A study on the Indian IT and BPO industry

Abstract

The Indian IT and ITES industry has witnessed tremendous growth over the last one decade. Various reasons are attributed to the success of this sector in India. Infact, India has by far been rated as the numero uno destination for outsourcing amongst clients worldwide. NASSCOM estimated that the Indian technology sector to accounted for approximately 5.4 per cent of the GDP in 2006-07. Overall, Outsourcing does entail some risks for the clients who decide to undertake it but the right model of outsourcing can be effective in reducing these with offering benefits to the clients far outweighing the risks inherent to this concept. The Indian IT and ITES industry has been at the forefront of offering major advantages to the clients outsourcing to India. The India value proposition has evolved considerably and demand is driven by key comparative advantages offered by India vis-à-vis other emerging outsourcing destinations. The outsourcing market has been so highly and visible attractive that it has sought the attention of major countries across the world who want to garner a share in this market. Research estimates worldwide technology-related IT Outsourcing to grow at a CAGR of 6.9% in FY08–12E and Business Process Outsourcing to grow at a CAGR of 11.9% in the same period. The National Association of Software and Services Companies (NASSCOM), expects global technology spending to grow at a CAGR of 5.2% over the four-year period from 2008 to 2012 to US$1.9tr from US$1.5tr. The fastest growth is expected to take place in the BPO segment (2008–12E CAGR of 12%), where Indian IT-BPO companies have demonstrated significant scaling up and considerable expertise over the last decade however, as stated above this is not without a fair degree of competition that has been building up over the years and is expected to really strengthen in the near future. The objective of the project is to study the historic, current and expected future trends of global IT and BPO outsourcing. The focus will also be on identifying capabilities that will arm the Indian service providers with sources of competitive advantage. Besides, we will look at the geographies and areas of outsourcing that hold immense potential in the near future. We will identify and come up with the effective model of outsourcing that offers the clients an excellent ROI as well as a long term partnership with the vendor.