8/18/2020 Indian IT-BPO Industry - Inclusion

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You are here: Inclusion Home Issue: The India Decade January-March 2010 Indian IT-BPO Industry

Indian IT-BPO Industry

Som Mittal

Som Mittal points out how the IT sector can transform RELATED STORIES
India through economic development and ICT-enabled
solutions in healthcare, education, financial services and Agenda for Sustainable Financial
Architecture
public services, leading to the socio-economic inclusion
of 30 million citizens each year
Cloud Computing, complete
The Indian technology and business services industry has service enablement on a hosted
infrastructure, may well be the
had a phenomenal run over the last 10 years, contributing next big thing in IT
massively to the country’s growth. The industry has grown The Foundation for Inclusive IT
from $4 billion in revenues in 1998 to a $59.6 billion giant Growth
today, employing over 2.3 million people, and has had an
unparalleled impact on the Indian economy. As we look
CIT to Be Next Decade�s Critical
ahead, the industry recognises that the next 10-15 years will Driver
be fundamentally different from the past and driving the next wave of growth will require all the stakeholders to
create an ambitious vision and focus on achieving that.
Document Managment to Drive
The beginning of the new decade heralds the slow, but steady end of the worst recession in the past 60 years. The IT Reforms
advent of 2010 has signalled the revival of outsourcing within core markets, along with the emerging markets
increasingly adopting outsourcing for enhanced competitiveness. Improving economic conditions signifying return
Microsoft Goes for the Clouds
of consumer confidence and renewal of business growth, is expected to drive IT spending going forward.

With increased GDP growth of emerging markets, and shrinking working age populations, there are a new set of
hitherto untapped opportunities that will include emergence of new verticals, service lines, geographic and
Saluting Best Practices in
customer segments. On the back of these trends, the addressable market opportunity for the IT-BPO sector is likely People, Projects and Institutions
to expand from the current $500 billion to $1.5 trillion by 2020. for Inclusive Growth Since 2003

India is fundamentally advantaged and uniquely positioned to sustain its global leadership position, grow its
offshore IT-BPO industries at an annual rate of 13-14 per cent, sustain nearly 10 million direct jobs, and generate
export revenues of about $175 billion by 2020 and domestic revenues of $50 billion by 2020. Additionally, this
growth can be further accelerated to $310 billion through deep and enduring innovation by industry participants,
and focused initiatives by all stakeholders.

The sector can transform India through economic development and ICT-enabled solutions in healthcare, education,
financial services and public services, which can drive the socio-economic inclusion of 30 million citizens each year.

Global Offshore IT-BPO Market Potential

While India holds a dominant share of the global offshore IT-BPO sector, yet, at $46.3 billion in 2008-09, Indian IT-
BPO exports accounted for less than 2.8 per cent of the global spend on IT-BPO. Over the next decade, the industry
will be influenced by several global macroeconomic, demographics, social, business and technological trends that
will shape the face of global business. These trends include:

Macroeconomic and demographic trends

Shifting centres of economic activity-GDP of Asia and Europe will converge

Working age population shrinking in key developed countries (e.g., Japan, Italy, US)

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Social and environmental trends

Increased Internet and mobile connectivity transforming the way people live and interact

Rapidly increasing consumption and associated supply gap in key natural resources (e.g., oil, water) creating need
for resource efficiency and climate change solutions

Business and technology trends

Global economic crisis leading to major shift in industry structures and higher regulatory control

Corporate boundaries being redefined (e.g., open innovation, extended supply chains, web of partnerships)

Technology radically transforming the way traditional corporations and governments function

Potential Indian IT-BPO revenues of $175 billion by 2020

Given the backdrop of large untapped demand potential and strong fundamentals, the Indian technology and
business services industry can aspire to a new level of impact by 2020. The export market can expand nearly four-
fold by 2020 from $47 billion in revenues today to $88 billion by 2014, and $175 billion by 2020, at an annual growth
rate of 13 per cent. The Indian domestic outsourcing industry, which is fairly nascent today, is likely to reach $50
billion in revenues by 2020 (indicating a penetration of 50-55 per cent of the total addressable market of $90 billion
to $100 billion and a CAGR of 14 per cent from 2008 until 2020).

Enabling inclusive growth 

The Indian technology and business services industry has contributed significantly to the Indian economy and
society. It can sustain and exceed this impact by 2020. Its contribution to Indian GDP can reach almost 10 per cent,
if the industry achieves its full potential. Further, it can create 30 million jobs (10 million direct and 20 million
indirect) by 2020, in the urban areas and significant job opportunities in rural and non-metro regions. This will lead
to increased gender diversity (with women being 50 per cent of the new recruits) and a global playing field for its
employees. The industry can also foster India’s overall regional development by encouraging improved
infrastructure.

Office space and direct capital investment requirement for the industry is expected to quadruple by 2020, leading to
developing of satellite townships around Tier-I cities, and overall upgradation of basic and business infrastructure
of a sizeable number of Tier-II cities. ICT can further deliver technology enabled solutions that are cheaper and
more efficient than traditional methods, thus reducing public spend in services delivery.

The way forward

Concerted action is required to capture the opportunities and mitigate the risks to achieve the vision for 2020. In
doing so, stakeholders (industry, NASSCOM and the government) will need to act together in an unprecedented
manner. Industry and NASSCOM have already started working on the key enablers:

1. Developing a high calibre talent pool

Providing higher level training to the recruits, focus on building specialisation and language skills

Industry academia partnerships on curriculum, faculty development

Introducing a common assessment programme to identify skill gaps and build programmes for the gaps in
education system

2. Establishing India as a trusted global hub for professional services

Industry building business continuity/disaster recovery implementation strategy

 India to become leader in setting standards in data security / data privacy

NASSCOM working with government to enhance enactment and enforcement

3. Harnessing technology for inclusive growth

 Industry leveraging PPP models and building applications for e-health, e-education, efinancial services and e-
skills

Balanced regional growth through setting up businesses in tier 2/3 cities by the industry; rural BPOs to provide
employment

4. Fostering a sustainable ecosystem for innovation and R&D

Carrying out research and IP development, both internal and sponsored

Thrust on PhD programmes and research partnership with academic institutions

5. Catalysing growth beyond today’s core markets

Industry concentrating on developing new markets; building global viewpoint

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Industry leveraging global workforce through offshore delivery centres - hiring best talent and participating in
local ecosystem development

NASSCOM facilitating policy advocacy, building coalition partners at a global level

NASSCOM acting as the brand ambassador for global services in global forums to champion globalisation of the
industry and relevant imperatives (global labour flows).

Som Mittal, President, NASSCOM

(The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of
INCLUSION. Comments are welcome at info@skoch.in)

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