The Indian IT industry has been the great saga of India's liberalization. It started with an export of around $100 million and mere 5000 employees at the beginning in 1990s and touched tremendous level. Presently, it is a globally dominating industry which has nearly 2.8 million employees and exports of $70 billion. Including business in India, the industry has touched whopping $100 billion in revenues with over 3.5 million employees. 

Despite these remarkable stats, Indian IT industry is facing new challenges, raising questions about its future growth.

To understand the existing state of Indian IT industry and its challenges, it mandatory to understand its various phases of growth so far. According to industry experts, the industry has gone through two distinct phases and is all set to enter the third phase of growth now. 

First phase of Indian IT: Unprecedented growth

First it was the decade of unprecedented growth in 90s. At that stage, IT spending in the US grew from 3 percent of GDP in the late 1980s to 9 percent by the end of 2000.  This was the opportunistic growth phase topped by the Internet boom. India became the country of choice for pioneering the offshore delivery model and revolutionizing service delivery.

Unfortunately, the boom ended with the Nasdaq collapse in 2002, but by then Indian IT had grown in scale with some great companies. Thanks to those industry tycoons, who manage to deliver projects on time and within limited budget configurations.  As a result, the market again started growing rapidly. 

 Second Phase of Indian IT: More Focused Approach

The second phase of growth has started with a more focused approach on Main Street after the bust to tackle the challenges of technology complexity. At that stage, Indian IT grabbed the top slot in quality, application development and maintenance space (ADM). Now, it started handling projects in the million dollar range and reduced the complexity of software maintenance by handling additional services including testing, infrastructure management services, and enterprise application to their services profile.

In 2008, Wall Street suffered financial crises. However, with focus on cost saving, high quality delivery, service excellence and vendor consolidation helped Indian It industry to stabilize. In addition, off shoring created new engines of growth, despite the overall slow market.  

Indian IT again started growing rapidly and became the dominant player having the second largest concentration of IT talent in the world. With the financial crisis fall down in the US and Europe facing the Euro crisis, the emerging markets become the dominant engine of economic growth globally. 

Thirs Phase of Indian IT: More Challenges Ahead 

Now, the Indian IT industry is entering the third phase of growth. It is believed, this phase is going to be painful as growth will not emerge only by getting market share, but also by getting a larger share of a growing market. 

The first crucial step that Indian IT industry should rigorously follow is to create an environment for innovation. India though is emerging as innovation hub but still the term is new for the IT sector.

Another major challenge that the Indian information technology industry must conquer is the need to co-ordinate with the academic circles as well as other industries in India for better performance and improved productivity.

Let’s hope Indian IT industry will once again overcome all the hurdles and would become one of the most robust industries world-wide.