Program, Batch & Section: PGDM 2017-19 – Section D

Term: Term III

Course Name: Strategic Management
Name of the Faculty: Dr. Jishnu Changkakoti
Topic/Title: Indian Software industry
Original / Revised: Original
Group Number: Group 8
Group Members: Sl. No. Roll No. Name
1 170101121 Anushka Gambhir
2 170102008 Abhishek Rathi
3 170103143 Noopur Jain
4 170103082 Himanish Bhandari
5 170102120 Ram Agarwal
6. 170103204 Saurabh Mishra
ACKNOWLEDGEMENT

We would like to thank Dr. Jishnu Changkakoti for giving us the opportunity to work on Project
Report on analysis of Indian Software Industry with the liberty to select business group and
strategic business unit to study. This was a great learning experience for the group towards
learning of the subject. His guidance throughout the term helped us in making the project.

We have compiled this report with our utmost effort to pinpoint all the details regarding the topic.
Once again we thank Dr. Changkakoti for the insight he suggested after our presentation on topic.
Overview of industry

The Indian IT industry is growing gradually despite the global render down in the year 2009.
When the whole of the world witnessed the negative growth, Indian IT industry still managed to
register a growth of 5.5%. The industry is about to register the important landmark of US $ 50
billion exports this year, President, Som Mittal. The domestic market is also slotted to witness
12% growth, this year. Potential size of India’s according to NASSCOM offshoring industry is
estimated at US $ 120 to 180 billion by 2015. The industry currently employs around 1 million
people and provides indirect employment to around 2.5 million people. It is expected to add
another 1, 50,000 jobs in the next fiscal according to NASSCOM. Indian IT/ ITes sector is
growing substantially with its

 expansion into varied verticals

 well differentiated service offerings
 increasing geographic penetration

The phenomenal success of the Indian IT- ITeS industry can be attributed to the favorable
government policies, burgeoning demand conditions, healthy growth of related industries and
competitive environment prevalent in the industry. The interplay of these forces has led to
putting the industry on the global map.

History and Evolution of IT industry

The evolution of IT industry can be studied in 4 phases:

Phase I: Prior to 1980

The software industry was literally nonexistent in India until 1960. Software used in the
computers till that time, were in built with the systems. Government protected the hardware
industry through high tariff barriers and licensing. However, in the West, the need for software
development was gradually being felt as the software in built in the system was not sufficient to
perform all the operations. The Government of India therefore, realized the potential for earning
foreign exchange.
In 1972, the government formulated the Software Export Scheme. This scheme made the
provision of hardware imports in exchange of software exports. TCS became the first firm to
agree to this condition. The year 1974 marked the beginning of Software exports from India.

Phase II: 1980- 1990

Despite the government initiatives, the software exports were not picking up because of two
reasons mainly:

 The exports of software, was heavily dependent on the imports of hardware, which was
costly as well as the procedure for obtaining the same was very cumbersome.
 Secondly, there was a lack of infrastructural facilities for software development.

To counter these, the government formulated a New Computer Policy in 1984, which simplified
import procedures and also reduced the import duty on hardware for software developers. In an
attempt to make, software industry independent of the hardware industry, the government in
1986, formulated Software Policy which further, liberalized the IT industry. According to this
policy, the hardware imports were de-licensed and were also made duty free for the exporters.
This along with the world wide crash in the hardware prices reduced the entry barriers
substantially. In 1990, government established Software Technology Parks of India. This scheme
was formulated to increase the exports of software and services.

Phase III: 1990- 2000

This decade made several significant changes in the economy, including trade liberalization,
opening up of Indian economy to foreign investment, devaluation of the rupee and relaxation of
entry barriers. These changes attracted many foreign entities (MNCs) to our nation. These MNCs
in India, introduced ‘Offshore Model’ for software services, according to which, the companies
used to tune their customers from India itself. This model further graduated to Global Delivery
Model (GDM). Global Delivery Model is a combination of Onsite and Offshore Model. In this
model, the Offshore Development Centre is located at various locations across the globe. During
this period due to the entry of many players in the Indian market, the competition got intensified.
Therefore, the players started investing in research and development to distinguish their services
from others.
Phase IV: Post 2000

The global problems like the Y2K, the dotcom crash and recession in the US economy, proved to
be a boon to Indian IT industry. The Y2K problem demanded the existing softwares to be
compatible to the year 2000. Due to the shortage of US based programmers during this period,
many mid sized firms were forced to utilize the services of Indian firms. This had placed the Indian
IT industry on the global map.

Post 2002- 03, the industry had listed a tough growth rate because of increase in the number of
clients, large sized contracted and a strong global delivery model.
PESTLE Analysis
POLITICAL FACTORS

This is political factors which affect a business which can be government rules and regulation
toward that particular business environment. For IT industry the Indian political structure is stable,
but there are fears of hung parliament due to a lack of clear majority in parliament creating fear of
wrong investing in the minds of investor thereby reducing capital. U.S government has declared
that U.S firm that outsource IT works outside the U.S will not get tax benefits, this has caused
reduction in U.S BPO contract from the U.S in the last fiscal year thereby reducing revenue from
the U.S. Indian government has decided to contract IT job to Indian IT companies creating more
opportunities for the company and the industry at large. In software development different
countries is pattern rules and regulation are considered since client demand differs because of
unlike system requirement. NASSCOM and DELIOTTE study (impacting economy and society
2007/2008), states that Indian government has strengthened the IT act, 2000 to provide a sound
legal environment for companies to operate related to security of data in transmission and storage
etc this has served as a positive factor. Infosys has to put Indian relationship with different
countries of business into consideration before investing. Other factors to be considered are
customer protection law, competitive regulations, and terrorist attacks.

POLITICAL STABILITY

India suffered political instability for a few years due to the failure of any party to win an absolute
majority in Parliament. However, political stability has returned since the previous general
elections in 1999. However, political instability did not change India's economic course though it
delayed certain decisions relating to the economy. The political divide in India is not one of policy,
but essentially of personalities. Economic liberalization (which is what foreign investors are
interested in) has been accepted as a necessity by all parties including the Communist Party of
India (Marxist). Thus, political volatility in India, in practical terms, posed no risk to foreign direct
shareholders because no policy edge by a past government has been inverted by any successive
government so far. You can find a comparison in Italy which has had some 45 governments in 50
years, yet overall economic policy remains unchanged. Even if political instability is to return in
the future, chances of a reverse in economic policy are next to nothing nil. As for terrorism, no
terrorist outfit is strong enough to disturb the state. Except for Kashmir in the north and parts of
the north-east, terrorist activity is either nonexistent or too weak to be of any significance. It would
take an extreme stretching of the imagination to visualize a Bangladesh-type state-disrupting
revolution in India or a Kuwait-type annexation of India by a foreign power. Hence, political risk
in India is practically non-existent. Likewise the IT sector does not have any influence of political
stability on industry. And if the govt. changes there is little effect on the industry of that political
step.

ECONOMICAL FACTORS

These include factors affecting IT industry ranging from rising functioning pay, global depression,
competition, agreement availability and fee. Domestic IT spending grew by 20% and reached $20
billion in 2009. Currency fluctuations caused by the devaluation of the dollar has affected the
industry during the last global recession. Real estate prices decline resulted in rental expenditure
forcing customer to leave luxuries goods such as electronic and computers that need software to
work. Recession cause low attribute rate due to job layouts and job cuts. India economic attraction
has helped in convincing investors due to low cost advantage. With India’s global IT expenses yet
to decline due to entry of new IS companies and the cause of the depression. With clients industry
faced with reduction of work force due to job layoffs and unsuitable balance sheet most companies
have decided not to make much expenditure in purchase, but make optimum use of existing
facilities to make profits. Most debtors with financial crisis have been granted more time to pay
up causing large debt deficit. With the decline of banking and financial sectors, the revenue from
there is expected to decline, hurting the bottom line of IT majors

DOMESTIC IT SPENDING

India's domestic IT market will grow around 14% this year, showing a minor decline as compared
to last year's growth of 16-18%. Hence, it is expected that the country will see a minor decline in
IT budget coming from its domestic market. "Compared to other countries, India is in a better
position. Its domestic market is expected to grow around 14% this year. We also expect that IT
spend in India will see a minor decline as compared to last year. There could be some 2-3% decline
as compared to last year's budget," commented Arup Roy, senior research analyst at Gartner.

GLOBAL IT SPENDING

Indian enterprises expenses on information communications and technology (ICT) in 2005 is

expected to raise at more than twice the rate in the Asia Pacific region. Enterprise spending in the
Asia Pacific (APAC) on hardware next year will rise 6.3 per cent to $36.9bn, with software
increasing 12.4 per cent to $5.6bn while telecom will grow 7.5 % to $132.5bn and IT services will
gain 8.4 % to $33.6bn. In India, of the $22.88bn spend in 2005 on enterprise ICT, $3.34bn is the
projected spend on hardware, an increase of 21.1 per cent over 2004; $0.52bn (16.4 per cent
increase) on software; $16.7bn (15.5 per cent increase) on telecom and $2.32bn (18.3 per cent
increase) on IT services. India will remain the highest growth market for telecommunications with
around 35 million new subscribers in 2005, an 18 per cent increase from 2004, with the growth
occurring in selected technologies mainly mobile. This accounts for almost one fourth of the new
subscribers forecasted in Asia Pacific. Consumer segment is rapidly gaining importance, driven
by adoption of mobile services. This is reflected in their increased contribution towards spending
for telecommunication services, from 35 per cent in 2002 to 43 per cent in 2005. By 2008 the
consumer segment will account for more than half of telecommunications spending, the report
said. Gartner also said that open source and offshore IT services will continue to grow, while it
warned global IT vendors to take emerging competition from China seriously with at least three
Chinese IT companies becoming significant global competitors by 2010. The growth in offshore
BPO services outpaces the growth in global sourcing of IT services. Offshore component of global
BPO services spend is expected to grow from $3 billion (2.4 per cent of total markets spend of
$124 billion in 2004) to $24 billion (15 per cent of the total markets spend of $161 billion in 2007).

ECONOMIC ATTRACTION

There is a lot of economic attraction towards IT sector due to low cost advantage and other factors.
India, with its low cost advantage and emergence of several private players, represents the fastest
growing market. Further the geographical location of India serves it the advantage of being exactly
halfway round the world from the US west coast, which is another reason why India is preferred
destination of many big brands. India’s development and contribution in world’s information
technology sector is of highest reputation. Cities like Bangalore have become the favorite(most
preferred) destinations of all the big banners like HSBC, Dell, Microsoft, GE, Hewlett Packard,
and several Indian multinational firms like Infosys Technologies, Wipro, and Microland who have
set up their offices in the city. It is because the city offers good infrastructure, with large floor
space and great telecom facilities. This can be judged on the basis of the high growth statistics of
India and the changing outlook of the companies towards India. It is because of this growth many
popular brands that have not yet build up there rigid offices in the country are making it fast to
have a destination in India too. For example, Sun Microsystems, a global IT major, announced in
Bangalore to double the present workforce of the company's Sun India Engineering Center (IEC)
from the present 1000 to 2000 in the next two years time. IEC, which is the largest R&D center
for Sun outside the US, would also focus on developing products in India to suit the needs of the
Indian market, which would be benchmarked globally. Also, the existence of a large number of
Indians, especially engineers, in the US gave India an effortless entry into the US software market.

SOCIAL FACTORS
These are social feature affecting IT industry which ranges from member of staff right, language
barriers, race nationality of company or other issues. English language being widely spoken in
India has help in fostering the industry’s relationship and interaction in India and on the global
stage. India is one of the few countries to have an increasing share of working population, since
there is great availability of both skilled and unskilled labor force. Great number of institute and
universities offer IT course creating room for availability of IT professional at lower cost since
there is job competition. India has to produces great numbers of IT professional each year to meet
its demand. India continue to produce IT professionals each year, this has help industry for IT
professionals inwards. Industries have to consider the type of services the software is meant for,
age difference of users, life style of the different countries of supply. It should be noted that there
will always be difference in client behaviors which is supported by the fact that different customers
have different taste.

SOCIAL ISSUES

Should Industry be concern with the issue of global warming? Yes it is affected by many
government laws regarding it like in china, where company with great amount of carbon emission
are charge great amount of tax. Similarly being a major player in the global IT market Infosys has
bring in measure to help in the reduction of carbon emission by trying to diminish its water
consumption, electricity utilization, carbon emission and partnering with other companies in
troubleshooting this global dilemma

EDUCATION

There are large number of universities and institutes in India offering IT education. And there are
large numbers of scholar which every year passed these courses and join the IT industry. The
Indian labor is not only cheap but is technically skilled too to the world class level. It is due to the
Indian Education System that includes in its course curriculum the practical knowledge of the latest
technology that is developed in world along with the fluency in English Language that imparts
compatibility in an Indian technician to communicate and work throughout the world.
TECHNOLOGICAL FACTORS

TELEPHONY

Cellular mobile telephony tariffs in India are the lowest in the world. A comparison of Indian
cellular tariffs vis-à-vis the tariffs prevailing in comparative emerging economies in South
America & Asia-Pacific region, clearly brings out the affordability of Indian cellular mobile
telephone services. The airtime tariffs have plunged by over 75% in the last three years alone.
According to the TRAI, the average monthly rental and airtime being realized for cellular services
stands at Rs. 202 and Rs. 1.99 per minute respectively. Prepaid services have been launched by all
operators at an very affordable tariff of Rs. 300 per month. Roaming charges have been cut by
70% down from Rs.10 to Rs.3 in early 2002 and now to as low as Rs. 1.50 by several service
providers.

• Expected to have total subscriber base of about 500 million by 2010.

• ARPU for GSM is 6.6$ month.

• India has the second largest telephone network after China.

• Teledensity - 19.86 %

• Enterprise telephone services, 3G, wi-max and VPN are poised to grow

INTERNET

India had as on September 2008 45.3 million active internet users. This is an internationally
accepted benchmark for enumerating internet users. Urban users continue to dominate internet use
contributing to 42 million of the 45 million odd users. In September last 2007, the number of active
internet users in urban India was 32 million showing a year on year growth of a little more than 30
per cent.

NEW IT TECHNOLOGY

With the evolution of SOA and semantic web services, enterprise solution heeds to the limitations
of conventional enterprise systems by providing data convergence and concept reutilization with
intelligence. Web2.O signifies the next transition in the growth of internet applications; they assure
to restore the richness, interactivity and usability lacking in many web applications. As with any
technological transition, for an enterprise this implies that there are new opportunities to be
explored and new challenges to be negotiated. To maximize the benefits of Web2.O, an enterprise
should assess. SOA has benefited enterprises with benefits such as standardized patterns,
interoperability, centralized governance, easy integration etc. Almost all industry domains have
benefited from SOA strategy in order to build more flexible and malleable IT architecture
involving re-usable services. On the other hand, Web 2.0 practices like communities and
folksonomy are much centered around end-users. They involve frequent communication among
large consumers dispersed all around the world over the Internet. They have become extremely
popular among internet users. This brings the interesting idea of bringing enterprise products i.e.
services and consumer-savvy applications from Web 2.0 together.

LEGAL ASPECTS AND POLICIES

This prompt growth of IT Sector is unquestionably due to the efforts of Indian government and the
other progress that took in the other parts of the globe.

IT Act 2000: The arrival of the Internet and the World Wide Web made it possible for people to
communicate and transact over cyber space. It was a revolutionary step for humanity, but it also
created a significant need for the regulation and governance of these activities, a requirement that
lead to the creation and implementation of cyber laws across the globe. India became the 12th
nation in the world to adopt a cyber law during 2000.

• From the viewpoint of e-commerce in India, the IT Act 2000 and its requirements contain many
positive aspects. Firstly, the implications of these requirements for the e-businesses would be that
email would now be a valid and legal form of communication in our nation that can be duly shaped
and approved in a court of law.

• Companies shall now be able to hold out electronic commerce by means of the legal
infrastructure provided by the Act.
• Digital signatures are given legal validity and authorization in the Act.

• The Act also throws unlock the gate for the access of corporate companies in the big business of
being Certifying Authorities for issuing Digital Signatures Certificates.

• The Act now permits Government to issue notification on the internet thus heralding e-
governance.

• The Act enables the companies to file any form, application or any other file with any office,
authority, body or agency owned or controlled by the suitable Government in electronic form by
means of such electronic form as may be approved by the appropriate Government.

• The IT Act also deal with the important issues of security, which are so significant to the success
of electronic transactions. The Act has given a legal denotation to the concept of secure digital
signatures that would be required to have been fixed through a system of a security procedure, as
fixed by the Government at a later date.

Indian Copyright Act:

The copyright of computer software is protected under the provisions of Indian Copyright Act
1957. Major changes to Indian Copyright Law were introduced in 1994 and came into effect from
10 May 1995. Copyright Act clearly explained:

• The rights of a copyright holder

• Position on rentals of software

• The rights of the user to make backup copies

• Most importantly the amendments imposed heavy punishment and fines for infringement of
copyright of software

Income Tax

Deduction under sections 10A/ 10B of Income tax Act, 1961 (“IT Act”) in respect of profits
derived from export of computer software. Following undertakings are eligible to claim deduction
in respect of profits derived from export of computer software under the provisions of sections
10A/ 10B of the IT Act:

Existing units which commenced operations prior to April 1, 2000 and claimed deduction under
the provisions of erstwhile sections 10A/ 10B, can continue to claim such deduction under the
provisions of newly substituted sections 10A/ 10B for the unexpired period of ten consecutive
assessment years. Deduction would continue to be available in case of corporate re-organizations
by way of amalgamation or demerger. Depreciation on computers and softwares at 60% as per the
requirements of the IT Act, annual decrease on systems and computer software can be claimed at
the rate of 60 percent of written down value at the opening of the relevant financial year for income
tax purposes. As a result, under the written down value method, 84 % of cost of computers and
software can be depreciated in first 2 years

ANTI MONOPOLY LAWS

From the 1950s, IBM had a virtual monopoly of computers in India. The 360 series release in
1960s was the major workhouse of the large organizations. They even maintained a chain of
programmers who could write down software's for their machines. However in 1978, when George
Fernandez, ministry of industries at that time, commanded IBM to take local shareholders into its
subsidiary, the company refused strictly and went back after winding up its all operations in India.
Its ex-employees then set up Computer Maintenance Corporation, with the primary object of
maintaining IBM computers. IBM puts India on cloud computing map Global computing giant
IBM on September 24, 2008 launched a "cloud computing" centre in Bangalore, putting the
country on the world map in an emerging area that takes information technology one step closer
to being a utility service like electricity or water with users sharing a common set of hardware and
software and paying only what they use. What append more to the dominance of India in
Information Technology Sector is the government policies like the enactment of cyber laws to
protect and protect the interest of software companies in India. In the latest in Indian IT Sector, a
five-city security seminar hosted by Microsoft Corporation India Pvt. Ltd is planned to take place
around mid 2005. It will concentrate on representatives from the IT professional, developer,
government, academic and the system integrator and ISV community. The basic motivation behind
it will be to help them to systematize and standardize a comprehensive security framework that is
essential for the protection of their IT investments.
ENVIRONMENTAL FACTORS

Environmental conservation and protection is an issue which has gained prominence because of
deteriorating environmental balance which is threatening the sustainability of life and nature.
Largely, business is also held responsible for such situations as emissions from industries polluting
the air, excessive chemical affluent drained out in water making it poisonous and unfit for use,
usage of bio non-degradable resources affecting the bio-chain adversely and exposure of
employees to hazardous radiations bring their life in danger. All these have been taken very
seriously by different stakeholders in the society including the government and legislations and
movements are creating pressure for an environment friendly business. These have far reaching
implications for business ranging from the kind of business, the product being manufactured, how
it is manufactured and how friendly it is for mankind and nature.

Physical and Demographic Analysis of Indian Software Industry

 India's export of software services rose by 10.3 per cent on an annual basis to USD 97.1
billion in 2016-17, the Reserve Bank (RBI) said. The export of software services --
excluding the one through commercial presence -- was USD 88 billion in 2015-16.

 "The USA and Canada remained the top destinations of India's export of software services,
followed by Europe in which the UK accounted for nearly half," said RBI's 'Survey on
Computer Software & Information Technology Enabled Services Exports: 2016-17'.
 Export of computer services ruled, with private and public limited companies accounting
for equal shares during the year. The US dollar was the principal invoicing currency,
making up 73 per cent of software exports, followed by the pound sterling and the euro.
For the 2016-17 round of the survey, the RBI said, 7,506 IT companies were approached,
of which 1,362 -- including most large companies -- responded. The responding companies
accounted for 81.2 per cent of the total software exports during the year.
  Exports of the remaining companies were estimated using the distribution pattern after
classifying them in four groups -- IT services, BPO services, engineering services and
software product development

Market Size

The internet industry in India is likely to double to reach $ 250 billion by 2020, growing to 7.5%
of GDP. The number of internet users in India is expected to reach 730 million by 2020, supported
by fast adoption of digital technology, according to a report by National Association of Software
and Services Companies (NASSCOM).

Indian IT exports are projected to grow at 7-8 per cent in 2017-18, in addition to adding 130,000-
150,000 new jobs during the same period.

Digital commerce market in India is set to grow at 30.4 per cent year-on-year to Rs 220,330 crore
(US$ 34.11 billion) by December 2017, according to a report by Internet and Mobile Association
of India and IMRB Kantar.

Indian technology business is expecting India's digital economy to encompass the potential to
reach $ 4 trillion by 2022, as against the Government of India's estimate of US$ 1 trillion.

Digital payments in India rose 55 per cent in volume and 24.2 per cent in value year-on-year in
FY 2016-17, stated Mr Ratan Watal, Principal Advisor, Niti Aayog.

Total expenditure on IT by banking & security firms in India is expected to grow 8.6 % year-on-
year to US$ 7.8 billion by 2017!!

The public cloud services market in India is slated to grow 35.9 per cent to reach US$ 1.3 billion
according to IT consultancy, Gartner. Increased penetration of web (including in rural areas) and
rapid appearance of e-commerce are the main drivers for continued expansion of data centre co-
location and hosting market in India. The Indian Healthcare Information Technology (IT) market
is valued at US$ 1 billion currently and is expected to grow 1.5 times by 2020. India's business to
business (B2B) e-commerce market is expected to reach US$ 700 billion by 2020 whereas the
business to consumer (B2C) e-commerce market is expected to reach US$ 102 billion by 2020.
Cross-border online shopping by Indians is expected to increase 85 per cent in 2017, and total
online spending is projected to rise 31 per cent to Rs 8.75 lakh crore (US$ 128 billion) by 2018.

Investments/ Developments

Indian IT's core competencies and strengths have enticed noteworthy investments from major
countries. The computer software & hardware sector in India enticed cumulative Foreign Direct
Investment (FDI) inflows worth US$ 22.83 billion between April 2000 and December 2016,
according to data released by the Department of Industrial Policy and Promotion (DIPP).

Leading Indian IT firms like Infosys, Wipro, TCS and Tech Mahindra, are diversifying their
offerings and showcasing leading ideas in block chain, artificial intelligence to clients using
innovation hubs, research and development centres, in order to create differentiated offerings.

Some of the major developments in the Indian IT and ITeS sector are as follows:

 India plans to create wireless Technology 5G by the end of the year 2020 which will help
India in realizing its most important goals of “Increasing the GDP rate”, “Creating
Employment” and “Digitizing the Economy”.

 Power2SME which serves as platform for raw material requirement of the small and
medium scale enterprises (SMEs) has raised US$ 36 million from its investors which
includes Inventus Capital Partners, Accel, Kalaari Capital, International Finance Corp.
(IFC) and Infosys chairman Nandan Nilekani.

 Unacademy a platform that helps educators to create multimedia content which can be used
for free of cost by users has raised US$ 11.5 million from Sequoia India Capital Advisors
and SAIF Partners.

 The mobile wallet industry is expected to maintain its current pace of expansion and the
value of its transaction is expected to reach Rs 32 trillion (US$ 480 billion) by 2022,
growing at a rate of 126 per cent.

 India’s largest online retailer, Flipkart, has raised at least US$ 2.5 billion from SoftBank
Vision Fund to maintain its dominance in the Indian e-commerce market and to fight
against its arch rival Amazon India.
  Google plans to set up its first data centre in India in the city of Mumbai by 2017, to
improve its services to local customers wanting to host their applications on the internet,
and to compete effectively with the likes of Amazon and Microsoft

 SAP SE, in partnership with the Associated Chambers of Commerce of India

(ASSOCHAM), has rolled out a knowledge sharing resource centre which will serve as a
one-stop portal for businesses looking to adopt or migrate to technology that will make
them future ready for the biggest taxation reform of goods and services tax (GST).

 Freshdesk, one of first companies from India to offer Software-as-a-Service (SaaS) to

global companies, has raised US$ 55 million in the latest round of funding led by Sequoia
Capital India and existing investor Accel Partners, estimating to value the company at US$
700 million.

 Warburg Pincus LLC, the US-based private equity firm, plans to invest around US$ 75
million in series C round of funding to buy a significant stake in Capital Float, an online
credit platform.

 Apple’s supplier and assembler, Taiwan-based Winstron, will set up an iPhone assembly
facility in Peenya, Bengaluru’s industrial hub, thus making India the third country across
the world to have an assembly unit for Apple’s iPhone.

 Paytm’s online marketplace unit raised US$ 200 million in a funding round led by a US$
177 million investment to be made by Alibaba Group Holding Ltd, and balance by SAIF
Partners.

 Intel Corporation plans to invest in Digital India related solutions such as India stack,
Unique Identification (UID), e-government 2.0 and other government initiatives, and scale
up operations of its data centre group (DCG), as per Mr Prakash Mallya, Director DCG,
Asia for Intel Corporation.

Government Initiatives

In the Union Budget 2017-18, the Government of India announced the following key
proposals:
 The Government of India has allocated Rs 10,000 crore (US$ 1.5 billion) for BharatNet
project under which it aims to provide high speed broadband to more than 150,000 gram
panchayats by 2017-18.

 Prime Minister of India, Mr Narendra Modi, has launched the Bharat Interface for Money
(BHIM) app, an Aadhaar-based mobile payment application that will allow users to make
digital payments without having to use a credit or debit card. The app has already reached
the mark of 10 million downloads.

Some of the major initiatives taken by government to encourage IT and ITeS sector in India
are as follows:

 All the 400 field offices of the Central Public Works Department (CPWD) have been
connected through a special integrated portal. Annual payments worth Rs 20,000 crore
(US$ 3 billion) will be done electronically after this digital transformation.

 Mr Ravi Shankar Prasad, Union Minister of Law & Justice and Information Technology,
has launched a free Doordarshan DTH channel called DigiShala, which will help people
understand the use of unified payments interface (UPI), USSD, adhaar-enabled payments
system, electronic wallets, debit and credit cards, thereby promoting various modes of
digital payments.

 The Government of India plans to revamp the United Payment Interface (UPI) and
Unstructured Supplementary Service Data (USSD), to make it easier for consumers to
transact digitally either with or without an Internet connection with the aim of
strengthening its push towards making India a digital economy.

 The Telecom Regulatory Authority of India (TRAI) will soon release consultation papers
ahead of framing regulations and standards for the rollout of fifth-generation (5G) networks
and Internet of Things (IoT) in India.

 The Railway Ministry plans to give a digital push to the India Railways by introducing bar-
coded tickets, Global Positioning System (GPS) based information systems inside coaches,
integration of all facilities dealing with ticketing issues, Wi-Fi facilities at the stations,
 super-fast long-route train service for unreserved passengers among other developments,
which will help to increase the passenger traffic

Road Ahead

India is topmost off shoring destination for IT companies. Verifying its capabilities in
delivering both on-shore & off-shore services to global clients, emerging technologies now
offer an entire new gamut of opportunities for topmost IT firms in India. US$ 150 billion
Indian IT industry’s export profits has to be grown at 7-8% & domestic market share is
projected to grow up by 10-11 % in 2017-18. Exchange Rate Used: INR 1 = US$ 0.015 as
on October 05, 2017

Porter 5 force analysis for Bing

Competitive Rivalry within an Industry

 Market leader is Google (71.47%)

 Google synonymous with search
 Bing + Yahoo search = Tie UP
(3.49%) + (6.68%) = (10.17%)
 Bing Faces a huge short term threat
 Long term threat from competitors might reduce
 High Rivalry within industry

Threat of Substitute Products

  Negligible substitutes
 Static in nature
 Libraries, Encyclopedias, Magazines, Newspapers, etc
 Low threat from substitutes

Threat of New Entrants

 Current monopolistic position held by Google

 Difficult to enter and sustain

 Lack of qualitative and quantitative information

 Familiarity of users with current players

 Low threat of new entrants

Bargaining Power of Supplier

 Suppliers are:

 Information seekers
 Content Supplier
 IT Supplier
 Equipment Supplier
 Maintenance Service Supplier

 Facilitate revenue generation.

 No payment, barter of information for information seekers.

 High bargaining power.

 Can supply to any other search engine

Bargaining Power of Buyers

  Advertisers are the buyers

 Pay for ad space

 Source of revenue

 High bargaining power

 High market share of Google

Conclusion

Bing has low threats from substitutes and also currently the major share is held by Google and
hence that makes new entrants chances negligible to enter for the competition. Suppliers have high
powers as they are important for providing information. Similar is the case with buyers. Hence
Bing’s industry analysis is as shown above from porter 5 force analysis.