Indian IT Industry : Impacting the Economy and Society

NASSCOM on 13th February 2008, released the key findings of the NASSCOM - Deloitte Study On ‘Indian IT Industry : Impacting the Economy and Society’ at India Leadership Forum.

The Report while bringing forth the contribution of the Indian IT/ ITES industry points out that – “the IT industry has been the trigger for many ‘firsts’ and has contributed not only to unleashing the hitherto untapped entrepreneurial potential of the middle class Indian but also taking Indian excellence to the global market. However, equally significant though not always as tangible, has been the significant economic and social contribution of the ‘for profit’ activities of the industry.”

This study has been based on the responses received from the participating companies from NASSCOM member companies as well as analysis of facts and information available from various other secondary sources.

The Report states that the IT/ITES industry’s contribution to the country’s GDP has been steadily increasing from a share of 1.2% in FY98 to 5.2% in FY07; it has contributed to foreign exchange reserve of the country by increasing export by almost 36% and its direct employment has grown at a CAGR of 26% in the last decade, making it the largest employer in the organized private sector of the country. In addition, the research has highlighted the IT industry’s significant contribution through socially relevant products/services and community initiatives in human resource development, education, employability, health, creating opportunities for the ‘out-of-the-mainstream’ candidates, encouraging women empowerment and employment of differently-abled and has given a boost to the Tier III, II towns where IT industries have located themselves.

The key findings of the report are as below

Direct contribution to the Indian economy

- contribution to the country’s GDP has been steadily increasing from a share of 1.2% in FY98 to 5.2% in FY07
- export earnings in FY08 at USD 40.0 billion with a growth of 36%
- direct employment expected to be 2.0 million in FY08, growing at a CAGR of 26% in the last decade

Indirect contribution to the Indian Economy

- indirect employment generated, at the rate of 4 additional jobs created in the economy for every 1 job created in the sector, is socially relevant as nearly 75% of the workforce employed in those jobs are SSC/HSC or less educated
- the industry has had a multiplier effect on other sectors of the economy
o an output multiplier of almost 2 through its non-wage operating expenses, capital expenditure and consumption spending by professionals
o 15.85 billion USD spent by the IT/ITES industry in the domestic economy in FY06 generate an additional output of 15.5 billion USD
- the sector has encouraged balanced regional development by gradually spreading business operations to smaller Tier II/III cities, generating revenue and employment, and assisting in improving the supply of talent, development of physical and social infrastructure
- fuelling the growth of PE/VC funding
- spurring first generation entrepreneurship
- emerging as a front runner in practising good corporate governance

Diversity in employment
- Creating employment opportunities in smaller towns/cities
- Encouraging employment of differently-abled
- Opening opportunities for non-technical personnel
- Promoting women empowerment
- Providing high growth opportunities for the youth Creating opportunities for the ‘out-of-the-mainstream’ candidates

Human Resource Development
- Training of workforce
- Promoting higher education

Contributing to society through socially relevant products/services and community initiatives



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