Indian IT-BPO industry: Future and challenges

BANGALORE, INDIA: If the Indian IT-BPO industry manages to achieve a high-growth scenario, its revenue could reach the US$ 350 billion level by 2020, out of which exports would account for 270 billion while the domestic market would account for 80 billion, says a study.

The study, IT Industry in Transformation: Opportunities and Challenges for India, by Raja M Mitra, Senior Consultant, The World Bank Group, is based on the ongoing research undertakings by the author on economic growth and high technology industry developments globally and India in particular.

It draws on desk research and interviews with corporate leaders and policymakers in India, Europe and the United States.

This study identifies three major growth scenarios for the IT products and services industry and the BPO sector in India for the 2010-2020 period.

A. The low growth scenario: IT-BPO industry revenue reaches US$ 185 billion level by 2020 out of which exports accounts for 140 billion while the domestic market accounts for 45 billion. This implies an especially substantive deceleration of IT-BPO industry growth compared to the 2000s.

B. The medium growth scenario: IT-BPO industry revenue reaches the US$ 255 billion level by 2020 out of which exports accounts for 200 billion while the domestic market accounts for 55 billion. This implies that IT-BPO industry growth reaches a CAGR 14 per cent in the 2010-2020 period – a comparatively moderate deceleration compared to the 2000s.

C. The high growth scenario: IT-BPO industry revenue reaches the US$ 350 billion level by 2020 out of which exports accounts for 270 billion while the domestic market accounts for 80 billion. This implies that overall IT-BPO industry growth will grow at comparatively higher rates but the CAGR will still not reach the 2000s level.

However, the medium growth scenario appears to be most likely and hence it is viewed as the base line, says the author.

The study, done with World Bank grants and published by the London School of Economics, says that much of the dynamism in IT-BPO industry development in India will continue to be driven by the offshoring-export business. However, unlike the 1990s the rate of growth in the domestic market may well be at par with or higher than in exports.

“India constitutes an example of a country which has begun to emerge as a significant power, both in terms of technical and business process innovation with the IT-BPO offshoring industry being a prime illustration,” says Mitra.

“The Indian economy, and the IT and ITeS-BPO industry in particular, is facing transformational opportunities. If handled well this offers the possibility of India to become one of the world’s leading powers in IT and other areas of knowledge-based industries both in terms of production and innovation,” he adds.

The study will be release in India at the CII Bangalore CEO Forum on December 17, in Bangalore.

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