Software Sector

What is a Software Industry? Why is it so important? What are the existing challenges that need to be addressed? To answer these questions, read further.

The software industry includes companies that create, support, and publish software. Additionally, the sector offers software services like training, documentation, consultancy, and data recovery.

The software and computer services sector spends more than 11% of its net sales on research and development, which is the second-highest percentage among all sectors (after biotechnology & pharma).

India’s market for international sourcing is expanding faster. India holds a 55% market share of the global services sourcing market in 2019–20, making it the top sourcing destination in the globe.

The IT sector emerged in the 1960s, and its export potential was identified as early as the first decade of the 1970s. The government adopted many policies. The most significant policy change made by the government to increase the export potential of this industry was to permit the duty-free import of computer systems for software export.

In 1893, Swami Vivekananda persuaded Jamsetji Tata when they were traveling by ship to attend the World Parliament of Religions and a Technology Expo that technology can be imported, however, scientific temper cannot be acquired and must be developed domestically.

Later, the Indian Institute of Science was founded in Bangalore by Jamsetji. The Tatas’ technology-friendly attitude helped to establish India’s software sector in the 1960s.

Importance

• The Indian IT and BPM (Business Process Management) industries are expected to generate over 191 billion US dollars in revenue by 2020.
• This industry is contributing significantly to the professional workforce in India. Thus creating employment.
• The sector aims to raise the benchmark for jobs by shifting away from low-skilled manual labor positions to high-skilled technological positions.
• Since Indian developers charge substantially less than their counterparts in the US and UK, outsourcing to India is made simpler.
• Thanks to India’s 100% FDI ceiling, the IT sector draws the second-highest amount of FDI inflows. Thus leading to more investments.
• India’s service exports are centered on the IT and software industries, which have strong growth and income potential.
• The expansion of the IT industry aids India’s transition from an agro-based economy to one that is based on the secondary and tertiary sectors.
• It also aids in the creation of models for local or worldwide climate and weather systems.
• Various apps and programs have been created to promote safety, financial independence, and educational opportunities. For example, using Mahila E-Haat, women can sell their products online. Hence, leads to women’s empowerment.
• This industry makes cutting-edge items like telemedicine, online doctor consultations, and other clinical technology to identify ailments. It is opening doors to the healthcare sector.
• It is also helping the education sector by using cutting-edge technology. For example, during Covid, it came out as a boon.
• Numerous apps and programs have made it possible for the elderly and the disabled to live fulfilling lives without being constrained. For example, the Reserve Bank of India released the mobile app MANI to assist those who are blind in recognizing banknotes.
• For the advancement of Indian space technology, domestic software development is equally essential.
• The IT and defense and strategic weapons industries commonly work together to create software. For instance, DRDO’s IMSAS program.
• Over the past 20 years, India’s growth rates have risen as a result of the software industry. The sector is responsible for this increased growth.
• India’s IT sector strongly supports the growth of e-commerce and subsequently the manufacturing sector, which is the need of the hour.
• The industry contributes to the development of cutting-edge technology. It also brings the software for both domestic as well as global needs.
• The IT sector is vital in developing and growing e-governance in India.
• The IT revolution would assist in marketplaces and customers as well as financial services, education, health care, long-distance communications, and knowledge of agriculture and climate.

Challenges

• Poor Digital Literacy is causing the absorption of the IT sector by vast sections of the public, especially in rural India.
• Indian businesses have regularly been accused of stealing intellectual property.
• A significant portion of Indian IT experts has been leaving for nations with better wages and living conditions. This is creating the problem of brain drain.
• There are also visa and hiring issues.
• Indian businesses are unable to operate in other countries due to the new data protection and privacy regulations being applied by those nations.
• The Indian software industry’s profits from the sale of traditional services are projected to decline in the future due to the steady influx of new competitors into the global software market.
• The benefits of the Indian IT sector are not felt in many regions because internet penetration is still low in so many places. Maintaining a reliable internet connection and communicating internationally requires infrastructure, which might not be present in all regions of the nation.
• Due to inadequate skill development, many people are ineligible to work in the industry.
• The industry has a profit-seeking nature, which results in scattered investments in many areas.
• Many Indian communities continue to be skeptical of internet goods and adhere to more conventional approaches.

Government Initiatives

National Policy: It promotes the development of India as the world’s center for software products through enhanced commercialization and innovation.

Simplified Other ‘Service Provider: These rules simplify doing business in the IT industry, business process outsourcing (BPO), and IT-enabled services more straightforwardly.

BharatNet: Over 150,000 Indian villages are expected to receive broadband connections through BharatNet.

5G: TRAI plans to publish a vision statement and consultation documents on the implementation of 5G in India.

Digital India: It enhances the strengths of the software industry and also raises interest in software creation.

Smart hackathons: They promote youthful talent and creativity across a range of industries.

Way Forward

The sector has the power to address several of India’s social problems.

With the IT sector leveling the playing field for outreach to India’s rural areas, there needs to be a stronger emphasis on rural development.

Upskilling the workforce of the nation is urgently required to meet the demand for jobs in the sector in the future.

To fully utilize India’s IT strength, the 5G revolution must occur fast.

India can attract NRI talents to return by offering incentives.

Given the pervasiveness of technology in business, the management of risks and controls should be prioritized at every stage of AI.

Income tax exemption for exports of software and services might also improve outreach.

Today, the IT industry in India outsources software services all over the world, thanks to the 1991 economic reforms and the numerous liberalization laws passed by succeeding governments. The industry can gain a lot if the government contributes to the development of some essential infrastructure and human resources. To suit the modern demands of organizations, the sector has already begun rethinking its services to include AI, RPA, and machine learning.

Article written by Chetna Yadav.