I.T & B.P.M Industry


 

OVERVIEW

The IT- BPM sector has become one of the most significant growth catalysts for the Indian economy and contributes to approximately 9.3% of the country’s GDP. The industry is known for its cost competitiveness and high quality services across the world and has been instrumental in transforming the perception of India in the global economy. India has been successful in capturing a sizeable portion of the global technology sourcing business. The Indian IT industry’s (including hardware) share in the global market stands at 7% and is also an export oriented industry.

Around 60% firms in the world use India as a medium for testing services before taking software products global. There are more than 15,000 firms in the nation dedicated to this business. It is one of the largest private sector employers, employing around 3.7 million jobs.

Technology based startups are also key growth drivers of IT & BPM products in India with more than 4,700 startups currently operating in the country. The market size of IT & BPM sector was US$118 billion in FY2018. Out of the total IT sector revenues in the country, IT services and BPM segment constituted 71% in FY2018. The market size of this segment registered a CAGR of 8.84% from FY14 to FY18.

India’s startup revolution will benefit verticals such as Internet of Things (IoT), Machine Learning, Artificial Intelligence (AI) and Health Care technology. In BPM segment, a strong annual growth will be fueled by newly emerging fields such as cloud, mobility and advanced analytics. By the period 2020, social, mobile, analytics, and Cloud (SMAC) market, which is helping to attract new customers is projected to reach US$ 225 billion by the year 2020.

The value of aggregate exports by the IT-BPM sector (including hardware) were estimated to be $126 billion in FY18; recording a CAGR of 12.26% between the period FY09 and FY18. IT service exports was the major contributor, accounting for 57% share in the total IT exports during FY18. BPM accounted for 21.20% of total IT exports in the year.

Non US-UK countries accounted for just 21% of total Indian IT-BPM exports during FY18. The sector accounts for largest share in total services exports (38%). The e-commerce industry itself recorded a CAGR of nearly 40%during 2009-2017. Global industry giants from France, Germany, USA and Japan have substantial operations spread across the country.

FDI up to 100% under the automatic route is allowed in the following sectors namely; data processing, software development and computer consultancy services, software supply services, business and management consultancy services, market research services, technical testing and analysis services.

100% FDI is permitted in B2B E-commerce, however no FDI is permitted in B2C e-commerce. As per these new guidelines on FDI in e-commerce, 100% FDI under automatic route is permitted in marketplace model of e-commerce, while FDI is not permitted in inventory based model of e-commerce.

FDI inflow of the value US$ 35.8 billion has been recorded in computer software & hardware segment during the period April 2000–December 2018. The computer software and hardware accounted for 8.75% of the total FDI inflow as at December 2018.

The ‘Digital India’ campaign has put India on the path of becoming a digital economy and the outlook seems promising. IT megaprojects such as nationwide broadband highways, universal mobile access and public internet access program are in the pipeline under the Digital India initiative. The National Optical Fibre Network aims to connect all 2,50,000 Gram Panchayats in the country with high speed broadband.

IT solutions in the domains of education, healthcare, urban planning and financial inclusion are focus areas of the program and this is creating several opportunities for the IT sector. India’s IT – BPM industry amounts for 56% of the global outsourcing market size.

Owing to the presence of skilled manpower, India is home to a large number of IT professionals. It has been forecasted that the revenue generated by the sector will touch nearly US$ 350 Billion by the period 2025. India’s IT & BPM sector has continued to record double digit growth despite static growth in global tech spending. India is also world’s biggest BPM destination.


 

SELECT GOVERNMENT INCENTIVES

National Policy on Information Technology 2012 aims to increase revenues of IT and BPM industry to US$ 300 billion by 2020. The policy also seeks to achieve the twin goals of bringing the full power of Information and Communication Technology (ICT) within the reach of the entire country and harnessing the capability and human resources of the country to enable India to emerge as the Global Hub and Destination for IT and BPM Services by the year 2020.

Key policies have been initiated by the government like the National Cyber Security Policy, National e-Governance Plan (NeGP) and the National Technology Parks (STP) Scheme. These help to protect information and information infrastructure in cyberspace, to provide more transparency in the governance system, to strengthen and enhance India’s position as the Global IT hub and to use IT and cyber space as an engine for rapid, inclusive and substantial growth in the national economy and to provide more concessions and exemptions.

North East BPO Promotion Scheme (NEBPS) - The North East BPO Promotion Scheme (NEBPS), envisaged under Digital India Programme, seeks to incentivize establishment of 5,000 seats in respect of BPO/ITES operations in North East Region (NER), at an outlay of ₹50 Crore up to 31.03.2019, thus creating employment opportunities for about 15,000 persons considering three shifts BPO/ITES operations.

For more: https://meity.gov.in/nebps

The India BPO Promotion Scheme (IBPS) has been approved under Digital India Programme, to incentivize BPO/ITES Operations across the country [excluding certain Cities and the States in North East Region (NER)], for creation of employment opportunities for the youths and growth of IT-ITES Industry. IBPS aims to incentivize establishment of 48,300 seats distributed among each State in proportion of State’s population, with financial support up to Rs. 1 lakh/seat in the form of Viability Gap Funding (VGF), with an outlay of Rs. 493 crores up to 31 March 2019.


 

SELECT EXPORT MARKET REGULATIONS

The US Customs and Border Protection (CBP) site has a number of Informed Compliance Publications (ICPs) in the "What Every Member of the Trade Community Should Know About: ..." series. The link given below provides information on the enforcement of Intellectual Property Rights of software and others. This link further provides details

https://www.cbp.gov/sites/default/files/assets/documents/2017-Feb/enforce_ipr_3_0.pdf

The UK government has a different set of regulations when importing from EU countries as against the non-EU members. The link below gives reference to importing from both.

https://www.gov.uk/starting-to-import

Also, when UK businesses buy services from outside the UK, a rule called the ‘reverse charge’ applies. The link helps traders calculate the same.

https://www.gov.uk/starting-to-import/vat-on-services