IT-BPO industry sees strong growth: NASSCOM

NEW DELHI, INDIA: Amidst speculation and an uncertain global economic environment, the Indian IT-BPO industry once again exhibited buoyancy and maturity, reflected through a strong customer demand in FY 2010-11, says the Indian IT Industry body NASSCOM, in its key findings of the Indian IT-BPO sector performance for FY 2010-11, released this week.

The IT-BPO industry (excluding hardware) witnessed a quick rebound in growth and is estimated to grow by 19 per cent, aggregating revenues of $ 76 billion this fiscal year. While exports continued to be the mainstay of the industry with revenue of $59 billion, the domestic market demonstrated steady growth of 16 per cent to aggregate Rs. 787 billion, NASSCOM said in a statement.

It said direct employment is expected to reach nearly 2.54 million, an addition of 240,000 employees. As a proportion of national GDP, the sector revenues are estimated 6.4 per cent in FY2011. 

Speaking on the occasion of releasing the report, Som Mittal, president, NASSCOM, said, “Pent-up demand for IT-BPO services, return of discretionary spending, new business models that encouraged first time buyers, and re-invented value proposition for existing ones, were the key drivers for the industry performance. Industry in FY 2011 demonstrated a broad-based growth across mature and emerging verticals, core markets and new opportunities.”

Within exports, IT Services segment was the fastest growing segment, growing by 22.7 per cent over FY 2010, and aggregating export revenues of $ 33.5 billion, accounting for 57 per cent of total exports.

Indian IT service offerings have evolved from application development and maintenance, to emerge as full service players providing testing services, infrastructure services, consulting and system integration.

BPO export segment grew by 14 per cent

The BPO export segment grew by 14 per cent to reach $14.1 billion in FY 2011. BPO sector was impacted by delayed decision making and deal restructuring in the first half of the year, but picked momentum in the second half.

The interesting trend for the year was the increased focus on client relationships, mining existing clients and restructured operations to provide focused vertical solutions. Further, the industry focused on achieving excellence in business process management, and deliver strong transformational benefits creating revenue impact for clients, NASSCOM added.

Engineering design and products development segments generated revenues of $11.3 billion in FY 2011, growing by 13.4 per cent, driven by increasing use of electronics, technology convergence and need for localized products.

India not only continues to lead the global sourcing market, it has achieved pronounced stability emerging as a formidable force - overall share increases to 55 per cent in 2010, up from 51 per cent in 2009, despite competitive challenges presented by other global sourcing destinations.

“Domain expertise, process excellence, the ability to leverage technology to enhance operating efficiencies, greater scalability are becoming paramount in ensuring the long-term success of the global sourcing model and a major differentiating factor among countries. India is a front runner in imbibing these multipliers into its value proposition,” added Som Mittal.

With growth in domestic IT market expected to outpace India’s GDP growth, the industry had a strong focus in this segment. The domestic market grew by 16 per cent to aggregate revenues of Rs 787 billion. Increased technology adoption across government, corporates and SMBs for providing citizen services, enhanced internal controls and customer service led to an increase in outsourcing within the domestic market also.

For FY 2012, the software and services growth is expected to grow at 16-18 per cent and aggregate revenues of $68-70 billion. The domestic market is estimated to grow by 15-17 per cent with revenues of Rs. 900—920 billion. Apart from existing growth areas, a vibrant start-up ecosystem, cloud, SAAS, analytics, mobile and products for India will additional drivers.

“As we step further, this decade heralds a new beginning, a new ‘transformation’ for the industry. Transformative service delivery is always business focused, delivers confidence and manages risks, using modern business re-alignment; at the same time enabling sustained savings and value,” said Som Mittal.