As per the Department of Information Technology (DIT), Govt. of India reports, by the year 2010-11 our software and services export is expected to reach US $ 60 billion and by 2011-12 which is also the terminal year of the eleventh five year plan, the figures are expected to touch US$ 72 billion., this is assuming a 20% growth rate YOY (year over year) for 2011-12. Globalization has a profound impact in shaping the Indian Information Technology (IT) industry over the years with India capturing a sizeable chunk of the global market for technology sourcing and business services.
Over the years the growth drivers for this sector have been the verticals of manufacturing, telecom, insurance, banking, finance and of late the fledgling retail revolution. As the new scenario unfolds it is getting clear that the future growth of IT and IT enabled services will be fuelled by the verticals of climate change, mobile applications, healthcare, energy efficiency and sustainable energy et al. Traditional business strongholds would make way for new geographies, there would be new customers and more and more of SMEs (Small and Medium Enterprises) will go for IT application and services. Rising up to the new challenges will only be possible when we scale-up the value chain and put in efforts toward providing more and more of end-to-end solutions to the clients. Indian IT firms will have to strive for that extra mile and put in smart work to survive in the newer growth opportunities.
The Indian software & services industry has grown at a remarkable pace since 2001-02. The overall Indian Software & Services industry revenue has grown from US$ 10.2 billion in 2001-02 to reach US $ 58.7 billion in 2008-09 translating to a CAGR of about 26.9 per cent. Despite the severe global recession, the industry grew at a modest rate of 12.9 % in 2008-09. As per NASSCOM, the industry is diversified across three major focus segments – IT Services, BPO and software products & Engineering services. While IT Services have been the mainstay of the industry, BPO and Engineering services sector has built upon the India value proposition and today there exist integrated service providers across the three focus areas as well as niche providers. The major three components of IT Services sector are custom application development, application management and support and training. Other significant components are IT consulting, systems integration, Infrastructure Services (IS) outsourcing, network consulting & integration and software testing.
Among the verticals serviced by India’s IT-ITES-BPO industry those that account for the largest share of revenue are banking, financial services and insurance(BFSI-41%), Hi-Tech/Telecom(20%), manufacturing(17%), retail(8%), with smaller contributions coming from media, publishing and entertainment, construction and utilities, healthcare and airlines and transportation. Important industry verticals being serviced by the BPO segment are insurance, retail banking, travel and hospitality, auto manufacturing, telecom and pharmaceuticals. Horizontals such as Customer Interaction and Support (CIS), Finance and Accounting (F&A) and Human Resource Management (HRM) are important areas in the BPO segment.
USA & UK continues to be major markets for the IT software and services exports. However the share of USA has declined from 68.3 per cent in FY2005 to 60 per cent in FY2008, whereas that of Europe has increased from 23.1 per cent to 31 per cent over the same period. Markets across Continental Europe and the Asia Pacific are also witnessing significant year-on-year growth. This trend towards a broader geographic market exposure is positive for the industry, not only as de-risking measure but also as a means of accelerating growth by tapping new markets.