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India’s sunshine sector — IT-ITeS — continues to maintain its pace of growth with a dogged determination.

It continues to chart double-digit growth and is expected to exceed US$ 36 billion in annual revenues in FY06. Out of this, software and services exports are estimated to grow by 32 per cent, to reach US$ 23.4 billion in FY06, according to key findings of the Strategic Review 2006.

The Indian IT and ITES sectors are well on track to achieve the targets that the industry aspires to achieve by the end of the decade.

The Indian IT industry will grow to Rs 247,000 crores (US$ 53 billion) by the end of calendar year 2008 from Rs 87,000 crores (US$ 18.7 billion) in 2003, says an IDC study. It will witness a compounded annual growth rate (CAGR) of 23.1 per cent till 2008 with exports growing 25.3 per cent and domestic market 18.5 per cent.

With growth in the sector being stupendous, the average increase in salary levels in the ITeS sector is between 16 per cent and 18 per cent.

A large part of this growth will be driven from small towns and Tier II cities.

A number of IT and ITeS companies are expanding to newer locations as they grow to deliver high-end services in the value chain, says a study carried out by the National Association of Software Services

Companies (NASSCOM) and Hewitt Associates.
 

  • Software accounts for exports worth US$ 13 billion against a total merchandise export of US$ 60 billion. The ITeS-BPO segment contributes 29 per cent to the total IT software and service exports from India.
     
  • Exports from the sector have grown 48 per cent in 2004-2005 to US$ 4.6 billion, up from US$ 3.1 billion the year before, says NASSCOM. Indian ITeS-BPO exports are estimated to grow to US$ 6.3 billion by the end of fiscal 2005-2006.
     
  • Outsourcing continues to be the main source of growth in IT services and has become a mainstream business practice for companies. A Gartner statement said: "By 2007 outsourcing will make up for 56 per cent of the IT services market," creating millions of jobs for young and educated Indians and attracting investments from countless countries from the Western world.
     
  • Net employment in the sector is estimated to have grown by approximately 100,000 in 2004-2005. Based on the hiring trends over the year, this segment is likely to end the current fiscal with total employment at 409,000. Nasscom estimates that the sector would add roughly about 300,000 people every year and would be employing 2 million people by 2008.
     
Global forays
 
  • Servion Global Solutions, a player in communications software, has acquired California-based 5by5 Networks, a technology company.
     
  • Satyam Computer Services Ltd has entered into a strategic partnership with eBaoTech, China-based provider of new generation insurance core software solutions.
     
  • Tata Consultancy Services (TCS) is planning to set new centres in China and Israel.
     
  • Hero group's BPO arm Hero ITeS is in talks with Australian firms for potential partnerships. The company, which serves financial services, telecom and white goods verticals and has offices in the US and UK, is also looking at entry into newer verticals besides going public soon.
     
Highlights of the Indian ITES-BPO sector:
 
  • The ITES-BPO sector has more than 80 per cent of the Fortune 500 companies either offshoring or evaluating offshoring most of their non-strategic processes now.
     
  • The industry has introduced new service lines such as technical help desks, finance and accounting services, engineering services, equity research to widen its gamut of services to achieve sustained growth.
     
  • It now has greater presence beyond metros, in cities like Vizag, Jaipur, Kochi, Pune, Ahmedabad and Chandigarh.
     
  • Multi-lingual processes are the natural progression for successful ITES-BPO players and part of their expansion to new markets.
     
  • Strong focus on data protection, security and audit compliance.

 

  
     
 
   

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