The Indian IT services industry that’s a combination of offshore services, BPM and domestic business performed expectedly well during the FY21-22 as the post-pandemic world continued to invest heavily on IT infrastructure as well as services in order to maintain business continuity and remain competitive.
The global sourcing market in India continues to grow at a higher pace compared to the IT-BPM industry. India’s rankings improved four places to 46th position in the 2021 edition of the Global Innovation Index (GII).
According to STPI (Software Technology Park of India), software exports by the IT companies connected to it, stood at Rs. 1.20 lakh crore (US$ 16.29 billion) in the first quarter of FY22.

Market size
According to Nasscom, the Indian IT industry’s revenue is expected to touch $ 227 billion in FY22 from $ 196 billion in FY21.
Similarly, Gartner estimates, IT spending in India is expected to increase to $ 101.8 billion in 2022 from an estimated $ 81.89 billion in 2021.
Indian software product industry is expected to reach $ 100 billion by 2025. Indian companies are focusing to invest internationally to expand global footprint and enhance their global delivery centres.
Another major area in the Indian IT services industry is the data annotation or data labeling market which is growing at a very rapid pace. In FY 2020 the data labeling market in India stood at US$ 250 million in FY20, and is expected to reach US$ 7 billion by 2030 due to accelerated domestic demand for AI and ML.

Exports from the Indian IT industry stood at US$ 149 billion in FY21. Export of IT services has been the major contributor, accounting for more than 51% of total IT export (including hardware). BPM and Engineering and R&D (ER&D) and software products exports accounted for 20.78% each of total IT exports during FY21. ER&D market is expected to grow to US$ 42 billion by 2022.
The IT industry added 4.5 lakh new employees in FY22 (as of February), the highest addition in a single year. Women accounted for 44% of the total new employees.

Major developments
Indian IT’s core competencies and strengths have attracted significant investment from major countries and companies.

The computer software and hardware sector in India attracted cumulative foreign direct investment (FDI) inflows worth $ 81.31 billion between April 2000-December 2021. The sector ranked 2nd in FDI inflows as per the data released by the Department for Promotion of Industry and Internal Trade (DPIIT). Computer software and hardware make up 14.19% of the cumulative FDI inflows.
In 2021, PE investments in the IT sector stood at $ 23.4 billion.
India’s IT startup ecosystem has received record investments of nearly US$ 36 billion in privately held companies in 2021, up from US$ 11 billion in 2020.

In March 2022, Licious, India’s largest tech-first, fresh animal protein brand, raised $ 150 million in a Series F2 funding round.
In March 2022, Byju’s raised US$ 800 million in funding as part of a pre-IPO round, which values the Bengaluru-based company at about US$ 22 billion.

Growth of IT sector in India
In March 2022, debt marketplace CredAvenue raised $ 137 million in a funding round led by Insight Partners, B Capital Group, and Dragoneer Investment Group, which propelled the startup’s valuation to US$ 1.3 billion.
 In February 2022, Hasura, a software company which helps developers with tools, raised US$ 100 million in a fresh funding round led by Greenoaks Capital, which elevated the company into a unicorn.
In February 2022, Bangalore-based edtech startup ‘BygC’ launched India’s first upskilling focused community platform for young graduates and people seeking jobs in the BFSI sector.
In January 2022, Google announced plans to invest US$ 1 billion in India’s Bharti Airtel Ltd. to push India’s digital ecosystem.
Amazon has partnered with Airtel to sell Amazon Web Services (AWS) to its customers and intends to inject US$ 1.6 billion into its two upcoming data centres in Hyderabad.
In November 2021, Wipro partnered with TEOCO to build solutions for communication service providers (CSPs) to improve network automation, efficiency, flexibility and reliability.
In August 2021, Tata Consultancy Services was adjudged a leader in the NelsonHall NEAT for CX Services in Banking, Financial Services and Insurance (BFSI).
In August 2021, SAP India and Microsoft announced the introduction of TechSaksham, a collaborative skilling initiative aimed at enabling young women (from underprivileged regions) to pursue careers in technology. 62,000 women students will be trained in artificial intelligence (AI), cloud computing, web design and digital marketing as a result of this collaboration.
In July 2021, Wipro announced plans to invest US$ 1 billion over the next three years to expand its cloud technology capabilities through acquisitions and collaborations.
In July 2021, Infosys announced that it has set up an Automotive Digital Technology and Innovation Centre in Stuttgart, Germany. Automotive IT infrastructure professionals stationed in Germany will transfer from Daimler AG to the new Digital Technology and Innovation Centre as part of Infosys’ relationship with Daimler.
In July 2021, TCS expanded its strategic partnership with Royal London, the largest mutual life insurance, pensions and investment company in the UK, to help the latter transform its pension platform estate and deliver market-leading services to members and customers.
In July 2021, Tata Technologies partnered with Stratasys, a 3D printing technology company, to provide advanced additive manufacturing technologies to the Indian manufacturing ecosystem.
In July 2021, Tech Mahindra Foundation and Wipro GE Healthcare have joined forces to offer skilling and upskilling courses to students and healthcare technicians.
In July 2021, HCL announced a multi-year agreement with Fiskars Group, consisting of a family of lifestyle brands including Fiskars, Gerber, Iittala, Royal Copenhagen, Waterford and Wedgwood for digital transformation.
In July 2021, TCS launched Jile 5.0, a key release of its Enterprise Agile, on-the-cloud services, planning and delivery tool that enables enterprises to meet the large-scale development needs of multiple distributed teams.
In February 2021, Tata Consultancy Services announced to recruit 1,500 technology employees across the UK over the next year. The development would build capabilities for TCS to deliver services efficiently to their UK customers.

Govt initiatives
Some of the major initiatives taken by the Government to promote IT and ITeS sector in India are as follows:
In Union Budget 2022-23, the Government allocated Rs Rs. 88,567.57 crore ($ 11.58 billion)for IT and telecom sector. The government introduced the STP Scheme, which is a 100% export-oriented scheme for the development and export of computer software, including export of professional services using communication links or physical media.

Indian Tech Industry generated $103 bn of revenue and directly employed 207,000 people in the US in 2021,as per NASSCOM, S&P Global Report
The outsized contribution of the Indian technology industry to the US economy is leading to a total impact of 1.6 million jobs supported, supporting $396 billion in sales revenue and $198 billion of GDP contribution.
The Indian technology companies in the US continues to grow its presence and today is a vital part of the US economies’ innovation progress. This is creating a multiplier effect for their US suppliers, employees, and customers. As of 2021, the Indian tech industry has directly generated $103 billion of revenue and directly employed 207,000 people in the US with an average wage of $106,360, witnessing a 22% of employment growth since 2017. From the value chain through to the end customers, Indian technology companies invest in American talent and technology that they augment with their global resources to develop and produce cutting-edge innovations for industries & clients. The direct impact of the Indian tech industry in both operational and investment spending as well as supporting their client base, has rippled through the US economy generating a total of $396 billion in US sales (output), supporting a total of 1.6 million jobs and contributing over $198 billion to the US economy – larger than the combined economies of 20 US states in 2021.
The reports also noted the sizeable investments the industry is making in the United States and its commitment to growing both its US employment base as well as helping build out the next generation of talent.  The Indian technology companies have contributed over $1.1 billion and developed partnerships with nearly 180 universities, colleges, community colleges, and others to strengthen and diversify the STEM pipeline in the US.  It also has provided over $3 million more for just K-12 initiatives.  These efforts have touched well over 2.9 million students and teachers to date.   In addition, over 255,000 current employees have been upskilled by the sector.

Expansion of The Talent Pool
The Indian technology industry in the US has played a significant role in expanding the talent pool outside of traditional tech hub states. This has contributed to some of these states, such as North Carolina, becoming emergent tech hubs. Over the last decade, these states have grown their employment rate by 82%, making outsized contributions particularly in states that have below US average concentrations in IT talent. This has helped industries operating in those states accelerate their digital transformation capabilities with deep pool of IT talent.

Outlook
For decades, India has been the preferred offshoring destination for IT companies across the world because of its exceptional talent pool, competitive RoI and investment friendly policies. The agility of the Indian industry makes it all the more lucrative for global companies to trust on Indian companies for their business continuity.