The Electronics and Computer Software Export Promotion Council (ESC) is working towards scripting a structural change in the Indian software landscape to empower it to become a major player in the global IT landscape. The ESC?s new approach is based on the fact that India?s share in the world-wide IT spending, as on today, is less than 2.35 per cent, not commensurate with the potential and its inherent capabilities.
Market diversification and moving up in the value chain are the twin objectives of ESC?s ICT strategy. As on today (2013), world-wide IT spending is $ 3.7 trillion (Gartner estimates), which is expected to grow to close to $ 4 trillion by 2015. As against this, India?s share is estimated to be $ 87 billion in 2013-14, which is insignificant, says Vinod Sharma, chairman, ESC, adding that there should be a thorough overhaul of India?s IT strategy to meet the desired goal.
Interestingly, it is estimated that total IT spending by the US works out to close to 41 per cent of the total. West Europe and Asia together account for almost the same percentage. This would mean that 18 per cent of the IT spending is by the emerging IT spenders like Africa, Latin America, Eastern Europe, CIS and Middle East. In absolute terms, this would work close to $ 36 billion, which is quite substantial.
Moreover, IT spending by these countries is increasing by 7 to 11 per cent. Latin America is witnessing the highest growth at 11 per cent. Africa and Middle East account for 7 per cent growth. In this context, ESC?s strategy is to move up in the value chain in developed markets like the US, Western Europe, Japan and China and increase market share in the emerging markets such as Latin America, Africa and the Middle East.
Significantly, 58 per cent of India?s IT exports comes from IT services, which are basic in nature, 23 per cent from business process outsourcing (BPO) and only 19 per cent is accounted by engineering design, R&D and software products, perceived to be the future frontiers of the IT industry. This pyramidal structure of the of IT industry, characterised by a large presence of low-ended training, support and maintenance, software testing and development works should be recast in a meaningful manner to give more stress to high-ended and value added operations like product architecture, R&D, design and product development.
Importantly, the Indian IT landscape is highly skewed against the small and medium IT enterprises, which account for more than 97 per cent of the total Indian IT enterprises. However, their share in IT exports is hardly 10 per cent of the total exports. This skewed trend is mostly on account of the advantages that the large enterprises have in getting the benefits on account of their sheer size, reach and capability. They have the advantage in getting benefits from various schemes of the government like offset, tax benefits to special economic zones, etc.
