ICT services exports: Despite India's 8% growth rate, China with 19% giving 'stiff competition'

By Rajiv Shah 

A World Bank report, while praising India, a “middle-income” country driving the surge in internet users across the globe, states that if in 2018, only one in five Indians used the internet, by 2022 there was already “a staggering 170 percent growth in internet users”. But a deeper look in the report suggests two things: One, Indian IT business is facing stiff competition from China, and two, insofar as speed is internet speed is concerned, India has far to go.
Titled “Digital Progress and Trends Report 2023”, claimed to have been updated this year, and running into 177 pages, the report says that while 4G coverage, which offers internet connectivity to most people, may be 99 per cent, only 46 per cent of the people have internet access, that too mainly via mobile. As for fixed broadband internet, only two in 100 people have the access.
Into the business of financing worldwide, the World Bank's focus is, naturally, on how well are entrepreneurs equipped with internet across different countries. Here, the report shows where India is placed vis-a-vis other developing: Thus, if the report is any guide, the tables show, 95 per cent of Indian firms have access to computers (worse than Vietnam, Chile, Poland, Korean Republic, Brazil and Georgia), and 96 per cent firms have access to internet (again, worse than Chile, Brazil, Poland and Korea Republic).

Share of firms

At the same time, the report reveals that only 27 per cent of firms use website and just seven per cent of firms use cloud computing for business purposes, which is worse than a large number of other developing countries. On the other hand, a whopping 87 per cent of firms use social media for business purposes; here, India is ahead of most of the peer countries.

Interestingly, "Visual Capitalist", claiming to be one of the fastest growing online publishers globally, focused on topics including markets, technology, energy and the global economy, analysis culling out facts from the World Bank report, does not place India among the top countries in the use of mobile internet – in fact, it evades mentioning India completely while comparing countries for mobile internet speed.
Thus, UAE tops with 179.6 Median Mobile Download Speed (in Mbps), followed by South Korea 138.5, Norway 131.2, Denmark 123.7, Kuwait 119.8, China 116.7, Netherlands 114.3, Saudi Arabia 101.9, Saudi Arabia 101.9 and Bulgaria 97.6. While there is no ranking, the table containing all the countries' mobile internet speed shows in India it is 31.0 megabits per second, which is worse than most developed countries but better than a large number of developing nations.
According to the World Bank, “the surge” in internet in India after 2018 took place because of “the rise in internet literacy among women, cheaper mobile data prices, pandemic restrictions, and government initiatives like the Unified Payments Interface and the Digital India Initiative.” The result is, nearly half of Indians are “active internet users.” Also, if China created by far the most jobs in IT services during the past two decades, it is now “followed by India.”

Business purposes in select countries

It states, “China’s IT services employment approached 10 million by the end of 2022, a 30-fold increase from 0.3 million in 2000. Underpinning this jobs spurt is the remarkable growth of China’s homegrown technology firms, enabled by a massive domestic market, vast pool of talent, enormous investments, and policy support. India maintained second place, behind China, during the past two decades.”
As for India, the top banker says, “more than 3 million people worked in IT services in 2022, up from 1.4 million in 2000. Direct employment in India’s ICT and BPO-ITES sector is estimated to have been around 5.1 million in 2022.”

However, the report underlines why India faces stiff competition from China. It says, “China’s rise as a major ICT services exporter has eroded India’s market share, although the latter’s outlook remains strong.”
At the same time, it praises India’s “booming IT industry has long been celebrated as a great success story in the country’s economic rise”, pointing out, India’s IT industry thrived on its vast engineering talent and a vibrant start-up ecosystem; its ICT services exports raked in US$100 billion in foreign exchange in 2022 and grew by nearly 8 percent annually during 2010–22.”
“However”, it does not fail to mention that “India’s growth was outpaced by China’s 19 percent growth rate during the same period. Riding on its domestic market success as a testing ground and stepping stone, Chinese software and IT firms are increasingly foraying into foreign markets and have propelled China’s ICT services exports.”
The report adds, “As the domestic market matures and competition stiffens, Chinese software and internet firms are looking overseas to expand their revenue sources. Among countries that exported more than US$1 billion in IT services, Indonesia achieved a whopping 41 per cent annual growth, followed by 30 per cent in Pakistan, 28 per cent in Türkiye, 26 per cent in Brazil, 23 percent in Serbia, 21 per cent in Bulgaria and Ukraine, and 16 per cent in China, Costa Rica, and India.”