Hyderabad: The pandemic has severely hit the IT industry, which played a major role in rewriting India’s growth story. Products and services have been disrupted along with operations coming to a standstill.
More than 1.5 lakh jobs are under threat. This is an unprecedented crisis in India’s IT industry. The latest developments came as a blow to the industry which has been struggling with economic slowdown. Its biggest challenge currently, is to move forward in the face of this adversity.
IT is a knowledge-based industry, which contributed to major transformations in human lives. Besides being organized, quick, easy, transparent and prosperous, it boosted the startup sector.
It has paved way for modern governance and digital world. India has achieved a sustainable position in IT in almost five decades.
IT has been instrumental in accelerating our country’s economic growth. It constitutes 7.7 percent of total GDP. India, which projected an enviable growth trajectory in the recent past, is a leader in IT. We hold a 55 percent market share in global IT services. Around 200 Indian IT firms are operating in about 80 countries worldwide.
India provides 75 percent of the world’s digital services. The size of India’s IT and ITeS industry is estimated at USD 181 billion in 2018-19. This includes exports worth USD 137 billion. The Indian IT industry is gradually expanding and attracting foreign investments. Between 2000 and 2019, foreign investments in hardware and software sectors worth USD 43 billion were reported.
The industry has expanded in terms of employment too. Domestically, the Indian IT employs 46 lakh people. There are an additional 20 lakh employees abroad. IT ranked first in employment priority list over the last two decades. The majority of people prefer working in IT because of career advancement opportunities and attractive perks.
The skyrocketing IT industry had to face its share of lows. Financial crises, cost control measures, robotics and data analytics have all played a role in downfall of IT.
Things, however, started changing since Donald Trump got elected to the office of the President. He took major decisions that spelt doom for the IT experts and job seekers in India.
Owing to the slump, campus placements and new jobs became fewer and far-fetched. Experts are fearing job losses. The pandemic came as a sudden blow to the already ailing industry. As several nations took the lockdown route, IT services worldwide were paralyzed. It is estimated that the coronavirus crisis may cost 1.5 lakh jobs in India alone.
As revenues plummeted, many companies have fired their employees. Some have announced pay cuts. Most of the major companies have encouraged their employees to work from home. New projects got stalled. About 75 percent of India’s IT services are aimed at Europe and the US markets, both floundering as a result of the pandemic. The sector is expected to take a turn for the worse as the chances of immediate recovery are low. New recruitments may become a rarity. There are concerns that clients may cancel or indefinitely postpone upcoming projects.
Andhra Pradesh and Telangana are leading the IT enabled services sector. Every year, the number of students getting enrolled in IT and related courses is increasing. Students from both states are in key positions in several leading IT companies around the world.
Satya Nadella is the CEO of tech giant Microsoft. Around 6 lakh people from AP and Telangana are directly employed in IT sector. Governments of both states favor digital services and e-governance. World-renowned companies like Google, Microsoft, IBM, Oracle and Amazon have their major campuses in Hyderabad. The IT sector is rapidly progressing in cities like Vijayawada and Visakhapatnam.
The central and state governments must take the initiative to ease the burden off IT sector. Special taskforce comprising of IT experts and policy makers must be appointed. Since stability is of paramount importance for any sector, the government must make sure to help companies sustain.
The domestic IT must focus on innovative domains like gaming, animation, electronic manufacturing and rural technology. Once the pandemic ends, several countries could consider shifting their base from China. India should grab this opportunity. As a part of the latest developments, the central government should review existing policies and focus on reforms. IT organizations need to be reassured.
The Center must support the organizations that have been directly or indirectly affected by the crisis. Short-term and long-term policies focused on land, labor and tax must be adopted. Credit guarantees must be provided to MSME. Only right reforms combined with meticulous long-term planning can revive India’s IT sector.
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