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INDUSTRY & SERVICES

INFORMATION TECHNOLOGY AND INFORMATION TECHNOLOGY ENABLED SERVICES (ITES)

The Information Communication Technology and Electronics is the world's largest and fastest growing industry and is increasingly finding applications in all sectors of the economy. Today, India is a large, vibrant and one of the fastest growing economies in the world. As a result of impressive growth of the economy, steadily increasing purchasing power of the people and aspirations of the young, India is one of the fastest growing markets for electronic gadgets. The domestic demand for electronic hardware is estimated at US$ 400 billion by 2020.

High offshore component of delivery and superior execution in multi-location delivery continue to be key differentiators. Broad-based industry structure; IT led by large Indian firms, BPO by a mix of Indian and MNC third-party providers and captives, reflects the depth of the supply-base. While the larger players continue to lead growth, gradually increasing their share in the industry aggregate; several high-performing Small and Medium Enterprises (SMEs) also stand out.

With a large pool of skilled manpower-chartered accountants, doctors, MBAs, lawyers, research analysts-India would be able to add value to the global KPO business and its high-end processes like valuation research, investment research, patent filing, legal and insurance claims processing, online teaching, media content supply, among others. Skilled manpower and multi lingual capabilities combined with the advantages of lower costs can help the country to emerge as a frontrunner in KPO, globally. Increasing adoption of technology in the domestic industries is already beginning to reflect in their enhanced performance and competitiveness.

Indian IT-BPO Industry

According to the National Association of Software and Services Companies (NASSCOMM) data, IT-BPO sector in India aggregated revenues of US$ 88.1 billion in Fiscal Year (FY) 2011, generating direct employment for over 2.5 million people. The industry focused on emerging verticals, markets and customer segments, driving innovation-led transformation in client organisations and transforming its internal operations. The domestic IT-BPO market witnessed the Indian consumers going up the IT maturity curve, return of economic growth, efforts by organisations and the government to increase technology adoption, and emergence of new delivery platforms thus driving growth.

Key Highlights during FY2011

As per NASSCOMM,following were the key highlights of Information Technology industry for the Fiscal Year 2011:

  • The IT-BPO sector in India is estimated to aggregate revenues of US$ 88.1 billion in FY 2011, with the IT software and services sector (excluding hardware) accounting for US$ 76.1 billion of revenues.
  • During FY 2011 direct employment is expected to reach nearly 2.5 million, an addition of 240,000 employees, while indirect job creation is estimated at 8.3 millio n.
  • As a proportion of national GDP, the sector revenues have grown from 1.2 per cent in FY 1998 to an estimated 6.4 per cent in FY 2011.
  • The share of IT-BPO industry in the total Indian exports (merchandise plus services) increased from less than 4 per cent in FY 1998 to 26 per cent in FY 2011.
  • Export revenues (including Hardware) estimated to reach US$ 59.4 billion in FY 2011; Domestic revenues (including Hardware) of about US$ 28.8 billion; total industry estimated to reach US$ 88.1 billion.
  • Software and services revenues (excluding Hardware), comprising over 86 per cent of the total industry revenues, expected to post US$ 76.1 billion in FY 2011; estimated growth of about 19.1 per cent over FY 2010
  • The upbeat domestic IT-BPO spending trend will continue in FY2012 as the industry is expected to grow at 16 per cent to reach US$ 20 billion.
  • IT spending expected to significantly increase in verticals like automotive and healthcare while the government, with its focus on e-governance, will continue to be a major spender.


Domestic IT-BPO Industry

NASSCOMM data has revealed that in the Domestic IT-BPO segment revenues excluding hardware are expected to grow at almost 16 per cent to reach US$ 15.75 billion in FY 2011. Strong economic growth, rapid advancement in technology infrastructure, increasingly competitive Indian organisations, enhanced focus by the Government and emergence of business models that help provide IT to new customer segments are the key drivers for increased technology adoption in India

Key Highlights during 2011

  • The domestic segment (including Hardware), that accounts for 33 per cent of the industry, grew by 16 per cent (including hardware) in FY 2011, to reach US$ 26.43 billion which in dollars is equivalent to US$ 28.8 billion a growth of 21 per cent
  • IT services is one of the fastest growing segment in the Indian domestic market, rising by 16.8 per cent to reach US$ 10.03 billion, driven by localised strategies designed by service providers
  • Hardware and IT Services account for 75 per cent of total revenues
  • Domestic BPO segment is expected to grow by 16.9 per cent in FY 2011, to reach US$ 2.54 billion, driven by demand from voice based services, in addition to adoption from emerging verticals, new customer segments, and value based transformational outsourcing platforms
  • Indian software product segment is estimated to grow by 14 per cent to reach US$ 3.14 billion, fuelled by replacement of in-house software applications to standardised products from large organisations and innovative start-ups
  • Government sector is a key catalyst for increased IT adoption- through sectors reforms that encourage IT acceptance, National eGovernance Programmes (NeGP), and the Unique Identification Development Authority of India (UIDAI) programme that creates large scale IT infrastructure and promotes corporate participation
  • Continued IT investments by mature verticals along with Greenfield initiatives by emerging verticals are fuelling the growth of IT adoption in India.
  • Indian service providers are using localised strategies to increase their market share in the domestic IT Services market .
  • Increased spending capabilities and improved technology acceptance driving growth.

 

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