Consulting revenue, although coming from a small base, grew 30.1 percent to $340 million in 2006 compared with 2005.

As companies become more mature in their overall approach towards IT, it becomes more complex and sophisticated; they invariably have to rely on external providers to help them with consulting services.

IT management revenue grew 27.3 per cent from 2005 to $549 million in 2006. Increased adoption of remote infrastructure management services has driven the development of network operation centers / security operation centers, remote management centers and other managed service offerings from ESPs.

BPM in India is a high growth area that is moving beyond traditional customer relationship management (CRM) services.

The primary challenges that are driving organizations to engage business process outsourcing (BPO) are cost, growth and business innovation. The primary objectives of BPO engagements are productivity improvements, process/business transformation, and cost-containment to improve profits.

Both global and Indian vendors have leveraged these growth areas and the top three vendors, IBM, Tata Consultancy Services (TCS) and Wipro Infotech, together accounted for 26.1 per cent of IT services vendor market share in 2006.

In 2006, IBM surpassed TCS to become the top vendor, taking 11.2 per cent market share. TCS and Wipro occupy the second and third positions with 10.9 and 4.1 percent market shares, respectively.

However, the Indian IT services market is still fragmented, with the majority of the market being serviced by smaller local players that account for close to 40 per cent of the IT services market.

On the vendor landscape, Roy said, "As the market matures, competition will intensify and then lead to consolidation. Vendors that are unable to find a niche for themselves, or smaller vendors with no real differentiators, will be acquired by larger, more-aggressive competitors. End user IT organizations or captive unit spin-offs will have a difficult time in competing with well-established providers unless they also find their own niche."

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