Indian software sector owes its meteoric growth and development to the wave of economic liberalization that began in the 1990s and which paved the way for the country to realize its entrepreneurial spirit. India’s large pool of young and energetic talent has helped propel the nation from a poor developing country at the time of its independence in 1947, to becoming the world’s third largest economy in terms of purchasing power parity and well on its way to becoming a high-middle-income country by 2030.
Indian software ecosystem has over the past three decades evolved into a dynamic and varied sector that is today at the forefront of building and managing complex IT systems for global enterprises. The combination of available talent, advanced research and development (R&D) centers and the availability of local and international capital have helped accelerate the sector’s growth, as well as the development of a vibrant technology startup ecosystem in India.
Today, there are more than 7,000 start-ups in the country that were initiated over the past five years, with nearly 1,200 of these technology start-ups being established in just the last couple of years. The start-up ecosystem in India attracted over US$10 billion in investments from venture capitalists from across the world between 2016 and 2018. US$6 billion has already been invested in Indian start-ups by the Japanese SoftBank Group out of its US$100 billion Vision Fund. Start-ups such as Flipkart, Ola, and Swiggy have helped create or digitally enable millions of jobs such as cab drivers and e-commerce/food delivery professionals. These companies are also empowering the country’s 60 million small and medium businesses by digitally enabling their operations.
The software sector’s impact on India and its economy over the years has been nothing short of impressive. The industry has contributed significantly to the country’s revenue growth, export earnings, talent capability, diversity in workforce, and its digital infrastructure. In terms of revenue and foreign exchange, this sector has transformed India’s finances, and is effectively financing a large share of imports. The sector is currently the largest forex earner from exports and accounts for over 25 percent of the country’s total exports. The sector is already contributing nearly 8 percent to India’s GDP.
In terms of employment, no other industry segment has generated as many jobs for the middle class, with the sector directly employing over four million people and indirectly supporting an additional 12 million jobs. The industry was also a major trigger for the government to push for an increase in output of engineering colleges to over 700,000 graduates a year. Over 500,000 engineers in India are already equipped with relevant digital skills to drive digital transformation. FutureSkills, an initiative of the National Association of Software and Services Companies (NASSCOM), has an ambitious goal of training another two million people in digital technologies over the next few years.
Over the years, the Indian software industry has grown from providing cost-effective back-office support to international clients, to driving the digital transformation agenda in global companies. Young Indian software entrepreneurs are now focusing on building platforms and products for Indian and global markets. India is already home to 18 unicorns, or start-ups valued in excess of US$1 billion, and another 10 are expected to be added by the end of 2020.
The software sector has also played a significant role in changing the global perception of India, from that of a poor nation that regularly needed drip-assistance from the developed world to a country that has taken a seat at international forums on global issues. India’s technology prowess and vibrant software ecosystem has been recognized worldover. Global enterprises and countries wanting assistance to develop their own information technology (IT) sectors have turned to India’s experience of rigorous software development process and the use of quantitative techniques to manage them.
Large Indian IT companies are now multinationals in their own right with some companies operating in over 50 countries, including in the United States, Europe, China, Australia, Mexico and elsewhere. In recent years India has also risen as a hub of global Centers of Excellence (COEs) for modern technologies such as artificial intelligence/machine learning, Internet of Things, robotic process automation, and others.
For its part, the government is lending full support to the software sector to accelerate the creation of public digital infrastructure to streamline existing citizen services and create industry-specific initiatives in areas such as healthcare, supply chain, and education. This support is expected to result in technology getting weaved into the fabric of the Indian workforce across agriculture, healthcare, education, and other industries. Millions of digitally enabled jobs and job categories will be created in the process over the coming years. A robust mobility network, digital infrastructure and education are also expected to link second and third-tier cities to the software ecosystem that would further enable global enterprises and Indian IT companies to leverage the pool of talent available there to drive future innovation.
The Indian software sector has also helped accelerate the adoption of digital technologies in the country, by playing a critical role in providing digital services to the 1.3 billion strong population of the country. Many Indian IT companies have developed, managed and maintained indigenous systems that have transformed services being provided to citizens and corporations.
Some of these services include the ambitious India Stack project that aims to create a unified software platform to bring India’s population into the digital age; corporate and individual income tax management systems; the Goods and Services Tax system, the Indian rail reservation system that today reserves in excess of 200 million tickets annually, as well as the Aadhaar, the world’s largest unique identification infrastructure that provides identities to over one billion people in the country. The aadhaar system enables the provision of services across industries such as banking, healthcare, education and supply of food grains in an efficient and transparent manner.
Today, India is a technology and software trailblazer, and with concerted efforts by the country’s software ecosystem, including local entrepreneurs, startups, Indian IT companies, global enterprises, and the government, India has the potential to further cement its standing as a global leader in the software sector in the coming years.
