IT revolution – Mukund Krishan – Tech Entrepreneur | Investor

“India is on the threshold of a big IT revolution. We are encouraging it to fast-track the services to our 1.25 billion people. New technology and renewable energy is our new Mantra. These initiatives provide additional avenues for investment in modern technology and human resources.”

– Excerpt from Prime Minster Modi’s speech on the MAKE IN INDIA initiative, at London’s Guildhall, November 2015.

With the Make in India and Digital India program, the IT and Business Process Management (BPM) sector is getting the much needed attention to further prosper. The government is encouraging multinational companies to boost their productivity and competitiveness by manufacturing products in India and leveraging India’s IT strength. India’s cost competitiveness and high quality services makes us still a favorite outsourcing hub for IT services (56% market share).

Consider the following statistics about the IT-BPM sector:

Our domestic IT-BPM market is growing at an impressive CAGR of 14% and this sector is presently contributing 5 per cent to the country’s GDP.
IT and BPM sector contributes 45% of the total services exported from the country, and by 2025 we aspire to double the revenue from $154 billion.
IT-BPM is the largest private sector employer in India delivering 3.7 million jobs, and this figure is set to grow.
With a view to develop 100 ‘Smart Cities’ and automate all the government processes and services, the government is investing $20 million to create a pro-digital urban infrastructure.

Initiatives to promote Innovation

The “Start-up India” initiative has set a corpus of $3.7 billion to fund entrepreneurship in the IT sector. To attract inflow of foreign capital and to ensure the success of ‘Make in India’, the corporate tax for MNCs has been reduced.
As the government introduced policies that are conducive for the growth of start-ups and innovation, several companies have set up incubation centers in the country. Start-ups are exempt from paying income tax for three years and any venture capital funds investing in start-ups are exempt from the Capital Gains Tax too. These positive steps have moved India’s rank from 134 to 130 on the World Bank’s“Ease of Doing Business”
The government, along with the National Association of Software and Services Companies (NASSCOM), has initiated projects to develop infrastructure for Information and Communication Technology (ICT) throughout the country. Roadshows like TechMarch and bilateral trade seminars are being used to showcase India’s innovation and market her skilled manpower in the field of smart manufacturing and Internet of Things (IoT).

Domino’s effect on the manufacturing, FDI, Technology sectors

The Make in India campaign has provided a domino’s effect on a whole bunch of other industries too. Three years back, most of the smartphones sold in India were imported. But with a duty of just 1% on locally assembled handsets (12.5% for an imported handset), around 40 mobile phone making plants have set shop in Chennai since 2015. In 2016-17, the value of mobile phones assembled in the country crossed $16.67 billion.

Chinese company Xiaomi has set up its manufacturing unit in India. This step has helped to change the perception about Chinese brands and has elevated Xiaomi’s brand image. This has worked positively, as the brand has the second largest share of India’s smart phone market today. They have invested $500 million in India so far and has seen the gross revenue grow fourfold in two years.

Similarly, South Korean brand Samsung, Chinese mobile maker Gionee, Taiwan’s Foxconn, the Singapore-headquartered electronic manufacturer Flextronics, are investing in India to set up their manufacturing plants. Google is building its largest facility outside the US, in Telangana, which will add 6500 jobs by 2019. Apple is planning a new manufacturing centre in Karnataka (agreement signed in February, 2017) which will help bring its products faster to the affluent Indian consumer.

Related: Is India ready for IoT?

What can IT companies do to take advantage of all these positive changes?

As government policies become extremely supportive, the time is ripe for companies to conduct research, innovate products and services, and train manpower in new technology areas. As every sector is riding on the Digital Transformation wave, IT solutions is a must for all, especially education, healthcare, urban planning and financial sectors. A future-ready digital workforce, with skills in newly emerging fields such as Internet of Things (IoT), Machine Learning, Artificial Intelligence (AI), Business Process as a Service (BPaaS), Social, Mobile, Analytics, and Cloud (SMAC) will fuel not just the IT-BPM market, but the entire economy.