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Porter's 5 Forces Analysis of The Technology Sector in India

The technology sector in India contributes around 55% to the country's GDP. While established IT service companies face minimal threat from new entrants, startups are emerging in niche areas like fintech. Software vendors have bargaining power due to bulk licenses. Buyers have significant power due to options. Substitutes are difficult to find for both conventional and emerging technology companies. There is intense competition among domestic and international IT service providers as well as opportunities for differentiation among non-conventional firms focused on areas like analytics and IoT.

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334 views2 pages

Porter's 5 Forces Analysis of The Technology Sector in India

The technology sector in India contributes around 55% to the country's GDP. While established IT service companies face minimal threat from new entrants, startups are emerging in niche areas like fintech. Software vendors have bargaining power due to bulk licenses. Buyers have significant power due to options. Substitutes are difficult to find for both conventional and emerging technology companies. There is intense competition among domestic and international IT service providers as well as opportunities for differentiation among non-conventional firms focused on areas like analytics and IoT.

Uploaded by

debojyoti
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Porter’s 5 Forces Analysis of the Technology sector in India

It is important to note that the services sector of our country contributes roughly
around 55% to the national GDP of India; and the major contributor of the services
sector is the IT-services/ technology companies.

Threat of New Entrants:

 In the context of the Indian IT services, which is highly commoditized, there


is minimum to negligible threat of new entrants. The reason being, it already
has established large corporate players who majorly deal in projects with
large ticket sizes which any new/small entrant probably will not be able to
handle properly.
 Although, several new entrants/ startups are emerging these days but majorly
in the non-conventional or rather niche segments like those of Fin-tech, Edu-
tech, Agri-tech, Artificial intelligence, etc.

Power of Suppliers:

 As far as supplies goes, the software vendors are in a position of demanding


a higher margin primarily due to the bulk of software licenses which they
provide to the IT services firms.
 Whereas, the hardware manufactures/ infrastructure providers and Office
Space suppliers are definitely lacking any sort of bargaining power.

Power of Buyers:

 As far as the conventional IT-service companies are concerned-The buyers


are practically the kings of this sector and hold a higher ground primarily
due to the variety of options which they have considering domestic as well
as international service providers.
 While for the non-conventional companies dealing with the emergent
technologies there is a lot of potential for differentiation and better margins.

Availability of Substitutes:
 Substitutes are a hard to find for this sector, both the conventional IT-
services as well as the emerging/ latest technologies.
 As far as the conventional IT-services firms are concerned many of them are
actually integrating majority of the latest technologies like those of Internet
of Things; Artificial Intelligence- Deep Neural networks, Robotic Process
Automation, Augmented Intelligence, and Virtual Reality. So, majority of
the conventional IT-service companies are quick to sense that they could
enhance their performance & resource management by actually adopting
these digital technologies into their process chains.
 The latest technology companies are in itself creating niche segments of
their own, be it Fin-tech, Agri-tech etc by using Virtual Reality, Block-chain
or Internet of things and hence are evolving every day. So for them it is
actually the question of evolution and not any substitute.

Competitive Rivalry:

 As evident from the detailed analysis up till this point, there is intense
competition amongst the existing conventional IT-services – like
Application Development, Network management services, Data-services, IT
infrastructure services etc; be it domestic or the international players - TCS,
Wipro, Tech Mahindra, Infosys, Capgemini, IBM, Accenture and others.
 As far as the non-conventional firms which are focused into- Analytics,
Cloud- computing, IoT, etc; there is immense scope of differentiation
through niche specialization and are even widely being integrated with other
firms of major industries- Banking & Financial Sector, Healthcare, Energy
and Utilities; as a separate Vertical specialization.

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