1. Political stability: Though there are many challenges due to global downturn but political stability is a big positive for India. Indian political structure is considered stable enough expect the fact that there is a fear of „hung parliament‟ (no clear majority). The new liberalisation in the economic policies will certainly help companies to flourish in the global market (India PR Wire 2010).
2. According to new US tax benefit schemes, tax benefit will not be given to the companies who are outsourcing IT services from other developing countries like India, china etc.
---Government new policies regarding free trade in international firms will result in more opportunities overseas.
3. Government owned companies and PSUs have decided to give more IT projects to Indian IT companies.
4.Threat from terrorist attacks or war.
Economic
1. Global IT spending (demand)
2. Domestic IT Spending (Demand):Doemestic market to grow by 20% and reach approx USD 20 billion in 2008-09 - NASSCOM
3. Currency Fluctuation
4. Real Estate Prices: Decline in real estate prices has resulted reducing the rental expenditures.
5. Attrition: Due to recession, the layoffs and job-cuts have resulted in low attrition rate.
6. ECOMONIC ATTRACTIVENESS due to cost advantage and other factors.
Spending on IT sector in hardware and software that decreased globally due to downturn is expected to revive gradually. According to Gartner, there will be growth in spending on information technology worldwide by 5 percent in 2010 (Physorg.com 2010)
The demand of IT in domestic market is also expected to grow
Constant depreciation and appreciation in rupee value can have adverse impacts on the importers and exporters especially in the IT industry.
Due to recession in 2009, there has been decline in the prices of real estate industry which has helped IT industry to recover their loss in the terms of reduction in rental expenditure.
Low attrition rate have been experienced due to job slash as an impact of recession.
Still labour is cheap in developing countries than in developed countries which will attract business from these countries due to cost benefits.
Social
Language spoken: English is widely spoken language in India, English medium being the most accepted medium of education. Thus, India boasts of large English speaking population.
2. Education: A number of technical institutes and universities over the country offer IT education.
3. Working age population
India has large share of working age population.
IT courses have been made as significant subject in schools, colleges and universities.
Along with national languages, English is the main medium of communication in education. This results in skilled working population.
Increase in literacy rate.
Technological
Telephony:
a. India has the world‟s lowest call rates (1-2 US cents).
b. Expected to have total subscriber base of about 500 million by 2010.
c. ARPU for GSM is USD 6.6 per month.
d. India has the second largest telephone network after china.
e. Teledensity - 19.86 %
f. Enterprise telephone services, 3G, Wi-max and VPN are poised to grow.
2. Internet Backbone: Due to IT revolution of „90s, Indian cities and India is well connected with undersea optical cables.
3. New IT technologies: Technologies like SOA, Web 2.0, High-definition content, grid computing, etc and innovation in low cost technologies is presenting new challenges and opportunities for Indian IT industry.
The technology growth in IT industry has provided ample opportunities for R&D and innovation in quality and cheap technology.
The rise of internet and technologies like e-commerce and other e-applications will certainly increase the consumer power in India.
There has been significant growth in the telecommunication industry that has made global customer reach more accessible.
Adoption of technologies like 3G, CDMA, Wi-Max has created a largest telephone network in India.
Call rates from India to US is comparably less.
Technology like video-conferencing, Virtual Private Network, Voice-over-IP (VoIP) is extensively being used in IT sector.
Legal
IT SEZ requirement: IT companies can set up SEZ with minimum area of 10 hectares and enjoy a host of tax benefits and fiscal benefits.
3. Contract / Bond requirements: Huge debates surrounding the bonds under which the employees are required to work, which is not legally required.
4. IT Act: Indian government is strengthening the IT act, 2000 to provide a sound legal environment for companies to operate esp. related to security of data in transmission and storage, etc.
5. Companies operating in Software Technology Park (STPI) scheme will continue to get tax-benefit till 2010.
Environmental
Energy Efficient processes and equipments: Companies are focusing on reducing the carbon footprints, energy utilization, water consumption, etc.
Porter
Threat of Substitutes: 1. Other offshore locations such as Eastern Europe, the Philippines and China, are emerging and are posing threat to Indian IT industry because of their cost-advantage. However, this should have an impact only in the medium to long term. 2. Price quoted for projects is a major differentiator, the quality of products being same.
Less cost and same quality of product services offered by companies are getting higher cost advantage.
The emergence of IT skilled workers and also proficient in English language in countries like China and Philippines are causing menace to IT/ITes industry of India.
Bargaining Power of Customers: 1. Large number of IT companies vying for IT projects - resulting in high competition for projects. 2. Huge decline in IT expenditure: Indian IT sector is dependent on USA and BFSI in particular for majority of its revenues, and with the recent financial crisis, the new spending from these has reduced tremendously. 3. However, for the existing products and services, the clients continue the old
There is increase in competition among vendors that has eventually increased the competition for projects.
Due to economic and financial downturn in 2009, spending on IT has decreased.
Rivalry among firms
Competition among IT firms in India is highly intense. The companies like Infosys, Dell, HP, Cognizant and many others offer commoditization of IT products. These products offer undifferentiated prices that lure different customers (wikinvest 2008)
IT industry has revolutionised in last few years. Even in the economic downturn, the IT industry in India has managed to survive and analysis have evaluated that still it has many opportunities for growth.
There is little differentiation in the products at cheaper rates. Thus, the competition is high.
India's growth depends upon diversification and innovation and the rival companies of Wipro have enough potential for R&D and innovation. Wipro will have to be proactive in increasing the prominence of its value chain to excel over its rival companies.
Bargaining power of supplier: There was less demand for IT professionals due to economic crisis. This financial trauma has affected the global IT outlook.
There is abundance of fresher's and experienced people seeking jobs. The collapse of Lehman Brothers, Satyam have adversely affected the economy and made huge manpower jobless.
Since, the economy is trying to overcome the influence of recession and it is expected to change the scenario in coming years.
Barriers to Entry 1. Low capital requirements. 2. Large value chain, space for small enterprises. 3. MNCs are ramping up capacity and employee strength.
Threat of New Entrants:
The Government is supporting SMEs and emerging companies.
Capital Investment is low
Implications due to value chain are less for small scale enterprises.
