The Information Technology (IT) sector has emerged as a major engine of growth for the Indian economy. The Indian IT industry has grown its revenues ten fold in the past decade from US $ 4.8 billion in the financial year 1997-98 to US $ 47.8 billion in financial year 2006-07. Its contribution to GDP is estimated to have grown from 1.2% to 5.4% in the same period. This growth is being witnessed primarily in two sub-sectors of the IT industry i.e. Software services including software development and testing and IT Enabled Services (ITES) like call centers, business process outsourcing, medical transcription services, etc. Over the last decade leading companies in the IT sector have managed to create a strong 'Indian Software Brand' on the twin foundations of excellent quality and reliability. These foundations have been built on the existing inherent advantages offered by India viz. a large pool of trained English speaking manpower, strong technical and functional skills and a 12-hour time gap with the major markets allowing for 24x7 operations, coupled with the fiscal and regulatory support from the Government. These advantages have enabled Indian companies to capture an increasing share of the global IT software and services market.

The increasing reliance on business process outsourcing as the 'right' way of doing business worldwide and India's sustained leadership over other competing off shore sourcing destinations has also led the industry onto the phenomenal growth path.

Recent times have also witnessed the coming of age of the Indian IT multinationals, with the traditionally India-centric, indigenous players beginning to build noticeable presence in other locations through cross border acquisitions, onshore contract wins and organic growth in other low-cost locations. This is complemented by global majors continuing to significantly ramp-up their offshore delivery capabilities predominantly in India, vindicating the success of the global delivery model and highlighting India's increasingly important role in the new world IT order.

In addition to the growth in scale, the portfolio of services sourced globally continued to expand into higher-value, more complex activities further reinforcing the growing maturity of the global delivery model.

The total direct employment in the Indian IT-ITES sector is expected to grow to 1.6 million in the financial year 2007. In addition to the nearly 1.6 million strong workforce employed directly in the industry, Indian IT-ITES is estimated to have helped create an additional three million job opportunities through indirect and induced employment.

The burgeoning corporate requirements for computers, focus on e-governance and buoyancy in small towns have been the key factors driving sale of Personal Computers in India, which is likely to cross 6.5 million units in financial year 2006-07.

The Government has rightly recognised the IT sector as the key leveraging factor in national development having a significant multiplier effect on national income, employment and several ancillary industries in the economy. The zero duty regime for IT hardware from the year 2005 pursuant to implementation of the Information Technology Agreement of the WTO, reduced tariffs on raw materials, Software Technology Parks Scheme of the Government of India, the Special Economic Zones Policy and the Automatic Route for 100 per cent foreign direct investment are amongst the numerous policy initiatives taken by the Government to make India an attractive investment destination.