India’s IT industry can be divided into five main components, viz. Software Products, IT services, Engineering and R&D services, ITES/BPO (IT-enabled services/Business Process Outsourcing) and Hardware.

Export revenues primarily on project based IT Services continue to drive growth with IT Services accounting for 59% of total revenues followed by BPO and Engineering services at 20% and Software Products at 19%. Multi-year annuity based outsourcing agreements are expected to increase going forward.

In terms of total export and domestic revenues, ApplicaEnergy+Management+Softwaretion  and Maintenance (ADM) still continue to be the bread and butter for Indian IT companies, contributing to roughly 60% of their total revenues.

Increasing competition, pressure on billing rates and increasing commoditization of lower-end ADM services are among

the key reasons forcing the Indian software industry to make a fast move up the software value chain by providing higher value-added services like consulting, product development, R&D, social media, mobility, analytics, cloud computing and end-to-end turnkey solutions.