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The Smart Techie was renamed Siliconindia India Edition starting Feb 2012 to continue the nearly two decade track record of excellence of our US edition.

June - 2006 - issue > Guru Speak

Indian IT Industry:A Billion Opportunities Now

Ramalinga Raju
Thursday, June 1, 2006
Ramalinga Raju
The information technology industry in India has taken center stage on the global platform and is poised towards a period of new growth opportunities. As the global IT opportunity increases from its current size of more than half a trillion dollars, Indian IT industry with its mature processes and robust business models is well placed to take a bigger share of the market. The industry has been able to handle both the growth as well as the scale. This is clear from the fact that while the industry has grown over 200 times in less than 15 years, the five pioneers of the industry still enjoy a leadership position in IT services.

Much of this growth has been possible because of the vision and courage of pioneer companies but forces of economic change have played their part as well. It is helpful to remember that rapid economic growth across the globe is a relatively recent phenomenon.

Between 1 AD and 1000 AD there was little change in global wealth. It took an Industrial Revolution that culminated in the middle of 19th century to put the world on a path of high growth. Between 1900 and 2004 the global wealth increased from $1.9 trillion to $41 trillion. This pace has only accelerated in the recent times with the availability of more computing power, better telecommunication networks and the birth of the World Wide Web.

Over the last decade, three characteristics have tended to define the global economy. The economic wealth creation has increased quickly at approximately 4.2 percent every year. In comparison, the services sector of the global economy has increased at relatively faster rate at 6.2 percent every year. The fastest growth, however, has been in global trade, which has increased 7 percent every year over the last decade. Today more than half the world’s wealth is traded with trade as a proportion of global GDP at 54 percent.

These three forces have come about in exactly the same time period when Indian IT industry too has experienced a very rapid growth. It has definitely benefited from the increase in quantum of global trade and an expansion of the share of services in the global economy. Another factor that has helped the Indian IT industry is the rapid cycle of innovation and commoditization in various products and services throughout the world. A prime example of this is the mobile phone. It was developed in the West but manufacturing hubs and large consumer bases in Asia helped bring the prices of the handset as well as the service to extremely affordable levels. Today, cellular service in India and other parts of Asia is perhaps the cheapest in the world. Similar examples abound in products such as DVD players and Internet services.

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