The research paper discusses the concept of Porters Five competitive forces and its application to Indian IT sector. Porters Five Forces is a simple yet powerful tool in understanding where the power lies in a business situation and identify weather new products, services or businesses have potential to be profitable. The tool is very effective as it helps in understanding both the strength of our current competitive position and the strength of position that we are considering to move into. With an understanding of where power lies, a business can take advantage of its strengths and improve on its weakness.