expected that during 1999-2000, software exports will be worth Rs. 172 billion (U.S.$ 3.9 billion). The software industry in India expects to reach an export level of U.S.$ 6.3 billion by 2000-01 and U.S.$ 10 billion by 2001-02. The National IT Task Force of India has set a target of U.S.$ 50 billion of annual I.T. software and services exports by 2008.

For achieving this velocity of business, both the software industry and the Government of India are currently taking some bold and purposeful steps. Amongst others, this exercise includes path-breaking measures adopted by the National IT Task Force to further liberate the economy, simplification of procedures, deployment of additional resources for technical manpower development, new marketing channels, enhancing global brand equity and providing state-of-the-art infrastructure for software development. The thrust on I.T. services like E-commerce, Software Development, Interactive Integration services, Application Service Providers (ASP’s).

Location of Software Companies

The mushrooming of new software companies until a couple of years ago was limited to a few cities. The industry was mainly concentrated around Bangalore, Mumbai, Chennai, Delhi, Pune, Hyderabad and Calcutta. However, with the infotech revolution sweeping India, we have witnessed a very high growth of infotech companies in other cities and towns as well. Most of the state governments have today accorded the highest priority to the development of the infotech sector in their states.

An analysis of the headquarters of the top 600 software companies demonstrates the following statistics: Mumbai131
Bangalore122
Delhi43
Gurgaon & Noida68
Hydrebad64
Chenna55
Calcutta25
Pune23
Tirvandururm14
Ahmedabad10
Bhubaneshwar10
Others35

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