Role of the IT sector in the Indian Economy
                     
INTRODUCTION
The IT sector of India is taking the 
Indian economy to unprecedented 
heights, and by all projections, the 
contribution of the IT sector to the 
Indian economy is going to increase 
manifold in the future.
Source: unacademy.com
THE INFORMATION 
TECHNOLOGY 
SECTOR
The information technology sector 
includes all the companies offering 
IT-enabled services (ITES), IT 
services, software products, e-
commerce facilities, etc. In the past 
decade, the role of the internet and 
computer has grown manifold in our 
lives. Most people consume IT 
services in some form or the other.
Source: unacademy.com
IMPACT OF COVID-
19
The COVID-19 pandemic further 
highlighted the contribution of the IT 
sector to the Indian economy. With 
the shift to remote working, the IT 
sector enabled the other sectors to 
operate from distance mode as well. 
New startups in the sector are 
opening up, which boosts the 
economy as a whole.
Source: unacademy.com
INDUSTRY 
TRENDS
The IT-BPM (Information technology 
and Business Process Management) 
sector of India has a share of 9.3% of 
the country’s GDP, making it one of 
the biggest sectors to contribute to 
India’s economic growth. The IT 
sector captures 56% of the global 
outsourcing market.
Source: unacademy.com
SOFTWARE 
PRODUCTS
The branch of the IT sector dealing 
with software products is projected 
to become worth $100 billion by the 
financial year 2025. The Indian 
technology companies are shifting 
their focus to international markets.
Source: unacademy.com
EMPLOYMENT
4.5 lakh employees were hired till 
February 2022 in the first quarter of 
2022. This has been the highest ever 
addition in any given year. There is 
significant participation of women as 
out of the total new employees, 44% 
were women.
Source: unacademy.com
FOREIGN DIRECT 
INVESTMENT (FDI) 
INFLOWS
The Foreign Direct Investment (FDI) 
inflows in the IT sector (computer 
hardware and software, to be 
precise) between April 2000-
December 2021 stood at $81.31 
billion (14.19% of the FDI inflows). 
The data from the Department for 
Promotion of Industry and Internal 
Trade (DPIIT) proves that it was the 
second-largest sector to have 
received such high FDI inflows.
Source: unacademy.com
INVESTMENTS
Record investments of $36 billion 
were made in private-sector IT 
companies in the financial year 2021 
alone. In 2020, this number stood at 
$11 billion. Hence, the investment 
increased more than three times in 
just a year, making this sector a 
lucrative investment destination.
Source: unacademy.com
GOVERNMENT 
INITIATIVES FOR 
THE IT SECTOR
In the Union Budget 2022-23 
announced by Finance Minister 
Nirmala Sitharaman, $11.58 billion 
were allocated to the IT and telecom 
sector. This is equivalent to ₹ 
88,567.57 crores.
Source: unacademy.com
GOVERNMENT 
INITIATIVES FOR 
THE IT SECTOR 
CONT.
The Department of Telecom, the 
Government of India, and the 
Ministry of Communications have 
signed a Memorandum of 
Understanding with the Government 
of Japan. 
Under this, there would be increased 
cooperation in sectors related to the 
development of 5G technologies, 
submarine optical fibre cable 
systems, and telecom security.
Source: unacademy.com