India’s services exports have seen a dramatic increase, with a 14% increase over the last two decades. They are expected to reach an astonishing US$254.5 Billion in 2021-22. Information Technology (IT), Business Process Outsourcing, and Business Process Outsourcing are two sectors that have contributed significantly to this success. These two sectors alone account for US$157 Billion. The growth story has been driven by both leading Indian companies and global tech giants who have taken advantage of India’s vast talent pool. India, with its more than 5,000,000 professionals working in these global capability centres, has become a technological powerhouse, providing unmatched quality, efficiency, and innovation. India is uniquely positioned as a global hub of technology and innovation, with corporations around the world seeking to scale up their digital transformation efforts.
The Key Driver of Export Growth
India’s service exports are a major factor in the country’s export boom, with IT and BPO at the forefront. Over 60% of India’s services exports come from these two sectors, which are the foundation of its success in the global market. Over the past two decades, this dominance has fueled services exports at a compounded annual growth rate of 14%. India’s impressive performance is a reflection of its ability to deliver cutting-edge services and highlights the country’s growing status as a global leader.
IT and BPO Services: Dominance
India’s exports of IT and BPO products totaled US$157 billion during fiscal year 2021-22. The country is a global leader in tech outsourcing, with a total of US$157 billion exported. This includes US$106 from IT services and US$51 from BPO. In FY 2021-22 the sector employed directly a staggering 5.1 million professionals, and indirectly created over 12,000,000 jobs. These figures reflect India’s unmatched ability to drive innovation, efficiency and large-scale jobs through its thriving IT industry and BPO.
Focus on Transformational Services
As India consolidates its position as the global hub for innovation and technology, the focus of the services will shift to more sophisticated and expertise-driven transformational services. This will catapult the Indian IT sector into an era of rapid growth. India’s IT sector is well positioned to take the lead in the global demand for high-value, complex solutions. It offers cutting-edge capabilities which will redefine the future technology and digital transformation. This strategic shift will open up unprecedented growth opportunities for India and strengthen its leadership in the global tech scene.
Manage Digital Operations
India’s workforce will be able to manage digital operations from end-to-end for global corporations. India has evolved from a technology back office to a dynamic hybrid workforce driving the digital backbone for the world’s biggest companies. India’s vast pool of highly-skilled professionals is well-positioned to dominate the global tech scene. India’s structural advantage as a destination for top-notch technology expertise will be further cemented by a large, employable talent pool, fueling the country’s rise as the ultimate hub of global tech talent.
The Potential of Robotics and Artificial Intelligence
India has the potential to be the global capital of robotics and AI. Robots will work with engineers to create a hybrid workforce that provides round-the clock service to clients around the world. India’s knowledge of these cutting-edge technologies will increase as automation and artificial intelligence redefine industry. This futuristic collaboration, which will have as many robots and engineers as there are skilled workers, will not only revolutionize the service delivery, but also place India at the forefront in the global AI revolution and robotics.
Business Services: A New Role
India’s role in the evolving world of business will go far beyond the traditional “run the company” services. Both Indian and global leaders in IT services are poised to use the vast talent pool of the country for high-value services that “change the business”. Imagine a world where consulting, full-stack engineering, and experience design will be the norm. Companies will look to India to not only maintain their operations, but also to reinvent them. India will be a key player in the future of industries, from product development to industrializing new business processes. India will become the center of innovation in the digital age, helping companies around the globe reinvent themselves.
Emergence as an emerging platform and product powerhouse
India is on the verge of becoming a global leader in platform-based products and services, as its IT services are rapidly evolving. India’s burgeoning Business to Business (B2B), Software as a Service ecosystem has developed a powerful and unique playbook, which is already delivering impressive outcomes. India is home to its first billion dollar product company and more than 20 B2B software unicorns. This momentum creates a high-potential, vibrant ecosystem that will pave the way for Hyperscalers in the next 20 years. India is on the forefront of SaaS innovation and platform development, and it’s poised to redefine global technology landscape.
Transform Cost Arbitrage into Innovation Hub
What began as a simple cost-arbitrage has evolved into an important source of talent and innovation. Global corporations are leveraging India’s demographic dividend by establishing over 1,500 Global Capability Centers. These GCCs are run by the world’s largest and most influential corporations across a wide range of sectors. They drive innovation, efficiency and strategic operations at a global level. India has transformed from a back office hub into a powerhouse for high-impact talent where multinational companies can find the expertise they need to lead in a constantly evolving digital world.
Growth of GCCs & Employment Impact
Global Capability Centers in India employed 1.3 million professionals as of FY2021, and this number is expected to increase to 2-3 million by the year 2025. India is either the largest or second largest workforce in terms of geography for many global giants. This highlights India’s strategic significance. India’s growing pool of highly-skilled talent is enabling multinational companies to drive critical functions and innovate at scale. India’s role in shaping global business is highlighted by this expansion.
GCCs Strategic Importance
India is a leader in the global business landscape, as it hosts over 45% Global Capability Centers established outside of their home countries. India’s global importance is highlighted by this remarkable concentration of GCCs, which are a result of companies seeking to take advantage its innovative capabilities and rich talent pool. India’s position as the preferred destination of GCCs not only improves operational efficiency, but also strengthens its position as an important hub for global innovation and excellence.
Dominance of Global Technology Workforce
India’s Global Capability Centers are now home to an astonishing 50-70% percent of the world’s technology and operations workers. This astounding statistic highlights India’s crucial role in shaping the backbone of multi-national corporations. India’s GCCs are a major source of talent, which not only helps to drive efficiency and innovation, but also establishes India as a cornerstone in the global technology landscape.
Global Strategy: Evolution of GCCs
Global Capability Centers are no longer just “executives” but pivotal influencers in global enterprise strategy. They now deliver both foundational and groundbreaking services. The GCCs offer cutting-edge services in cloud computing and data analytics, machine learning and artificial intelligence, software design and system design and chip design. They also manage administrative and procedural tasks. The dual capabilities of GCCs allow them to drive innovation and streamline operations. This allows them to be integral players in shaping global business and technology.
Investment and Growth in the GCCs
Global Capability Centers’ (GCCs’) remarkable ability to scale is driving the ongoing investments and expansion. They are able to harness vast talent pools, which support innovation and deliver services with unparalleled efficiency and competitiveness. This growth is a reflection of a vision that GCCs will not only be operational hubs, but also innovation powerhouses. They will empower businesses to adapt and flourish in an ever-changing global landscape. These centers will redefine industry standards as they continue to develop and play an important role in shaping the work of tomorrow.
GCC Success has Economic Impact
The Global Capability Centers’ (GCCs’) success in India has had a powerful multiplier impact on the Indian economy. This growing workforce is not only a source of innovation, but it also becomes a major consumer in the country. Savings and investments are boosted. GCCs, as digitization grows across the globe, are in a unique position to boost economic growth through an increase in business processes managed by India. They are essential catalysts of sustainable economic growth, as their ability to deliver value and harness talent makes them an essential catalyst for sustainable development.
Diversification Services Exports
India’s services exports must expand beyond IT and BPO by tapping into the growing demand for digitalized and skill-based services, such as healthcare and education. By 2022, 68% of India’s population will be in the working-age group. This makes the country a major player on the global labor market. India is also expected to contribute a staggering 24.3% of global growth in the workforce over the next decade. India’s demographic advantage offers a great opportunity to diversify the services it provides, drive economic growth, and establish itself as a leading nation in high-demand, innovative sectors.
The Services Sector is Important
India’s manufacturing ambitions are advancing, but the services sector is still a key pillar in the country’s economic development. This sector, which employs nearly 31% and contributes over 50% to India’s GDP is a source of innovation and productivity. It is also one of the biggest recipients of foreign direct investments (FDI) within the country. This highlights its importance in attracting global investment. The services sector is a major engine of growth in India and exports. It also helps to position India as an important player on the global market, driving forward progress in various industries.
Expanding the Services Trade
The share of services in the global trade is increasing, and this presents a great opportunity for services trade to grow. It currently amounts to US$254.5billion (2021-22). India has the opportunity to expand its international presence by tapping into innovative solutions and diverse sectors. India can take advantage of this momentum to unlock new growth avenues, positioning it as a formidable global player in the services sector and driving significant economic progress.
Strategic Diversification to Growth
India needs to diversify its exports of services by improving competencies in new sectors. This will allow it to fully benefit from the increasing share of services within the global economy. India can open up new growth opportunities by focusing on services which align with its competitive strengths and offer substantial export potential. Tourism, telemedicine and medical value tourism are promising sectors that cater to the growing global demand. Audio-visual services and mobile gaming, as well as the construction and engineering sector, with a focus on digital engineering, also present opportunities. These areas not only help India to expand its service portfolio, but will also push it towards becoming a leader in the global market for services.
Frequently Ask Question
Question : Which is the technical hub of India?
Answer : Bangalore. Bangalore is India’s largest tech hub. It is also a global hub for technology.
Question : How did India become an IT hub?
Answer : The 1991 liberalization of India’s economy accelerated Bangalore’s IT boom. Karnataka’s proactive policies such as tax exemptions and infrastructure support, along with the creation of software technology park, helped IT firms thrive.
Question : Which is India fastest growing tech hub?
Answer : There are six other tech hubs in India after Bengaluru: Delhi NCR (National Capital Region), Hyderabad, Chennai, Kolkata and Mumbai. These seven cities have a thriving tech industry and are home to many domestic and international firms. They are mature and well-established technology hubs in India.
Question : Which is the future IT hub of India?
Answer : Odisha has a large talent pool and a favourable business environment. It also enjoys political stability. Image used as a representation.1 January 2024
Question : What is the fastest growing technology in India?
Answer : Machine Learning (ML), Artificial Intelligence and AI: AI and ML drive innovation across various sectors from healthcare to finance by enabling data driven decision-making.