Viewing IT and ITeS as the New Opportunity in the Changing Developmental Paradigms of the Indian Economy
The below oft-quoted line by Bill Gates sums up the essence that as human civilisation progresses, information-induced technological changes will occur like a wildfire. Coming to the Government of India’s (GoI) historic demonetisation move on the 8th of N
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Viewing IT and ITeS as the New Opportunity in the Changing Developmental Paradigms of the Indian Economy Sovik Mukherjee and Asim K. Karmakar
The two areas that are changing … are information technology and medical technology. Those are the things that the world will be very different 20 years from now than it is today. —Bill Gates
11.1 Introduction From alpine to elephant, we are heavily dependent on information technology which has brought about a kind of revolution in our daily lives. The story dates back to the year 1967 when the Tata Group together with Burroughs started its intellectual journey with the birth of Tata Consultancy Services (TCS) and thus marked the beginning of India’s IT industry. In 1973, SEEPZ, the first software export zone began, accounting for almost 80% of India’s software exports in the seventies and eighties. In 1974, Burroughs recognised that India had comparative advantage in terms of cheap labour availability and decided to send Indian engineers to the USA to work in Burroughs’ clients’ offices. Thus, it started the export of Indian programmers for the completion of assignments in the USA which became renowned as the concept of “body shipping”. One of the major breakthroughs came when IBM was asked to leave India because it did not want to hand over the ownership of its subsidiaries—a classic case of the infant industry argument to protect the IT industry (Basu 2008). In leaps and bounds, software exports became popular and by 1981 India’s export S. Mukherjee (B) Department of Economics, Faculty of Commerce and Management Studies, St. Xavier’s University, Kolkata, West Bengal 700160, India e-mail: [email protected] A. K. Karmakar School of Professional Studies, Netaji Subhas Open University, Kalyani, Nadia, West Bengal 741235, India © Springer Nature Singapore Pte Ltd. 2020 S. Sikdar et al. (eds.), Role of IT- ITES in Economic Development of Asia, https://doi.org/10.1007/978-981-15-4206-0_11
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revenue earnings stood at US$4 million, shared by 21 firms, out of which TCS only accounted for 63% (Heeks 2002) to US$154 billion in 2017–18. With late Rajiv Gandhi’s mission and vision, the former Honbl’e Prime Minister of India, New Computer Policy (NCP) was rolled in 1984 which was followed by the National Informatics Centre (NIC) coming into existence and paving the way for cultivating the concept of “Digital India”. Coming to the export trends within the IT and ITeS segment, IT services is the one showing the fastest growth and has generated export revenue of US$69.3 billion in 2017–18 as compared to US$66.0 billion in year 2016–17. Coupled with this, we have the domestic sector performing exceedingly well with growth rate y-o-y being 8.7% in 2017 and being mainly driven by IT services which occupy 40.5% of domestic IT sector in terms of revenue generation. The BPO/ITeS segment has almost hit the 9.23% export growth rate mark between 2016–17 and 2017–18 (see Table 11.1). The rapid growth of the IT industry in India has created a large number
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