Information technology in India is an industry consisting of two major components: IT services and business process outsourcing (BPO). The sector has increased its contribution to India's GDP from 1.2% in 1998 to 7.7% in 2017. According to NASSCOM, the sector aggregated revenues of US$160 billion in 2017, with export revenue standing at US$99 billion and domestic revenue at US$48 billion, growing by over 13%. The United States accounts for two-thirds of India's IT services exports.
India's IT Services industry was born in Mumbai in 1967 with the establishment of the Tata Group in partnership with Burroughs. The first software export zone, SEEPZ - the precursor to the modern-day IT park - was established in Mumbai in 1973. More than 80 percent of the country's software exports were from SEEPZ in the 1980s.
The Indian economy underwent major economic reforms in 1991, leading to a new era of globalization and international economic integration, and annual economic growth of over 6% from 1993-2002. The new administration under Sri Atal Bihari Vajpayee (Posthumus) (who was Prime Minister from 1998-2004) placed the development of Information Technology among its top five priorities and formed the Indian National Task Force on Information Technology and Software Development.
Wolcott & Goodman (2003) report on the role of the Indian National Task Force on Information Technology and Software Development:
Within 90 days of its establishment, the Task Force produced an extensive background report on the state of technology in India and an IT Action Plan with 108 recommendations. The Task Force could act quickly because it built upon the experience and frustrations of state governments, central government agencies, universities, and the software industry. Much of what it proposed was also consistent with the thinking and recommendanotions of international bodies like the World Trade Organization (WTO), International Telecommunications Union (ITU), and World Bank. In addition, the Task Force incorporated the experiences of Singapore and other nations, which implemented similar programs. It was less a task of invention than of sparking action on a consensus that had already evolved within the networking community and government.
In 1991 the Department of Electronics broke this impasse, creating a corporation called Software Technology Parks of India (STPI) that, being owned by the government, could provide VSAT communications without breaching its monopoly. STPI set up software technology parks in different cities, each of which provided satellite links to be used by firms; the local link was a wireless radio link. In 1993 the government began to allow individual companies their own dedicated links, which allowed work done in India to be transmitted abroad directly. Indian firms soon convinced their American customers that a satellite link was as reliable as a team of programmers working in the clients' office.
Videsh Sanchar Nigam Limited (VSNL) introduced Gateway Electronic Mail Service in 1991, the 64 kbit/s leased line service in 1992, and commercial Internet access on a visible scale in 1992. Election results were displayed via National Informatics Centre's NICNET.
"The New Telecommunications Policy, 1999" (NTP 1999) helped further liberalise India's telecommunications sector. The Information Technology Act, 2000 created legal procedures for electronic transactions and e-commerce.
A joint EU-India group of scholars was formed on 23 November 2001 to further promote joint research and development. On 25 June 2002, India and the European Union agreed to bilateral cooperation in the field of science and technology. India holds observer status at CERN, while a joint India-EU Software Education and Development Center will be located in Bangalore.
In the contemporary world economy India is the largest exporter of IT. Exports dominate the Indian IT industry and constitute about 79% of the industry's total revenue. However, the domestic market is also significant, with robust revenue growth. The industry's share of total Indian exports (merchandise plus services) increased from less than 4% in FY1998 to about 25% in FY2012. The technologically-inclined services sector in India accounts for 40% of the country's GDP and 30% of export earnings as of 2006, while employing only 25% of its workforce, according to Sharma (2006). According to Gartner, the "Top Five Indian IT Services Providers" are Tata Consultancy Services, Infosys, Cognizant, Wipro, and HCL Technologies.
Bangalore is known as the Silicon Valley of India. Notable tech park are Electronics City Phase I & II, ITPL, Bagmane Tech Park, Embassy Golf Links, Manyata Tech Park, Global Village Tech Park, Embassy TechVillage
Hyderabad - also known as the HITEC City or Cyberabad - is a major global information technology hub, and the largest bioinformatics hub in India. Hyderabad has emerged as the second largest city in the country for software exports pipping competitors Chennai and Pune. Notable tech and pharma parks are HITEC City, Genome Valley, and Hyderabad Pharma City
Pune is one of the leading Indian and international IT services and outsourcing exporters. The next biggest IT park of India (Rajiv Gandhi IT Park at Hinjawadi) is expected to scale up to phase 7.
Chennai has a good IT infrastructure with dedicated expressway nicknamed as IT expressways, and many other IT parks promoted by both government agency (Elcot) Electronics Corporation of Tamil Nadu and private entities.
Mumbai and Navi Mumbai have major IT parks.
India's growing stature in the Information Age enabled it to form close ties with both the United States and the European Union. However, the recent global financial crises have deeply impacted Indian IT companies as well as global companies. As a result, hiring has dropped sharply, and employees are looking at different sectors like financial services, telecommunications, and manufacturing, which have been growing phenomenally over the last few years.
With fundamental structural changes visible everywhere in the IT services due to Cloud computing, proliferation of Social media, Big data, Analytics all leading to digital services and digital economy, many of the leading companies in India's IT sector reported lower headcounts in their financial results.