it industry details

8/6/2019 IT Industry Details

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IT Industry details

Information Technology is one of the most important industries in the

Indian economy. The IT industry of India has registered huge growth in

recent years. India's IT industry grew from 150 million US Dollars in

1990-1991 to a whopping 50 billion US Dollars in 2006-2007. In the last

ten years the Information Technology industry in India has grown at an

average annual rate of 30%.

PEST ANALYSIS:

Political:

Political stability: Indian political structure is consideredStable enough except the fact that there is a fear of hungParliament (no clear majority). - Positive U.S. government has declared that U.S companies thatPolitical outsource IT work to other locations other thanU.S. will not get tax benefit. - Negative Government owned companies and PSUs have decided t oGive more IT projects to Indian IT companies. - Positive Terrorist attack or war. Negative

Economical: Global IT spending (demand). (ve)Global IT services spend increased from US$ 566 billion in 2009 to US$574 billion in 2010 Currency Fluctuation (-ve)

Real Estate Prices: Decline in real estate prices has resulted reducingthe rental expenditure (+ve). Attrition: Due to recession, the layoffs and job-cuts have resulted inlow attrition rate (+ve). Economic attractiveness: Due to cost advantage and other factors(+ve)


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Social:

Language Spoken: English is widely spoken language in India. English

medium is the most accepted medium of education.(+ve) Education: Large number of technical institutes and universities overthe countries provide IT education. (+ve) Working age population. (+ve)

Technological:

Telephony (+ve)

1.India has the world lowest call rates2.Expected to have total subscribers base of about 500 million by

2010.3.India has the second largest telephone network after china.

o Enterprise telephone services, 3G, Wi-max, VPN, poised togrow.

Internet Backbone: Due to IT revolution in 90s india is wellconnected with undersea optical cables. (+ve)

New IT Technologies: Technologies like SOA, web 2.0, High definitioncontent, gridcomputing, and innovation in low cost technologies is presenting newchallenges

& opportunities for Indian IT industry.(+ve)

Trends in global sourcing remained positive and showeda growth rate of 10.4% in 2010 over 2009 and the globalsourcing market size was in the range of US$ 102 to 106

billion in 2010. IT sourcing grew at 10.3% to a market


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size of US$ 62 to 64 billion and BPO sourcing grew at10.6% to a market size of US$ 40 to 42 billion.There is enough potential for growth. Estimate of theaddressable global sourcing market is in the range

of US$ 500 billion (US$ 280 billion for IT services andUS$ 220 billion for BPO services). (Source: NASSCOMStrategic Review 2008 - 2011)

One of the major beneficiary countries of the globalsourcing trend continues to be India whose expertiseand capability in the area of Information Technology (IT)and Information Technology Enabled Services (ITES) hasmade it a leading destination for global corporations

looking for technology partners.

1.2 Growth forecasts for IT Services Industry

IT services spend is expected to increase from US$ 566billion in 2009 to US$ 684 billion by 2014 at a CAGR of3.9%.

y IT outsourcing component is expected to grow from US$ 225billion in 2009 to US$ 239 billion in 2014 at a CAGR of 1.1%

y IT services offshore are expected to grow fromUS$ 31.1 billion in 2009 to US$ 42.8 billion in 2014 at

a CAGR of 6.6%.

BPO spend is expected to increase from US$ 152.1 billionin 2009 to US$ 201.5 billion in 2014 at a CAGR of 5.8%.IT spend forecasts by global technology analyst firms like

Gartner, Forrester, IDC and others indicate a growingmarket for IT and ITES for industry verticals, serviceofferings and geographies of interest to the Companyand excellent prospects for growth in the future.


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Features of the IT Industry at a Glance

y Economies of scale for the information technology industry are high. The

marginal cost of each unit of additional software or hardware is insignificant

compared to the value addition that results from it.

y Unlike other common industries, the IT industry is knowledge-based.

y Efficient utilization of skilled labor forces in the IT sector can help an

economy achieve a rapid pace of economic growth.

y The IT industry helps many other sectors in the growth process of the

economy including the services and manufacturing sectors.

The role of the IT Industry

The IT industry can serve as a medium of e-governance, as it assures

easy accessibility to information. The use of information technology in

the service sector improves operational efficiency and adds to

transparency. It also serves as a medium of skill formation.


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MAJOR STEPS TAKEN FOR PROMTION OF IT INDUSTRY

Domain of the IT Industry

A wide variety of services come under the domain of the information

technology industry. Some of these services are as follows:

y Systems architecture a representation of the system in which there is a

mapping onto software & hardware components, a mapping of software

mapping onto hardware architecture & human interaction of these

components

y Database design and developmentis the process of producing a detailed

data model of a database. This logical data model contains all the needed

logical & physical design choices and physical storage parameters needed to

generate a design in a Data Definition Language, which can then be used to

create a database. A fully attributed data model contains detailed attributes

for each entity.


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y Networking - often simply referred to as a network, is a collection of

computers and devices interconnected by communications channels that

facilitate communications and allows sharing of resources and information

among interconnected devices. Computer networking orData

communications (Datacom) is the engineering discipline concerned with

the computer networks.

y Application development - Application development involves creating a

computer program, or set of programs to perform tasks, from keeping track

of inventory and to maintaining accounts, speeding up business process

and, in fact, even improving application effectiveness. Unlike vanilla

programming, application development involves higher levels of

responsibility (particularly for requirement capturing and testing).

Testing - Software testing is an investigation conducted to provide

stakeholders with information about the quality of the product or service under

test.Software testing also provides an objective, independent view of the

software to allow the business to appreciate and understand the risks of

software implementation. Software testing is an investigation conducted to

provide stakeholders with information about the quality of the product or

service under test.[1] Software testing also provides an objective, independent

view of the software to allow the business to appreciate and understand the

risks of software implementation.


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y Documentation -is a general term for a multiplicity of documents in a

chosen mix of media and with a certain collection. Purpose of

documentation is the use to support a tool or a process.

y Maintenance and hosting

y Operational support

y Security services

STP Of IT Industry

Segmentation

Market segmentation is a process that segments a market into smallersubmarkets,called segments. Segments are to be homogeneous or have similarattributes. Purchasing patterns and trends can appear prominently incertainsegments. Good market segmentation is to create segments where

prominentpatterns can emerge. Market segmentation may be used to analyze thefollowings;Market responsiveness analysis: This is very useful in direct marketingsince

market responsiveness of product offerings can be readily available.Market Trend Analysis: Analyzing segment-by-segment changes ofsalesrevenues can reveal market trends. Trending information is vital in

preparing for ever-changing markets.


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Segmentation offers deals with a specific function within the enterprisesuch asdata processing, accounting, human resources, plant maintenance,engineering

design, manufacturing, inventory control, etc. This is the most likelydomain for a

product or service, but you must recognize that the other domains mayalso getinvolved if the purchase of the product or service becomes a high profiledecision.This purchase decision will be made by the prospect's functionalmanagement.

Targeting

The dynamics of IT industry is changing and IT firms are now preparingthemselves to meet new challenges. Traditionally, Indian IT firms have

beenderiving sales from the Americas and Europe but going forward, theCAGRs ofthese regions will be low where as the Asian market is expected to growat a veryfast pace and approach the market size of the European markets. Theemerging Latin American and Middle-East/African markets, thoughsmaller in size,are also expected to have a higher CAGR. The growth in the Asia-Pacific Region isexpected to be higher mainly on account of growth in spends in China

and India.

Positioning

India has firmed up its position in the global software industry andglobalsoftware biggies too are setting up huge R&D facilities in the country.

National Association of Software & Services Companies (Nasscom), the


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apex body of indias information technology and business processoutsourcing sectors (IT-BPO), reported indias share in the globaloutsourcing market rose to 55 percent in 2010 from 51 percent in 2009.Exports are expected to grow 18.7 percent contributing $59 billion and

IT services 22.7 percent. Domestic markets rose 16 percent to 787billion rupees.

Nasscom expects the domestic market to grow by 15 percent to 17percent with revenue of $20 billion for the next fiscal.

8Ps of IT Industry

1.Product:

The product aspects of marketing deal with the specifications of theservices, andhow it relates to the end-user's needs and wants. The scope of a productgenerally includes supporting elements such as warranties, guarantees,

andsupport.

2. People:

For service marketers, the core of the service element is the interactionbetweenthose providing services and the customer, which is known as service

encounter.To achieve customer satisfaction appropriate processes are designed toensurethat the service encounter meets customer expectations.To deliver the satisfactory services, the employees of a company have to

play an


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important role. Employees must possess personal qualities, ability tounderstandand satisfy customer needs, flexibility, skills and knowledge. Friendlyand warm

employees increase customer loyalty.

3.Place:

In service place refers to location and use of distribution channels. It isreferringto the channel by which a service is sold (e.g. online vs. retail), whichgeographic

region or industry, to which segment (young adults, families, businesspeople),etc. also referring to how the environment in which the product is sold incanaffect sales.

4. Process

In Service Industry Process refers to how a service is provided anddelivered tothe customer. IT relies on processes to consistently deliver high qualitysolutionswhile executing a growing number of engagements from multiplelocations.Values, vision and policies form the first level of our three-tiered

processarchitecture. They are implemented through process execution at the

next level.These processes are defined with clear ownership using the ETVX(Entry, Task,Verification, and Exit) paradigm and clearly defined roles andresponsibilities.


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5. Physical Evidence

The environment in which the service is delivered and where the firmand the

customers interact; and any tangible commodities that facilitateperformance orcommunicate the service. Physical evidence enhances customers

perception ofquality.The general elements of physical evidence include (OrganizationPhysical Facility): Exterior facilities

o Exterior designo Signageo Parkingo Landscapeo Surrounding environment Interior Facilitieso Interior designo Equipmento Layout Other tangibleso Business cardso Stationeryo Billing statementso Reportso Employee dress/uniformo Brochures

6. Productivity

Productivity refers to the success or failure of any business, so thequality of the


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product should be very good for his companies have different qualitystandardswhich are certified by the quality department and are approved

all over theworld. If one does not have approved quality standards then hedevelops its ownto meet the quality that are demanded by the customers

7. Price

Software pricing strategy is price planning for a software firmtakes into viewfactors such as overall marketing objectives, consumer demand,productattributes, competitors' pricing, and market and economic trends.When a firmlaunches a product, the pricing decision is one of the most

critical decisions.Software pricing has been concentrated the internal businessobjectives ofvendors such as costs, specified margins, and the competition.On the marketing point of view, the goal of pricing strategy is toset a price that isthe pecuniary equivalent of the value perceived by the customerin the product inorder to meet the profit and achieve investment goals.


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8. Promotion

Over here, services and project consulting is through contract or

agreementbetween the parties and promotions are carried out only for theparticular clientselected as upgrading and extended service for a particularperiod, etc. : Thisincludes advertising, sales promotion, publicity, and personalselling. Brandingrefers to the various methods of promoting the product, brand, or

company.

PORTERs five forces model (Indian it industry)


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Threats of substitutes:

y Other offshore locations such as eastern Europe, the

Philippines & china , are emerging & are posing threat toIndian it industry because of their cost advantage. howeverthis should have an impact only in the medium to long term

y Price quoted for projects is a major differentiator , thequality of products being same.

Bargaining power of supplier:

1)Due to slowdown, the job cuts , the layoffs & bleak IToutlook

2)Demand & supply of IT professionals is no longer thatfavourable to employees

3)Availability of vast talent pool- freshers & experienced

Bargaining power of customers:

1)Large number of IT companies vying for IT projects-resulting in high compettion for projects

2)Huge decline in it expenditure: Indian it sector isdependent on USA & BFSI in particular for majorityof its revenues & with the recent financial crisis , thenew spending from these has reduced tremendously

3)However for the existing products & services , theclients continue the old companies


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Barriers to entry

1.low capital requirements

2.large value chain

3. MNCs are ramping up capacity & employee strength

Rivalry among firms: high

1.commodited offerings

2.low cost, little differentiation positioning

3.High industry growth

4.Strong competitors few numbers of large companies .

it industry details

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