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A Study on Impact of Key Business Trends on the Competitiveness of IT Service Industry.pdf

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A Study on Impact of Key Business Trends on the Competitiveness of IT Service Industry.pdf
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    A STUDY ON IMPACT OF KEY BUSINESS TRENDS ON THE COMPETITIVENESS OF IT SERVICES INDUSTRY   S. Arun Kumar | EPLM 10 | Student ID: 2235320 INDIAN INSTITUTE OF MANAGEMENT, CALCUTTA MARCH 2018  CONTENTS Abstract ................................................................................................................................................... 2 Introduction to Project & Scope of Study ............................................................................................... 3 The IT Services industry .......................................................................................................................... 3 Industry Analysis ..................................................................................................................................... 5 Top business trends that relate to IT Services industry .......................................................................... 7 Summary of impact trends on industry competitiveness ..................................................................... 10 Conclusion ............................................................................................................................................. 11 Limitations & Future Scope ................................................................................................................... 11 References ............................................................................................................................................ 11    Abstract ITIndustryisperhapstheyoungestofanytechnologyevolutionthathashadwideandfar-reachingimpacttoalmosteveryindividualintheworld.Itisalsotheindustrythathasundergonetremendouschangesinhardware,andthesoftwarethatgoesintoit,initsshorthistoryof25years.TheITServicesindustryhasbeentheleadingindustryinseveralemergingmarkets,andthisreportstudiestheIndianITServicesindustryanddoesananalysisoftheindustryattractiveness.Further,itrecognizesfivekeybusinesstrendsthatimpactthisindustryandstudiesthenatureofimpactthatthishasonthecompetitivenessoftheindustry.     INTRODUCTION TO PROJECT SCOPE OF STUDY Since the time John Neumann published the “First Draft of a Report on EDVAC” (1945), Bob Metcalfe invented Ethernet (1973), and Tim Berners- Lee wrote “ Information management: A proposal ” (1989), IT has pervaded all walks of life and has spun off numerous services banking purely on IT. It is perhaps the youngest of any technology evolution that has had wide and far-reaching impact to almost every individual in the world. It is also the industry that has undergone tremendous changes in hardware, and the software that goes into it, in its short history of 25 years since world wide web was made available free to the world in 1993 (Press, n.d.). The IT Services industry has adapted to various disruptions in the past and some of its key competitive factors that have defined its success include, expansion of product offerings, expansion of target market geography, offshoring, near-shoring and local hiring. However, since the past few years, the industry is at the throes what with multiple technology advancements (such as Artificial Intelligence based solutions, 5G, Internet of Things) and business trends (such as growing protectionism, power shift from CIO to CMO in deciding IT spend, Insourcing, Uberisation of workforce and decline in contract value and length) simultaneously creating dramatic impact in the way software solutions are developed and services are delivered. With these and other such trends simultaneously at play, there is marked slowdown in the sector’s growth and significant pressure on margins. As companies go through a phase of reinvention, this project attempts to study the influence of such trends on the competitive forces that will define the success of IT Services companies to lead growth or protect margins. THE IT SERVICES INDUSTRY The global IT Industry is estimated to be at USD 4.5 trillion in 2018, with nearly a third of the USA’s IT industry contributing to IT services, and the remaining via Software, Devices and Infrastructure, Telecom Services and other emerging technology. The beginning of IT Services industry is widely attributed to the IT services outsourcing done by Kodak in 1989 (Applegate & Montealegre, 1991). Since then, IT services industry had been growing at a significant rate and has seen many IT outsourcing service providers in emerging in USA and Emerging Markets such as India.  The industry is highly competitive. Figure 1 shows the worldwide top 10 companies’ IT Services market share (Statista, 2017). Figure 1 Worldwide IT Services Provider - 2016 Market Share An analysis of market concentration using Herfindahl Index  of the above data, yields 0.012 , which is an indicator of very low concentration or perfect competition. Figure 2 shows the growth of Indian IT & ITeS services since 2010 (IBEF, 2018). Figure 2 Market Size of IT Industry in India An analysis of the growth rate shows that even while the industry is growing, there is a clear deceleration over the last eight years (Ref. Figure 3 Error! Reference source not found. ).
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