Module 1 : Overview of the IT Industry
At the start of this millenium, the IT industry in India has about 2000 companies, most of them focused on software projects in the US. We have presented an analysis of the industry done by NASSCOM in terms of the type of business, sectoral focus and countries exported to. Our sample represents the same trend. The domestic market is not as yet of importance to most companies.
As the industry has grown, the major companies are beginning to focus more on off shore development and have multiple development locations in the country. A few companies are also setting up development locations overseas, for example Infosys at Toronto. However all companies still had a significant number of staff overseas doing on site development. Body shopping also remains a major part of the industry especially amongst the mid size and small companies.
Despite the large number of companies in the industry, about 25 major companies contribute to 80% of the exports. The major 5 companies infact contribute about 30% of the exports. We have included a list of the rank order of companies as published by NASSCOM. We understand that HCL Technologies should have ranked second with the inclusion of billings from overseas.
Multinational companies as yet account for less than a third of the industry. While there are over 200 multinational companies their total employment is still relatively small. Most of the multinational companies barring a handful do not have more than 500 employees. Infact most of them have as yet less than 250 employees.
The multinational companies have been leaders in cash compensation since most of them have been "cost " centres rather than "profit" centres and have been able to take a different approach to compensation. They have in several cases also given employees an opportunity to be part of their international staff which has enabled them to attract and retain staff. Multinationals have also brought in several Western HR practices that have been widely emulated.
Over the last two years several of the leading Indian companies have positioned themselves competitively, especially due to the success of ESOP plans. In addition several Indian companies have also enlightened and innovatived HR practices. However we find the product and business model has had a large influence in the approach to and type of HR policies adopted.
A major concern in the industry is therefore the availability of IT professionals. There are a large number of engineering colleges as well as a mushrooming growth in private IT training institutions. Despite the increasing number of IT professionals the anticipated growth will continue to make the issue of attracting and retaining staff a key focus area for several years.
