IT Industry - Overview of Different Sectors

INTRODUCTION TO IT INDUSTRY

IT Industry or the Information and Technology industry refers to that sector of the business world that helps in the development of services like technological software, software consulting services and provides various types of business process outsourcing (BPO) services.

In this ever-expanding world with so many technological developments taking place at such a rapid pace, this industry has made itself the highlight of today’s economic progression. Without the existence of this industry, humans could’ve never thought of achieving such great milestones.

IT INDUSTRY CONTRIBUTION TOWARDS

THE ECONOMY

Since the work performed by companies falling under the IT industry seems a bit technical, let us take a look at some existing instances to see how has the expansion of this sector lead to the upliftment of the Indian economy and the global economy as a whole.

1. India is home to the 2nd largest data center on Earth, Yotta NM1 located in Navi Mumbai and developed by the Hiranandani group. Although this piece of news is more related to the infrastructural developments in the country, the presence of such a great data center is a big step towards addressing the challenge of data privacy, which has become a major concern in today’s times and being worked upon by many IT companies.

2. Talking at the global level, we are very much aware of philanthropist, entrepreneur Bill Gates’ Microsoft Corporation. Its most successful product Microsoft Office Collection is widely used at the industrial as well as household level. Bill Gates had a dream which was to manufacture computers at a nominal rate so that every household is able to afford at least one, and he is not very far from conquering his dream.

That’s the contribution of the IT sector to this world. Isn’t it amazing?

SOME FACTS AND FIGURES FOR IT INDUSTRY

Up until 10 years ago, this sector contributed less than 5% of India’s GDP. Today it contributes more than 8%. It accounts for approximately 53% of the total service exports by India and for approximately 55% of the global software service sourcing market. This sector has generated about 4 million jobs since the time it was founded. These figures are much greater than what they seem to be and truly reflect the contribution of this sector to the Indian and global economy.

IMPACT OF COVID 19 ON IT SECTOR

Due to the economic slowdown not only in the country but throughout the world, most industrial sectors have been hit hard. Luckily IT industry is not one of them. All major IT sector companies have reported a spike in business. Wipro reported a whopping growth of 21% in profits and 1.3% growth in revenue in Q3 2020 (Oct. 2020- Dec. 2020) in comparison to the previous year. TCS reported a 7% growth in profits and 5.4% growth in revenue in this time frame. Other major IT sector companies also reported similar increments.

We must carefully analyze why is this industry able to generate profits which is very unusual for other industries. The demand for IT services grew when the national lockdown was imposed and work from home culture started to prevail. The need for various technological services grew as data transmission, cloud-based services, IT consulting services gained importance. Not only this, demand for electronic gadgets like laptops and computers also shot up, which indirectly leads to demand for IT-based products and due to which we could also see a rise in their prices.

IT INDUSTRY AND STOCK MARKETS

Another important point to be noted is the stock market reaction. We know that stock markets are the first to react to any changes that affect the larger Indian population. Hence stock market speculation is a great way to analyze various results. Since their incorporation, most major IT sector companies have been able to grow year-on-year at a rate of approximately 15%. However, if you take a look at the share prices of these companies in the previous 1 year, the data is going to take your breath away.

COMPANY NAME GROWTH (MAY 2020 - MAY 2021)

Tata Consultancy Services Ltd. 60%

Infosys Ltd. 93%

Wipro Ltd. 167%

HCL Ltd. 80%

Tech Mahindra Ltd. 82%

CONCLUSION

We can conclude that the IT industry is growing tremendously and has a great scope in the future. One who is aware knows about these technological advancements taking place can use this information to his/her greatest advantage. Thus, keeping a tap on the work of these companies can be very resourceful.