India’s technology sector turns the country into a back office for the world

The growth of the information technology sector helped to revolutionize the Indian economy, transforming it from a largely closed system inspired by the Soviet Union in the 1980s, to the back of the world since the 1990s.
India’s IT sector, with an annual revenue of more than $ 200 billion and five million people, is a provider of digital services to companies around the world, utilizing the country’s in-depth language and engineering skills.
The sector also contributes to Indian companies appearing in the Financial Times Asia Pacific 2022 Climate Leaders list. Top among them is Bangalore-based Mindtree, followed by other firms like Tata Consulting Services in Mumbai and Tech Mahindra in Pune.
The Climate Leaders List, compiled in partnership with Nikkei Asia and data provider Statista, identifies companies that have significantly reduced carbon emissions in Scopes 1 and 2. These are the emissions that result from the company’s own operations and from the generation of the energy it purchases, respectively.
Digital companies are very advantageous because they tend to have relatively low scale 1 releases. Unlike heavy industries, they do not operate furnaces that release carbon dioxide, for example.
However, India’s IT sector shows both the opportunities and the challenges facing the burgeoning white-collar industry that plays a vital role in the global services economy.
These companies are usually large business owners, with hundreds of thousands of employees across India and the world. It works in some of the hottest regions, such as the capital, New Delhi, where temperatures have recently reached 49 degrees Celsius, making them a major consumer of air conditioning. In addition, it operates massive, energy-intensive data centers to support customers’ businesses worldwide.
Nilangan Roy, chief financial officer of IT giant Infosys, says the company takes what it has learned about reducing its emissions and selling that knowledge to customers. He adds that reducing emissions “gives you jobs,” noting that Infosys has set up a business unit that advises on carbon offsets and other areas. “We are a technology company. Why not help our customers maintain them? This is good business for us.”
The immediate challenge for IT companies in India is Scope 2 emissions, which are indirectly created by the energy they consume.
India’s electricity system remains dependent on coal, which accounts for 70 per cent of power generation. While the country is investing in building renewable energy, the absolute consumption of coal is expected to increase as the economy and population grow.
So, for Indian companies trying to reduce emissions, the obvious first step is to make their buildings more energy efficient by upgrading air conditioning or using alternatives like water cooling. But the most important step is to obtain renewable electricity, whether it is generated by the company itself or by an appropriate power supplier.
Some companies have created their own solar farms. Mind Tree operates a farm in a training center in Bhubaneswar, while Infosys owns a power station near its Bangalore headquarters.
There is a cost involved in setting up a renewable energy facility, says Santhush Jayaram, head of sustainability at HCL Technology, but the company can recoup its investment in less than two years. “It makes business sense to move to renewable energy,” he adds.
The hardest thing yet is to reduce Scope 3 releases, which result from companies’ activities beyond their direct control, such as commuting or business travel. The measurement of these things has become more complex since the coronavirus pandemic started in 2020.
Many IT companies in India, for example, have endorsed work from home, with TCS introducing a policy that no more than 25 per cent of its workforce should be in the office at any given time. But while fewer office workers have reduced Band 1 and 2 emissions, employees now use air conditioners, lights and computers for longer periods at home.
Managers acknowledge that this is a new challenge. “The pandemic brought about a new set of emissions that we captured for the first time, emissions by working from home,” said Jayaram, of HCL.
Not many companies report these cases separately, but the ESG report by Infosys sheds light on the matter. Their emissions due to homework increased by 10 percent in the year to March 2022 to 71,503 tons of CO2 eq – higher than their Scope 1 and Band 2 emissions combined.
Managers say India’s IT companies need to find ways to deal with these emissions if they want to adapt.
BS Narayan, Head of Sustainability at Wipro, notes that the ability to demonstrate progress in emissions has become essential to attract employees in a time of fierce competition for talent.
“Climate change and environmental sustainability are increasingly important for young people,” he says, adding that they will want to know “what the companies they join are doing about sustainability.”

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