NASSCOM:IT-BPO Industry shows Growth and Buoyancy

By Team YS|2nd Feb 2011
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National Association of Software & Services Companies (NASSCOM) today released the key findings of the Indian IT-BPO sector performance for FY 2010-11. 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.

The IT-BPO industry (excluding hardware) witnessed a quick rebound in growth and is estimated to grow by 19 percent, aggregating revenues of USD 76 billion this fiscal year. While exports continued to be the mainstay of the industry with revenue of USD 59 billion, the domestic market demonstrated steady growth of 16 percent to aggregate INR 787 billion. 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, Mr. 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. While BFSI as a vertical and US as a geography accounted for the largest revenue growth, emerging verticals and new geographies growth rate was 1.3-1.5 times of core markets reiterating our focus on diversification in the coming decade.”

Within exports, IT Services segment was the fastest growing segment, growing by 22.7 per cent over FY2010, and aggregating export revenues of USD 33.5 billion, accounting for 57 percent 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.

The BPO export segment grew by 14 per cent to reach USD 14.1 billion in FY2011. 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.

Engineering design and products development segments generated revenues of USD 11.3 billion in FY2011; growing by 13.4 per cent, driven by increasing use of electronics, technology convergence and need for localized products. The engineering services landscape in India has evolved significantly reflecting maturity, diversification and enhanced verticalisation to partner with global corporations.

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 percent in 2010, up from 51 percent in 2009, despite competitive challenges presented by other global sourcing destinations. Mr. Som Mittal, President, NASSCOM said, “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.”

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 percent 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.

Way Forward

For FY2012, the software and services growth is expected to grow at 16-18 per cent and aggregate revenues of USD 68-70 billion. The domestic market is estimated to grow by 15-17 percent with revenues of INR 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. The dawn of the new decade has signaled a new partnership with customers in key markets and emerging countries to enhance competitiveness and value creation”, said Mr. Som Mittal.

( This is a press release)

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