ITeS & BPM industry in India to grow to US$ 350B by 2025

India’s IT-BPM sector is expected to grow to US$ 350 billion by 2025 and BPM is estimated to account for US$ 50-55 billion out of the total revenue.

  • Definition / Scope
  • Market Overview
  • Top Market Opportunities
  • Market Drivers
  • Technology Trends
  • Regulatory Trends
  • Other Key Market Trends
  • Market Size and Forecast
  • Market Outlook
  • Competitive Landscape
  • Competitive Factors
  • Key Market Players
  • Strategic Conclusion
  • References
  • Appendix

Definition / Scope

  • ITeS, Information Technology Enabled Service, is a part of IT that refers to the services that can be enabled with information technology.
  • BPM, Business Process Management, is a holistic management approach that focuses on aligning all organization elements for better business efficiency.

Market Overview

  • IT industry contributes around 7.7 per cent to the India’s GDP.
  • IT industry employs about 3.97 million people in India. The industry added around 105,000 jobs in FY18 and is estimated to add over 250,000 new jobs in 2019.
  • IT industry is fuelling the growth of start-ups in India, with the presence of around 5,300 tech start-ups in India.
  • The IT-BPM sector increased from US$ 74 billion in FY10 to US$ 167 billion in FY18, growing at a CAGR of 10.71 per cent. This is 3 to 4 times higher than the global IT-BPM growth.
  • India acquired a share of around 38 per cent in the overall Business Process Management (BPM) sourcing market.

Top Market Opportunities

  • As per data released by the Department of Industrial Policy and Promotion, the computer software and hardware sector in India attracted cumulative FDI inflows worth US$ 32.23 billion between April 2000 and June 2018 and ranks second in inflow of FDI.
  • The rollout of Fifth Generation (5G) wireless technology by telecommunication companies is expected to bring at least US$ 10 billion global business to Indian IT firms by 2019-25.
  • The total exports revenue from the IT-BPM sector is expected to grow 7-9 per cent y-o-y basis to US$ 135-137 billion in FY19.
  • Government, healthcare, media and utilities together have IT spend of nearly US$ 190 billion. This account just 8 per cent of India’s IT revenue. There lies opportunities in emerging verticals like telemedicine, clinical information system, health and remote monitoring solutions.

Market Drivers

Global Digital Export

India has become the digital capabilities hub of the world. There are more than 8,100 firms that offer digital solutions. Further, there is 75 per cent of global digital talent in India.

The global digital spend is expected to increase from US$ 180 million in 2017 to US$ 310 billion by 2020. The revenue from digital segment is expected to comprise 38 per cent of the forecasted US$ 350 billion industry by 2025.

Policy Support

There is more liberal system for raising capital, seed money and ease of doing business in this sector. There is a tax holiday to the IT sector for software technology parks of India (STPI) and Special Economic Zones (SEZs). For STPI , the tax exemption term is 10 years and 100 per cent tax holiday is on export profits.

For SEZs, the tax exemption term is 15 years and 100 per cent tax holiday on export for first 5 years. There is also tax exemption of three years in a block of seven years to start ups under “Startup India”. The GOI has identified IT as one of the 12 champion service sectors.

Talent Pool

There is strong mix of young and experience professional in IT sector in India. IT service giant DXC Technology has planned to set up its first global analytics unit in Bengaluru to leverage the skill set that India offers.

Similarly, Nasscom has launched an online platform to skill over 2 million technology professionals and 2 million potential employees and students. The number of engineering graduates has increased from 651,000 in 2013 to around 779,000 in 2017. This is further expected to grow to 802,000 by 2020.

Technology Trends

  • Disruptive technologies such as social media, data analytics and cloud computing (SMAC) are offering new possibilities of growth across verticals for IT companies. Data collected from SMAC is helping businesses in understanding buyer preferences and tastes, customization and allowing for communication tailored to customer interest. The SMAC market is forecasted to grow to touch US$ 225 billion by 2020. India’s
  • BPM industry are using robotic process automation for repetitive and low end tasks that requires less human human judgement. Some of the examples are document processing, organizing data, and responding to customer queries.
  • IT megaprojects such as public internet access program, nationwide broadband highways and universal mobile access are aimed under the Digital India Initiative.

Regulatory Trends

  • An action plan has is being developed for champion service sectors in India. The government has identified Information Technology as one of the 12 champion service sectors. The government has set up US$ 745.82 million fund for realizing the potential of these champion service sectors.
  • NITI Aayog is going to set up a national level programme as a part of Union Budget 2018-19. This will enable efforts in AI and will help in leveraging AI technology for development works in India.

Other Key Market Trends

  • The major share of revenue of IT major comes from the BFSI business vertical. The revenue growth in the BFSI verticals stood at 10.3 per cent y-o-y in the first quarter of 2018-19.
  • US is the biggest importer of Indian IT exports, accounting for over 62 per cent of Indian IT-BPM exports. Non US-UK countries accounted for just 21 per cent of total Indian IT-BPM exports during FY18.

Market Size and Forecast

  • IT-BPM sector accounts for largest share in total Indian services export, which is around 45 per cent.
  • IT BPM industry revenues excluding hardware was estimated at around US$ 154 billion in FY 2016-17 and grew to US$ 167 billion in FY2017-18.
  • The domestic revenue of the IT industry is estimated at US$ 41 billion and export revenue is estimated at US$ 126 billion in FY18.
  • The total exports from the IT-BPM sector were estimated to be US$ 126 billion during FY18, exports rose at a CAGR of 12.26 per cent during FY09-18.
  • BPO and E R&D and software products exports accounted for 21.20 per cent and 21.80 per cent of total IT exports during FY18 respectively.
  • The onshore revenue of Indian IT industry has grown from around 48 per cent in 2011-12 to 59 per cent in 2017-18.

Market Outlook

  • The total export revenue is forecasted to expand 7-9 per cent y-o-y to US$ 135-137 billion in FY19.
  • The size of IT-BPM sector is estimated to grow to US$ 350 billion by 2025 and BPM is expected to account for US$ 50-55 billion out of the total revenue.
  • The spending on IT is expected to rise over 9 per cent to touch US$ 87.1 billion in 2018.
  • ER&D is expected to grow to US$ 42 billion by 2022 from US$ 28 billion currently.

Competitive Landscape

The industry is dominated by large players as they move from being simple maintenance providers to full service players. Of the total revenue, about 80 per cent is contributed by 200 large and medium players.

Competitive Factors

  • India is the leading sourcing destination across the world, accounting for nearly 55 per cent market share of the US$ 185-190 billion global services sourcing business in 2017-18.
  • India has the world’s largest number of highly qualified talent pool of technical graduates, facilitating its emergence as a preferred destination for outsourcing. Computer science and information technology accounts for the largest chunk of India’s fresh engineering talent pool, with more than 98 per cent of the colleges offering this stream.
  • India has a low-cost advantage by being 5-6 times inexpensive then US.
  • Indian IT firms have delivery centres across the world. IT& ITeS industry is well diversified across verticals such as BFSI, telecom and retail. Indian companies have set up over 1,000 global delivery centres in about 80 countries over the world.
  • India ranks third among global start-up ecosystems with more than 5,300 tech start-ups.
  • India has been challenged by other low cost Asian destinations like Philippines, Vietnam, Bangladesh and China. However India still has advantage where clients only ask for chatbots for support. It is said that in terms of BPM deals, India is for non-voice and Philippines for voice.

Key Market Players

TATA Consultancy Services

It is the India’s largest IT outsourcing company and global leader in IT services, digital and business solutions. It offers a consulting led, integrated portfolio of IT, engineering, BPO and assurance services. It has over 394,998 of the world’s best trained consultants in 46 countries.


It was established in 1981 and is one of the largest IT companies in India and the world. It operated in 45 countries with more tan 200,000 employees, The company provides business IT services comprising infrastructure management, independent validation, engineering services and business process management.


It is a global leader in IT, business process and consulting services. It is among the leading tech companies in India and the world. It has over 160,000 dedicated employees. It helps its clients adapt to the digital world and make them successful.

Strategic Conclusion

The expanding economy and strong growth in demand for exports from new verticals is driving the IT industry. India has the largest highly qualified talent pool of technical graduates in the world.

IT and ITes also has a low cost advantage by being 5-6 times cheaper than the US. India is the leading sourcing destination in the world and the global sourcing market in India continues to grow at a higher pace compared to the IT-BPM industry.

Further Reading



  • BFSI – Banking, Financial Services and Insurance
  • BPM – Business Process Outsourcing
  • CAGR – Compounded Annual Growth Rate
  • FDI – Foreign Direct Investment
  • GOI – Government of India
  • IT & ITeS – Information Technology-Information Technology Enabled Services
  • ROW – Rest of the World
  • SEZ – Special Economic Zone
  • STPI – Software Technology Parks of India
  • US$ – US Dollar

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