Technology Sector

1. General overview
The global information technology industry is on pace to reach $5.2 trillion in 2020.
Economies, jobs and personal lives are becoming more digital, more connected and more
automated. Waves of innovation build over time powering the technology growth engine
that appears to be on the cusp of another major step forward. We are living in revolutionary
time brought on by dramatic advances in Information Technology. Information technology
concerns the uses of systems that allow the transfer, storage, processing and presentation
of information.

2. Companies

3. Impact

Capability
Female development Growth in Start up Digital
and
empowerment exports ecosystem infrastructure
employment
creation

4. Way Forward
5. SWOT Analysis

Highly skilled, English speaking manpower

Lower attrition rates than on the West
Lower response time with efficient and effective service
Strength

Recent months have seen a rise in the level of attrition rates among IT workers who
are quitting their jobs to pursue higher studies
The cost of telecom and network infrastructure is much higher in India than in the
Weakness US

Opportunities for Indian companies to work closely with western Governments

andassure their concerns and issues
Oppurtunity India can be branded as a quality IT destination rather than a low-cost destination

Workers in British Telecom have protested against outsourcing of work to Indian

BPO companies
The anti-outsourcing legislation in the US state of New Jersey. Three more states in
Threat the US are planning legislation against outsourcing

6. Infographics
7. Porter’s Five Forces Analysis
a) Existing competition (High)

 Application Development & Maintenance, IT Infrastructure Management Services, Network

Management Services, Data centre Services are leading to commoditization.
 The existing competition comes from both domestic players like Infosys, TCS, Wipro, HCL
technologies, Tech Mahindra, Mind tree etc. and international ones like IBM, Accenture,
Capgemini, Cognizant and so forth.
 Emerging technologies and trends such as Analytics, Cloud computing, Social Media,
Enterprise Mobility, Internet of Things where the opportunity for differentiation
through niche specialization occurs.
 Products in this industry are well branded and tend to have a strong customer base.
 Market share is unevenly distributed among existing players who are often in various kinds
of legal and advertising battles with one another.

b) Bargaining power of Buyers (High)

 The buyer having worked with both with international IT providers as well as Indian ones is
largely the price setter and has negated (to a large extent) the offshore advantages through
mature procurement and global delivery.
 Minimal switching costs so customers aren't typically locked in to one firm.
 IT sales come from companies that make large purchases due to which companies are
powerful and important to the IT firms who often provide incentives to these businesses in
order to convince them to utilize their products over competitors.
 Myriad of options to offer customers with multiple companies providing a range of similar
products in every niche and domain of tech.

c) Bargaining Power of Suppliers (Low)

 The bargaining power for suppliers is very low and since high-standardization exists as there
is little scope of suppliers having any clout.
 The suppliers consist of IT Infrastructure providers, Recruitment firms, Office Space
Suppliers etc.
 Existing relationships between current suppliers and IT firms.
 Suppliers are not locked into deals with specific firms (contracts exempt) but most of the
relationships between the firms and suppliers in this industry are well established and these
suppliers would most likely not want to end their relationships with firms in the first place.

d) Threat of New Entrants (Low)

 Industry is also characterised by high people dependence and therefore can see veterans
detach from existing companies to invest in new ventures.
 The newer technologies allow the possibility of new niche players that are not dependant
on size or experience constraints.
 The IT industry is relatively attractive to newcomers because of its rapid growth and
appealing customer base.
 Unattractive to newcomers because of the cost advantage large-scale incumbents possess,
the significant amount of capital a new firm would need, and the major established brands
already in the industry. 
 The best way for a new entrant in this field to be successful would be if they had a brand
new idea for a product or service; the lack of differentiation in the industry is one thing a
newcomer could exploit.

e) Availability of Substitutes (Low)

 This has been a mixed bag for newer services as well since internal specialization is very low
as most of the work is outsourced.
 Conventional services is highly commoditised with potential for differentiation
concentrated around niche expertise in new technologies and trends (SMAC + Internet of
Things) and around non-conventional engagements (revenue/profit share, risk-reward
models).
 It is unlikely that the market for conventional services will vanish overnight but the future
promises to hold a highly modified view.
 Application development is fast morphing into app-development and a large part of
revenues continue to be drawn from conventional services as the need to adapt and
incorporate new technologies.
 This leaves a vast scope for improvement in innovation with different small scale companies
offering similar products at lower prices.

8. Conclusion

The computer has been called ‘the machine that changed the world.’ We believe that
Information Technology has and will continue to revolutionize all aspects of human life. The
Information Technology Sector in India has to take care of threats and should trap the
bundle of opportunities into its basket in order to take maximum benefits of its Information
Technology competitive advantage. The Industrial Revolution changed the nature of work
and led to dramatically higher standards of living.