LOVELY PROFESSIONAL UNIVERSITY

Assignment
OF
Business Enviroment.

Topic:-PESTEL analysis of IT Industry.

Submitted To: Submitted by:.

BHAVDEEP S.KOCHAR SS(A50)

 INTRODUCTION
The Information technology (IT) industry has become one of the most robust (strong) industries
in the world. IT, more than other industry or economic facet, has an increased productivity
particularly in the developed world and therefore is a very key driver of global economic growth.
Economies of scale and insatiable demand from both consumers and enterprises characterize this
rapidly growing sector .The Information Technology Association Of America (ITAA) explains
“information technology” as encompassing all possible aspects of information systems based on
computer. Both software development and hardware involved in IT industry include everything
from computer systems, to the design, implementation, study and development of IT and
management study. Owing to its easy accessibility and the wide range of IT products available,
the demand for IT services has increased substantially over the years .The IT sector has emerged
as a major global source of, both growth and employment.
Features of Information Technology Industry

1. Economies of scale for the information technology industry are high. The marginal cost
of each unit of additional software or hardware is insignificant compared to the value
addition that results from it.
2. Unlike other common industries, the IT industry is Knowledge-based.
3. Efficient utilization of skilled labour forces in the IT sector can help an economy to
achieve a raplid pace of economic growth.
4. The IT industry helps many other sector in the growth process of the economy including
the services and manufacturing sector.

Role of the IT Industry

The IT can serve as a medium of e-governance, as it assures easy accessibility to

information. The use of information technology in the service sector improves operational
efficiency and adds to transparency. It also serves as a medium of skill formation.

PESTEL Analysis

PESTEL is an acronym (means short form) for the political, economic, social, technological,
environmental, and legal factors of the external micro-environment. A PESTEL analysis is an
analysis of the external micro-environment that affects all firms. Such external factors usually
are beyond the firms control and some times present themselves as threats. For this reason, some
say that “pestle” is an appropriate term for these factors. However, changes in the external
environment also create opportunities.

The following are examples of some of the factors that might be considered in a PESTEL
analysis.
POLITICAL analysis

 Political stability
 Risk of military invasion
 Legal framework for contract enforcement
 Intellectual property protection
 Trade regulation and tariffs
 Anti- trust laws
 Pricing regulations
 Taxation- tax rates and incentives
Economic analysis
 Type of economic system in countries of operation
 Government intervention in the free market
 Infrastructure quality
 Labor costs
 Unemployment rate
 Inflation rate
 Interest rates

Social analysis

 Demographics
 Class structure
 Education
 Culture (gender roles,etc)
 Entrepreneurial spirit
  Attitudes (health , environmental consciousness)

Technological analysis

 Recent technological development

 Impact on cost structure
 Impact on value chain structure
 Rate of technological diffusion

Environmental analysis

 Ecological
 Environmentel issues
 I nternational
 National
 Local
 Environmental regulation
 Customer values
 Market values

Legal analysis

 Current legislation home market

 Future legislation
 Regulatory bodies and processes
 Employment law
 Consumer protection
 Industry-specific regulations

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PESTEL analysis of IT industries

Political:-

a) Tax rates in India for the hardware sector are 20%-30% plus which creates obvious
possibilities for the further reform and faster growth.
b) Tax initiative by government to ask state government to fix VAT at 4% in the hope of
attracting investors.
c) 26 new projects as a part of a national E-Government plan.
d) Manufacturing Association of IT(MAIT) an Electronic Industry Association of
India(ELSINA) are also pressing for reduction in land acquisition rights by stamp duty
exemptions.

Economic:-

a) In last couple of years there is growth in sales in PCs and computer hardware, mainly due
to lower prices.
b) IT plays an important role in bringing 50% of rural household to the banking innovation.
c) Compound Annual Growth Rate is 15% between 2005-2010.
d) IBM, Dell, Lenovo has announced new investment to expand capacity.
e) Industry contribution upto 7% in GDP.

Social:-

a) Only 1.3 % of people in India own a comuter.

b) Regional imbalance and low incomes.
c) Still abroad is the fascination among the IT professionals to work.
d) Business practices varies region wise.
e) IBM, Wipro and Infosys recruit 15000-2000 graduates each year.

Technological:-
 a) Plans by AMD to setup the country’s Ist chip fabrication (an investment upto US $3 bn)
to stimulate local production and lower prices.
b) Multimedia features and Entertainment to bring bollywood among the masses.
c) Lenovo to built in TV tuner cards capable of connecting to a TV antenna.
d) Development of new software programs and hardware products in the computer systems
makes it popular.

OPPORTUNITIES FOR IT INDUSTRY ARE AS FOLLOWS

 GROWING CAREER OPPORTUNITIES IN INFORMATION

TECHNOLOGY
IT is one of the basic opportunity of it industry .To get a foot in the door & eventually land
one of the competitive but well paying jobs , it is necessary to have a broad range of
computers skills that are best learned at community or technical colleges where practical,
hands on training is a part of the daily instructional process. The information technology is
still a hot employment area but the focus has shifted. Many who are in the know believe the
future for graduates of the information technology related programs is in information
security particularly as it is related to wireless technology .These computers give doctors and
nurses instant access to medical records, x-ray, test result and other information almost
instantaneously. It not only saves time but there is less opportunity for error.
  OPPORTUNITY OF DOING BETTER IN NEAR FUTURE
There is lot of scope for IT industry to do better in nearer future by developing new and
improved software programs and hardware products. And also helps a lot to improve the
security of various sectors including army, banks etc.

 INCREASING THE GDP RATE

IT industry plays an important part in increasing the GDP rate of the country by developing
new software with better techniques and quality as well.

 KEY OPPORTUNITIES LIES IN THE DEVELOPING COUNTRIES

By setting industries in developing countries it will improve the growth rate of the
developing countries and also helps to strengthen the economy of the country by giving
employment opportunities.

THREATS

A threat may be defined as a “Warning” that something unpleasant is imminent

OR
Declaration of an intention or a determination to inflict harm.

THE THREAT TO IT INDUSTRY ARE AS FOLLOWS

 STEALING THE INTERNET

Stealing the internet and destroying it by using non-standard solutions is not the worst
matter. The internet has much more serious threats in viruses, worms & Trojans. They
 cause destruction which can be noticed often easily. Creating them can regard as
criminal without exceptions. They also violate the privacy of peoples. In addition to this
viruses are also have been made for home and work computers.

 SPYWARE
It is a software which employs a user’s internet connection in the “Background” or
commonly known as “Back channel” without their knowledge or explicit permission. This
gives the possibility of “Information Thefts “.Spyware are usually harmless &they will not
regard as real spy wares. Commonly they just transmit information about the user’s web
surfing habits back to the software company.

 COMPUTER DEFECTS
Defects breaking security are found constantly in almost all computer software, desktop,
enterprise, entertainment, media players, even security software itself. Criminals use these
defects to force “Malicious Programs” or “Vulnerable Computers”. Mitigating this risk
requires that security updates constantly be applied to computers.

 MALICIOUS PROGRAMS
Malicious programs direct our computers to do these we don’t want them to do. They may
be simple or sophisticated. Their actions may be limited to creating nuisance, or more likely
these days, turn our computers over to criminals. Criminals use constantly evolving tricks &
technology to convince us to install these malicious programs ourselves of force them on
using defects in our computer software.

 CHINESE INDUSTRY
There is no doubt about china’s competitiveness in IT sector, considering its hardware &
telecom markets are much bigger than India’s. And even in software china has a huge captive
 domestic market as compared to India’s relatively tiny domestic market. There are some
other alarming figures for India the ratio of china’s IT spend to its GDP is nearly 5 times that
of India’s .If India’s current growth rate in IT doubles it would still take us 25 yrs to catch up
with China & that only if china’s growth rate remains stagnant.

 INSTABILITY OF POLITICAL ENVIRONMENT

Politics and war contradiction between India and Pakistan is severe and internal
contradiction of race religion brings about instability of politics and economy. Instable
factors make some people from international investment and software outsourcing region
hesitated. India is obsessed by internal race problem since its independence and large-scale
collision and society violence events emerge in endlessly.

CONCLUSION

 PROTECTING MORE GLOBAL CUSTOMERS

In july2009, 47 global partners have joined MAPP (Microsoft active protections
program) since the programs launch. As a result customers are better protects from
threats more quickly. The number of customers helped by partner protections ranges from
the tens of thousands for smaller specialist companies to hundreds of millions for mass-
market vendor.

 DECREASING THE ATTACK WINDOW

In the race between exploit &protection, information shared through MAPP is helping
decrease the risk of attack. For example, source fire Inc. indicates that before MAPP, it
took around eight hours to reverse -engineer, develop proof of f concept (poc) code &
 then build the exploit detection for vulnerability. With MAPP, the process for source fire
takes about two hours, which is a 75 percent decrease.

 MICROSOFT SECURITY UPDATE GUIDE

Written to help customers better manage risk, the Microsoft security update guide
outlines Microsoft resources, processes & practices surrounding its security release
process. Available for download the guide helps customers plan for security releases,
improve risk evaluation decisions &highlight the resources available to help customers
deploy updates quickly with disruption to their IT environment.

 MICROSOFT OFFICE VISUALISATION TOOLS(OFFVIS)

A free tool designed to help combat file format-based software vulnerable & exploits,
OffVIS will allow customers to better understand & deconstruct Microsoft office-based
attacks. As a result, security vendors can build deeper, more precise malware
Detection signatures & develop new techniques for analyzing malware.

SUGGESTION
Now a days the proportion between software and hardware is changing. Hardware
prevails at past and software now. According to forecast from authority institution,
software industry will become the large industry of IT market and it is a sunrise industry
with the fastest speed to develop already Bill Gates believes that there is no so limit in
developing of software industry. The cake of software industry enlarge gradually, we
must pay much attention on it.

Threats to HCL
 1. One of key threat for HCL and the industry as a whole is the ban of outsourcing
from India due to new regulations from U.S
2. Dip in quarterly sales by 5% can lead to loss of market share and product
depreciation
3. Small players and manufactures are trying to enter into the segment where they
can provide much cheaper products then HCL which will be a rising competition
for HCL to stand.
Change of Threats of HCL into opportunities
1. HCL after getting banned from U.S created joint venture with companies from
other countries.
2. When the sales getting low they tried to attract most or the customers by
providing them home deliveries ,discounts and by making policies of buying
goods relevant so that a common man can buy their goods.
3. IT industry is one of the fast moving industry in the world it can increase its sales
by developing new software and hardware products with improved technology by
paying attention on the views of their customers.
4. When the small companies tried to enter the market of HCL they upgrade the
quality of their products so automatically looking towards the cost most of the
customers prefer quality of a product.