After years of neglect, the country’s IT industry is starting to reap the rewards of the country building a software revolution, a recent report says.
The World Bank’s India and Emerging Economies Initiative (WEI) is a five-year, $1.5 billion study of how the country is integrating and harnessing its massive IT workforce and its digital economy.
The WEI report, released this week, also found that in 2016-17, India’s software industry grew by 4.2%, a more than 50% jump from 2015-16, and its gross domestic product (GDP) grew by 8.1%.
The WEIs findings, however, are less certain than the numbers themselves.
The report, which surveyed 2,500 companies, did not examine whether there was a clear pattern in which companies were scaling back on software investments or hiring, and whether the government was taking the right steps to address issues that could cause problems.
The report did say that the IT sector was growing, but there was no evidence that it was growing fast enough to be considered a full-fledged tech sector.
“The data suggest that Indian IT is still relatively new, and as such, there are many opportunities for growth, but also some challenges in terms of scaling,” said Pradeep Chatterjee, co-author of the WEI study.
“In our view, there needs to be more emphasis on the growth opportunities for the IT industry.”
Chatterjee is an economist with the Indian Institute of Management, Bengaluru, and a co-founder of the Indian IT Association, which represents about 30,000 software companies.
The industry has been in rapid growth since 2015 when India launched its digital ecosystem, and the number of software developers has more than tripled.
The WEI survey found that there were over 1,000 companies in the IT space in the first six months of 2017, and that there are more than 400 software companies in India, according to data from the Indian Software Alliance, a government-backed group that represents software developers and companies.
India is one of the worlds largest software markets, accounting for a whopping $8 trillion in sales, and more than one-fifth of the total software development spend.
In India, companies can invest up to $10 billion in software infrastructure, and up to 40% of their revenue comes from software, according a study by Ernst & Young India.
“I think we’re not there yet,” said Jitendra Sharma, a partner at McKinsey India.
“There’s a lot of work to be done, and we need to do more.”
India is also one of a handful of countries that have not fully embraced the digital revolution.
In the United States, there is no formal IT strategy or a digital policy framework, according the New York-based consulting firm KPMG.
In Germany, the government is not spending money to build digital infrastructure.
India’s software ecosystem, however has caught the attention of tech companies, who say that they have been able to scale quickly.
A study released in 2016 by Deloitte found that companies in emerging markets are already building apps and developing services that are used by 1.5 million people a month.
India’s digital economy has also attracted large companies, including SAP, which has said it plans to invest $30 billion to develop its technology.
Still, Sharma said there are still a lot more things to be accomplished before the digital economy could be considered as a full tech sector, like setting up and running a central digital platform, building a data management system, and developing an open platform that would allow startups to easily build their apps and services.
“If you are going to have an economy that is growing, you need to have a government that is doing its job.
I think India has done its job, and I think the rest of the countries will follow,” Sharma said.