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In a nutshell

Indian IT and ITeS sector is an archetype of how an emerging country stands among global leaders in the IT field in an era of ubiquitous competition. Over the years, the industry has moved from providing cost-effective back-office solutions to building platforms and products. While sectors across the board were adversely impacted by the pandemic, the Indian IT sector registered steady growth, and as per a NASSCOM report, it registered an overall growth of 2.3 % with revenues growing from USD190 billion in 2020 to USD194 billion in 2021. In FY2020, the IT sector contributed 7.7% to India’s GDP and is expected to grow at a CAGR of 14% between 2020 and 2025.

A hub for digital talent, the sector has played a crucial role in putting India on the world map for efficient and cost-effective IT services and displayed India’s “soft” power. With an estimated 4.5 million people across the country employed in the sector, India is the largest offshoring destination for IT companies in the world.

The sector is broadly categorized into 4 main segments:

1. IT software services (around 50% market share)
2. Hardware (around 9% market share)
3. Software products and engineering services (around 19% market share)
4. Business Process Management (around 19% market share)

IT and ITeS have the highest share (around 60%) in the total operational SEZs in India—145 out of a total of 240 operational SEZs belong to the IT, ITeS electronic hardware, semiconductor, and telecom equipment. The sector has applications across various industries and is therefore bolstered by IT in verticals like retail, healthcare, and technologies such as blockchain, IoT, big data, cloud computing, analytics, and cyber security. The rise in smartphone penetration in the country and the boost in 5G deployment have provided a further fillip to the sector.

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Relative share to India’s GDP (FY2020-21)

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Number of people employed

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Budget allocation to the sector (FY 2022-23)

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Latest Updates

45 data centers spanning around 13 million sq. ft. to come up by 2025

According to the ANAROCK-Binswanger report 'Under the Lens: India's Data Centre Explosion,' 45 data centers (DCs) covering 13 million square feet and 1,015 Mw of IT capacity are expected to open in India by the end of 2025. Over 69% of the new IT capacity (1,015 Mw) will be built in Mumbai and Chennai, with 51% in Mumbai alone. Currently, India has 138 DCs totaling around 11 million square feet and 737 million watts of IT capacity (building ready). At least 57% of the existing IT capacity is concentrated in Mumbai and Chennai.

With this new supply, India will have 183 DCs on 24 million square feet, with at least 1,752 Mw of total IT capacity by 2025. Meanwhile, India has the potential for almost 2,688 Mw of future unexpected supply. DC operators have secured land for this, although the projects will most likely be designed based on actual demand and/or the outcome of earlier scheduled phases. While this is land banking for future customer expansion, the capacity must be released into the market with caution to preserve price stability. Approximately 78% of this unplanned IT capacity will be concentrated in Mumbai and Hyderabad.