IT and Production Management ISSN : 2230-9667 IMPACT OF IN INDIAN IT & ITES INDUSTRIES

Dr. Dileep Baragade Dr. Amit Jadhav

ABSTRACT: The term globalization means International Integration. Opening up of world trade, development of advanced means of communication, internationalization of financial markets, growing importance of MNC's, population migrations and more generally increased mobility of persons, goods, capital, data and ideas. It is a process through which the diverse world is unified into a single society. The wave of globalization hitted India at the end of the last century and still the country is flowing with the current of global changes. The new economic policy initiated in the 1990s, advocating Liberalization, Privatization and Globalization (LPG), has had a substantial impact on all major sectors of the Indian economy. Consequently, the country has grown to become globally competitive especially with respect to the service sector; and more specifically in the case of Information Technology and Information Technology Enabled Services (IT-ITES). Against this background, this paper attempts to overview the impact of the globalization on Indian software industries. Further, it deviates from most of the earlier studies by attempting to investigate the dynamic relationship among Software exports, openness and economic growth in India. Further, IT exports and openness contribute to economic growth more in the long run rather than in the short- run. This implies that economic growth can be enhanced by implementing policies that not only improve the efficiency of the sector, but also focus on optimization of the potential of the Indian Software industry. Keywords: India, Globalization, IT, ITES, Export, Industries

Introduction: Information technology (IT) sector in India has played a very important role in putting India on the global map. The IT sector has played a significant role in transforming India’s image from a slow moving economy to a land of innovative entrepreneurs and a global player in providing world class technology solutions and business services. The IT sector has helped India transform from a rural and agriculture-based economy to a knowledge based economy. Information Technology has made possible information access at gigabit speeds. It has made tremendous impact on the lives of millions of people who are poor and living in rural area. IT industry is one of the best sources for the people who are with good communication and skill of knowledge. IT industries has risen to become biggest employments generator with number of employments. has made revolutionary changes with possibilities of e-government measures like e-commerce, e-education, e-agriculture, etc. Today, whether its filing Income Tax returns or applying for passports online or airways e-ticketing, it just need few clicks of the mouse. India’s IT potential is on a steady walk towards global competitiveness, improving defense capabilities and

Neville Wadia Institute of Management Studies & Research 228 IT and Production Management ISSN : 2230-9667 meeting up energy and environmental challenges amongst others. IT-ITES sector in India, with the main focus on increasing technology adoption and developing new delivery platforms. The major sector that combine together to contribute service industry like IT trade, Education, Financial services, Media, Hospitality, accommodation and food services, entertainment, culture, transportation, warehousing and storage. Modern businesses are not possible without help of IT in which is having significant impact on the operations of enterprises and it is claimed to be essential forth survival and growth of economies in general. IT sector as one of high value addition and net foreign exchange earning industries. It created history of its sorts on the Indian stock Exchange. More importantly, Indian IT and ITES industries has high tended the international recognition of Indian IT and ITES; since there are many IT industries are listed on NASDAQ and New York Stock Exchange. The opportunities in the IT services and ITES sector can be classified among the following broad categories: IT services, R&D Services and Software Products, Customer Interaction Services (BPO, KPO), Transaction processing (Data entry/ conversion, Rule set processing, Problem solving), Content Development, Knowledge Services (Non-IT), Engineering Design. Multiple opportunities for strategic use of information technology exist today. More are constantly emerging lower cost technology providing significant new capabilities. And they are increasingly being seized upon as competitive pressures grow. It can be used to support enterprise systems and e-business applications as well. Business professionals need to be aware of the availability of new technologies and able to evaluate the cost benefits and usefulness of each. It enhances access to information product consumers provide access to government services make skill formation and training more effective, improves delivery health services and promote transparency. It provides tremendous employment and potential and linkages between Government and people both at the rural and urban level. Investment in knowledge based industry will determine the level of countries dominates position in the world economy in next two decades. Build capabilities to respond quickly to new business opportunities and challenges optimizes business processes and develop new applications. Modernize and rationalize a complex and inefficient technology environment. Improve quality of services and flexibility to internal and external stockholders and customers. To be successful you must understand their roles and responsibilities in the context of the surrounding IT and business process. The index has grown from covering 25 countries in 2004 to 55 countries in 2017, indicating just how global the industry has become. While most locations have experienced movements in the ranking over the years as competition has become more intense as economies Literature Review: Global Scenario of IT & ITES Industries: The worldwide innovation spending on equipment and Information Technology (IT) related administrations is evaluated to be about US $ 1.7 trillion and developing at a Neville Wadia Institute of Management Studies & Research 229 IT and Production Management ISSN : 2230-9667 CAGR of around 7% over the most recent two years. Far beyond this, the building and Research and Developments spend represents about US $ 800 billion. The spend in IT Services and IT Enabled Services (ITES) or Business Process Outsourcing (BPO) was relied upon to touch over US 500 billion and US $ 450 billion of every 2008 separately, with IT Services recording a development of 6.3% and BPO Services recording a development of 12% comprehensively. IT Services is relied upon to develop at a CAGR of 6 to 7% till 2012 and ITES is required to develop at 10 to 12% over a similar period. Regardless of the current financial log jam, innovation spending is relied upon to manage in the long haul and get after the following 4 to 6 quarters (FIICI 2014) . There was a sudden pick-up in world services GDP in 2012 compared to 2011 with increase in growth from 2.7 percent to 3.8 percent (at constant prices) with a 65.9 percent share in the US $ 72.7 trillion world GDP (at current prices) in 2012. Like in overall GDP, the US ranks first in services GDP also, with and China a distant second and third. Among the world’s top15 countries in terms of GDP (at current prices), India ranked 10th in terms of overall GDP and 12th in terms of services GDP in 2012. However, India has the second fastest growing services sector with its CAGR (compound annual growth rate) at 9.0 percent, just below China’s 10.9 percent, during the last 11-year period from 2001 to 2012(NASSCOM) . IT sector in India has been instrumental in making and in addition digitalizing India a noteworthy player in the worldwide time. IT has changed India from Agricultural based economy to an information based economy. India is huge, dynamic and one of the quickest developing economies in world. Because of great development of the economy, relentlessly expanding purchasing energy of the general population and desires of the youthful, the utilization of electronic devices in the is developing quickly. India is one of the universes' quickest developing ITES showcase. Consequently, the Government has agreed high need to this division. IT part has assumed a huge part in changing India's picture as worldwide player in giving top of the line innovation arrangements and business administrations. After the opening up in Indian economy amid changes of 1991-92 activities gave by government in type of lower esteem included duty (VAT) On programming and disposal of obligations on imports of data innovation items, speculations made for IT and ITES administrations, IT area has prospered. Indian association in the business have turned out to be worldwide multinational with more than 400 conveyance focuses (abroad), The industry has nearness in 52 with more than 10 association recorded on abroad stock trade and serving more than 400 fortune 500 clients. India has welcomed financial specialists to support outside enlistment both through FDI and through the remote innovation. Joint effort understandings and has built up more noteworthy straightforwardness in strategies and financial specialists cordial methods. A remote organization can hold value in Indian enterprises up to 100%. IT segment in India has seen high inflows of FDI which has helped the Indian economy as of late. FDI inflows ascended by over 100% to US $ 4.66 billion in May 2011, up from US $ 2.22 billion a year back as per the most recent information discharged by Department of Industrial strategy and advancement (DIPP). Neville Wadia Institute of Management Studies & Research 230 IT and Production Management ISSN : 2230-9667 The Indian IT segment is extensively arranged in to IT administrations and programming; IT empowered administrations (ITES) and equipment item fragment. On the in addition to side, the India IT, ITES industry has climbed the esteem chain of worldwide discernment. India is worldwide accomplice conveying a few mission basic administrations to customer internationally. Indian ventures are venturing out of India and are going worldwide. Indian Industry have set up conveyance focuses over the world and giving administrations from various district. IT – ITES industry give work to individuals different aptitude levels. ITES is the most noteworthy development impetus and expansion to in powering the lives of its kin through dynamic immediate and aberrant commitment to the different financial accomplices. On the in addition to side, the India IT, ITES industry has climbed the esteem chain of worldwide discernment. India is worldwide accomplice conveying a few mission basic administrations to customer internationally. Indian ventures are venturing out of India and are going worldwide. Indian Industry have set up conveyance focuses over the world and really giving administrations from various areas. IT – ITES industry furnish work to individuals with different aptitude levels. ITES is the most noteworthy development impetus and expansion to in powering the lives of its kin through dynamic immediate and aberrant commitment to the different financial accomplices. Discussion and Findings : Major Steps towards Globalization Indian economy was in deep crisis in July 1991, when foreign currency reserves had plummeted to almost $1 billion; Inflation had roared to an annual rate of 17 percent; fiscal deficit was very high and had become unsustainable; foreign investors and NRIs had lost confidence in Indian Economy. Capital was flying out of the country and we were close to defaulting on loans. Along with these bottlenecks at home, many unforeseeable changes swept the economies of nations in Western and Eastern Europe, South East Asia, Latin America and elsewhere, around the same time. These were the economic compulsions at home and abroad that called for a complete overhauling of our economic policies and programs. Major measures initiated as a part of the liberalization and globalization strategy in the early nineties included the following: Annual GDP growth rate 1980 – 2012 Globalization in India had a favorable impact on the overall growth rate of the economy. The pick-up in GDP growth has helped improve India’s global position. India has grown at an averagerate of close to 9% annually. Figure 1 shows the Annual GDP growth rate of India (1980-2012) Year GDP growth rate of the economy 1980-81 7.17 1985-86 4.6 1990-91 5.29 1995-96 7.29

Neville Wadia Institute of Management Studies & Research 231 IT and Production Management ISSN : 2230-9667 2000-01 8.59 2005-06 9.48 2010-11 8.59 2015-16 7.11 2017-18 7.3 http://statisticstimes.com/economy/gdp-growth-of-india.php

Structure of the Indian Economy towards Service Industries: Due to globalization not only the GDP has increased but also the direction of growth in the sectors has also been changed. Earlier the maximum part of the GDP in the economy was generated from the primary sector but now the service industry is devoting the maximum part of the GDP. The services sector remains the growth driver of the economy. Figure 3 shows Sectorial composition of GDP in China 1980 to 2012. Sector 1990-90 2000-2001 2010-11 2016-17 Agriculture 28.97 23.02 23.02 17.32 Industrial 26.49 26.01 27.76 29.02 Services 44.18 50.98 49.52 53.66 http://statisticstimes.com/economy/gdp-growth-of-india.php It is clear that figures during the last three decades the weight of the industrial sector on GDP has persistently been much higher in India. India is more specialized in services and agriculture continues to be more important. Foreign Direct investment inflows: India has vast potential to attract Foreign Direct Investment (FDI) to serve the local and to become a more important part of the global integration. Table: 1 represent the FDI inflows in India during 1978 to 2012. Year 2000-01 2005-06 2010-11 2015-16 2017-18 FDI inflows In US$ million 2463 5540 21383 36317 37366

India - The Top Global Outsourcing Location Assessment of Location Attractiveness for Global Outsourcing Hub 2016 While the analysis indicate that automation will eliminate a substantial number of the job that are currently offshored, global services value chain will only grow in the future as opportunities for outsourcing higher- level tasks that cannot be automated are identified and new offshore jobs are created. As the number of locations suitable for continues of proliferate, companies seeking to benefit from these opportunities must anticipate increasingly fierce competition for offshore jobs and dollars. Table illustrates the top twenty five economies on the basis of global services location index, which examines the off-shoring locations across the globe and ranks the top destinations for global off-shoring for 2017. Assessment of Location Attractiveness for Global Outsourcing Hub 2017.

Neville Wadia Institute of Management Studies & Research 232 IT and Production Management ISSN : 2230-9667 Rank Changing Country Financial People Business Total in Attractiveness skills environment Ranking & availability 1 - India 3.30 2.63 1.14 7.07 2 - China 2.37 2.69 1.26 6.31 3 - Malaysia 2.92 1.47 1.72 6.11 4 1 Indonesia 3.25 1.53 1.20 5.99 5 (1) Brazil 2.65 2.02 1.27 5.93 6 5 Vietnam 3.31 1.39 1.22 5.92 7 - Philippines 3.13 1.57 1.17 5.87 8 (2) Thailand 3.06 1.38 1.43 5.86 9 - Chile 2.54 1.33 1.88 5.76 10 10 Colombia 2.85 1.45 1.43 5.73 11 3 Sri Lanka 3.42 1.07 1.22 5.70 12 (2) Poland 2.63 1.38 1.68 5.69 13 (5) Mexico 2.72 1.61 1.35 5.68 14 2 Egypt 3.37 1.26 0.99 5.62 15 (3) Bulgaria 2.99 0.95 1.61 5.55 16 10 Czech 2.44 1.17 1.87 5.48 Republic 17 6 Germany 1.16 2.15 2.14 5.46 18 (5) Romania 2.84 1.13 1.49 5.45 19 6 United 1.03 2.26 2.12 5.41 Kingdom 20 27 Peru 2.97 1.19 1.25 5.41 21 1 Bangladesh 3.34 1.23 0.80 5.37 22 (7) United 0.53 2.83 2.00 5.36 States 23 1 Bangladesh 3.34 1.54 1.18 5.33 24 - Ukraine 3.23 1.14 0.93 5.31 25 8 Estonia 2.39 0.95 1.95 5.30 Research Methodology: Growth of revenue of IT industry: Indian IT-ITES industry revenue US $ 95.7 billion in FY2012-13 is estimated at US $ 105 billion in FY2013-14 as compare to, registering an increase of around 10.3%. The last five years overall industry’s growth of this sector over is given in the table below. IT – ITES Industry Exports Trends (in US $billions) Year/ Description Exports Domestic Total 2012-13 76.5 19.2 95.7 2013-14 87.3 19.0 106.3 2014-15 97.8 21.0 118.8 2015-16 107.8 21.7 129.5 2016-17(E) 117.0 24.0 141.0 Source: NASSCOM, E: Estimated Table 1.1 Neville Wadia Institute of Management Studies & Research 233 IT and Production Management ISSN : 2230-9667

160

140

120

100

80 Domestic

60 Exports

40

20

0 2012-13 2013-14 2014-15 2015-16 2016-17€

The above table shows that in 2012-13 the export was 76.5 US$ billion; in 2013-14 it becomes 59.0 US$ billion after that it mounting which will be expected in 2013-14 is 86.0 US $ billion. It shows that in last 4 years the exports growth is 36.3 US $ billion (E). At domestic market also the growth is steadily in increasing order. The export income of Indian IT-ITES industry has developed from US $ 64.0 billion out of 2009-10 to US $ 95.2 billion of every 2012-13 and is anticipated to reach $ 105 billion by 2013-14 with CAGR of 11.88%. In perspective of the serious worldwide monetary subsidence in the created markets, which represent very nearly 90% of India's IT-ITES sends out, the fares development rate amid the year2008-09 declined to single digit (5.5%).

Export of IT industry: As appeared in figure 2, IT-ITES trades are evaluated as US $ 117.0 billion in FY2016- 17, developing by 8.5% over FY 2015-16. A mix of arrangements around troublesome advances, for example, SMAC (Social media, mobility, analytics and cloud), manmade brainpower, and inserted frameworks and so on have turned into the life-power of the business. IT Services is the quickest developing portion inside the Indian IT and ITES area. This portion is assessed to create sends out incomes of the request of US$ 66.0 billion in year 2016-17 when contrasted with US$ 61.0 billion in year 2015-16. ITES or BPO fragment has been rethinking itself in the previous couple of years and is relied upon to produce send out income of the request of ~US $ 26.0 billion in year 2016-17 when contrasted with US $ 24.4 billion in year 2015-16. Building Research and Development and Product Development has enrolled a development of around 11.6 % in the fares, which is assessed to achieve US$ 25.0 billion in year 2016-17 from the level of US$ 22.4 billion in year 2015-16.

Neville Wadia Institute of Management Studies & Research 234 IT and Production Management ISSN : 2230-9667 Segment wise Export Revenue Trends in IT – ITES Industry (in US $billions) Year/ IT ITES- S/W Products, Engineering Total IT & Description Services BPO Services, R&D ITES 2012-13 42.9 18.3 15.3 76.5 2013-14 49.2 20.4 17.7 87.3 2014-15 55.3 22.5 20.0 97.8 2015-16 61.0 24.4 22.4 107.8 2016-17 (E) 66.0 26.0 25.0 117.0 CAGR 10.59 10.34 13.97 11.20 (2012-17) Source: NASSCOM, E: Estimated Table 1.2

Export Revenue Trends in IT – ITES Industry 70

60

50

40

30

20

10

0 2012-13 2013-14 2014-2015 2015-16 2016-17

IT Services ITES-BPO S/W Product, Engineering,R&D

The present study will be based on secondary data. Data and information will be obtained from published papers, books, periodical, journals, internet websites and official sources like RBI Annual report, Monthly statistics of Foreign Trade of India- DGCI &S, Govt of India, and Center for Monitoring Indian Economy (CMIE) and National statistics of China, China’s statistical year book. The base period of proposed study will be limited to ten years before globalization (1981-1990), after globalization (1991-2000, 2001-2010). Important and relevant statistical tools will be used to analyze the data. Globalization is the process of integrating various economies of the world without creating any hindrances in the free flow of goods and services, technology, capital and even labour or human capital. It was argued that international specialization benefits both the countries which enter into trade relations. The same argument has been brought forth by the advocates of globalization now.

Neville Wadia Institute of Management Studies & Research 235 IT and Production Management ISSN : 2230-9667 Growth of India’s Foreign Trade : A comprehensive economic reform was undertaken in 1991 in the wake of sever crisis. Globalization has major impact on India’s foreign trade. The export, imports and balance of payments picture is given in Table. Export, Import and Balance Payments from 1990-91 to 2017-18 Period Exports Imports Trade Balance 1991-92 18537.2 19410.5 -1545.1 2001-02 43826.7 51413.3 -7686.6 2005-06 103090.5 149165.7 -46075.2 2009-10 178751.4 288372.9 -109621.4 2015-16 262291.1 381007.9 -118716.7 2017-18 303376.2 465578.3 162202.1 Source: RBI Hand book of Statistics of Indian Economy 2017-18 (US $ Million) This table shows that the export and import has continuously increased but as compared to the export, import has increased at a higher rate. As it can be seen, the trade balance is negative throughout the year.

Conclusion: Main finding of this paper is that Impact of globalization on India’s IT and ITES sector has received a strong impetus in post 1991 era. Flowing with globalization, India is shining in nearly every perspective. GDP growth has helped to improve India’s global position. The data shows that globalization has shown positive results in economic term. The investigation found that the commitment of Indian IT part to GDP expanded amazingly from 1.2 percent in FY1998 to almost 9.5 percent in FY2016 post globalization. Globalization has also effected India’s international trade positively but even than India’s share in international trade is very low. This study over-views the trends and patterns of growth of the Indian IT sector after the period of globalization. The investigation additionally to break down the relationship among monetary development and IT and ITES trades in India. It keeps on being one of the biggest private segment business in the nation, specifically utilizing four million experts. Programming and administration sends out commands the business, turning into the sole patron of around 75 percent of the all-out industry income. In addition, the nation has persistently kept up initiative position in worldwide sourcing, representing right around 56 percent of its worldwide offer in 2016. India is getting a global recognition and slowly moving towards to become a major economic and political strength., India needs to launch a ‘second generation’ of economic reforms and the reforms must be based on the long-term vision of transforming India into a global economic power in the next twenty to twenty-five years.

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