IT sector - a maturing industry - slow growth rates in the future - impact

[techiemba]

Just as any other industry, the IT export industry in India is maturing (please see article below). The industry life cycle model has been well studied in several business research initiatives over the last 100 years. So - my thoughts are that with this maturity we will see slower growth rates (even contraction) in the future especially in the tier 1 cities. Please discuss on how this impacts the quality of life and if cities such as Hyderabad and Bangalore are diversified enough to weather this slowdown.

http://www.deccanherald.com/content/86862/karnataka-export-growth-dips-23.html

Karnataka IT export growth dips from 23% to 1.4% Pradeesh Chandran, Bangalore, August 7, DH News Service:
At a time when the State government is trying to lure more investments in information technology (IT) industry and when the industry is raking in large profits, software exports from Karnataka is far from satisfactory.
According to data compiled by STPI (Software Technolgy Parks of India) and State IT department, in the last financial year (FY 2009-10), software exports from Karnataka was at about Rs 76,000 crore as against Rs 74,929 crore in 2008-09, registering a growth of just about 1.4 per cent. This is a sharp drop from 23 per cent growth in IT exports in 2008-09 over previous year. Even national growth in software exports in 2009-10 was estimated at 5.5 per cent by Nasscom. This includes export from about 1,200 STPI units and 71 SEZ units in the State and it accounts for about 30 per cent of its national share. However, another data available with the State IT department said the share of exports from SEZ during FY 2009-10 was Rs 8,000 crore as against Rs 4,500 crore during 2008-09.

During the period 2009-10, 100 new IT companies were registered in the State including 77 in STP and 23 SEZ units. Out 77 STP units 34 are foreign equity holding companies which is lower compared to previous year. Thirty-nine small and medium enterprises were also started during the period.

Meanwhile, State IT, BT & ST Principal Secretary Ashok Kumar Manoli, said ?the state is in final stages of signing agreement with Israel?s Matimop for R&D in semi-conductor business.? He said, ?young entrepreneurs can use the Rs 10 crore ?Karnataka Fund for Semi Conductor Excellence? for enhancing partnership with Israel. The fund, allocated for private companies in the recently announced semi conductor policy, covers up to 50 per cent of R&D expenses subject to a limit of Rs 10 lakh per unit. On IT investment region (ITIR) near Devanahalli, Manoli said the Planning Commission has cleared the project. The State government had notified 2,071 acre of land. Fifty-eight IT companies and four developers have expressed interest in setting up operations in ITIR. He said ?the final draft of animation policy is ready and cabinet nod expected soon.? The state is also framing a new policy for hardware sector and in final stages of preparing the draft of revised ICT policy.

[Sid]

With maturity comes efficiency in process. Chaff will get separated from wheat (both employers and employees).
Actually IT is not a single industry. Software is like a framework technology. All other technology/business areas (Material Sciences, Electrical/Electronics Engineering, Geology, Civil/Architecture, Business Process, Sales, Financials, Banking etc.) depend on software of one kind or the other. Growth in IT will depend on growth of other areas.

With millions of Indians in pipeline, there will be plenty of growth available. It might not be as high paying, when local market becomes the major consumer of IT (as opposed to rich US/Europe market).