Blog: The IT-Sector of India

Blog: The IT-Sector of India

  • Posted by @dmin-IndiaTrading
  • On March 21, 2022
  • 0 Comments
  • aksjer, India, investment, IT, startup

India’s IT-industry is large and highly developed, but when considering the stock market, but there are two leading companies: Tata Consultancy Services (TCS) and Infosys. Three other companies, relatively smaller than these two giants are HCL technologies, Tech Mahindra and Wipro.

The IT-companies weighting in the NIFTY-50

The It-sector in India had more than 200 billion USD in revenue last year, according to NASSCOM.  This mainly includes IT-services, business process management (BPM) and captive unites which is the Indian arm of multinational companies.  The sector grew 15,5 % last year and according to the report it will keep the same level of growth going forward, reaching revenues of 350 billion USD in 2026.

The geography sites of the IT-sector are all over India, but a few cities are leading the development. These are Bangalore, Delhi, Hyderabad, Chennai and Pune.

  • Bangalore is considered as the “Silicon Valley of India”, and is Capital for both the IT- and the startup sector. The third largest city in India is responsible for about 40 % of the revenues earned in IT. The city also includes all the main players of a venture industry which is number three in the world.
  • Hyderabad is also key in the IT-sector. Specially in combination with biotechnology, it has become the “Medical valley” and is the dominant city of Bioinformatics.
  • Chennai do also include a number of the leading IT-hubs and companies in India. It is not the same size as Bangalore, but a key Tier 2 IT-city together with Hyderabad.
  • Delhi is another main IT-hub of India. Specially the outer parts of larger Delhi like Noida and Gurgaon is central.

Tata Consultancy Services is the largest IT-company in India, and second largest company after Reliance Industries.  From its beginning in 1968 as a part of the Tata conglomerate, it has grown into a multinational global leader with a diversified product portfolio related to B2B, B2C and C2C. The company is still owned about 70 % by the Tata conglomerate and their most important holding.

Infosys is the second IT-giant in India and a multinational corporation. Founded by seven it-engineers in 1981, it has had a rapid growth until today. The main focus of the company all relates to IT Services and IT consulting. A lot of work is related to outsourcing of IT from all over the world. It has a broad owner structure, without any conglomerate or family backing.

HCL Technologies is another large multinational IT-company based in the greater Delhi-area. It is a subsidiary of the conglomerate HCL Enterprise, which still owns about 40 % of the company. The main focus is providing software services related to outsourcing and infrastructure services.

Tech Mahindra is a the forth of the large players in the IT-sector, and an important part of the Mahindra conglomerate. It was a joint venture with British Telecom set up in the 80s, with a broad IT-focus as the rest of the large players in this sector. BT sold their last share in 2012, but the Mahindra group still own about 35 % of the company.

Wipro is the last of the IT-companies on the Nifty 50, and was established in 1945 with a broad focus in a range of sectors. In the 70s it started to focus on IT, and was the start of the Wipro equity of today. The IT-arm of the company was demerged from the rest in the early 2000s, and is leading in India when it comes to a broad range of IT-services. It is also largely owned by the holding company of Wipro with more than 70 % of the shares.

The future growth of IT in India is expected to keep going. The number of companies in this sector is taking off, especially with new startups/scaleups coming to the market. A key driver forward will be the implantation of IT in the India society, which is still lagging the west. The full effect from introduction of the Aadhaar-card and a number of new regulations is still years away, and India has “only” 730 million users of mobile-internet so far (population of 1,4 billion), who will keep adapting and increasing their IT-habits going forward.

Outside India, the world is also experiencing much change. The openness and global trade tend to be decreasing. Increased “cold war” between China and USA will be interesting going forward. It seems clear that the “one country” production focus will disappear, and companies will diversify more. India that is a democracy with 1,4 billion people and the second largest English-speaking population in the world, should be interesting to many. The Indian IT-sector will take part of these changes, with world leading companies like TCS, Infosys and others, to the small startups. It is going to be extremely interesting to follow India’s It-industry the next 10-30 years.