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Information Technology

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Information Technology

December, 2010

Sector structure/Market size

The Indian information technology (IT) industry has played a key role in putting India on the global map.

Over the past decade, the Indian IT-BPO sector has become the country’s premier growth engine, crossing significant milestones in terms of revenue growth, employment generation and value creation, in addition to becoming the global brand ambassador for India.

According to a research report published by National Association of Software and Service Companies (NASSCOM), ‘IT-BPO Sector in India: Strategic Review 2010,’ the IT-BPO industry is estimated to aggregate revenues of US$ 73.1 billion in FY2010, with the IT software and services industry accounting for US$ 63.7 billion of revenues.

The report estimates export revenues to gross US$ 50.1 billion in FY2010, growing by 5.4 per cent over FY2009, and contributing 69 per cent of the total IT-BPO revenues. Software and services exports (including BPO) are expected to account for over 99 per cent of total exports, employing around 1.8 million employees.

IT services is expected to grow by 2.4 per cent in 2010, and 4.2 per cent in 2011 as companies coming out of recession harness the need for information technology to create competitive advantage.

NASSCOM said that the domestic IT-BPO is expected to grow by 15-17 per cent during FY11. According to NASSCOM, the industry will witness a healthy growth in 2010, led by growth in the core markets and supplemented by significant contributions from emerging markets. Growth drivers include a thrust on platform BPO, Analytics, Finance & Accounting, Remote Infrastructure Management, ADM, and Cloud Services. The annual survey on the outlook for FY10-11 said that the growth in the domestic IT-BPO spend is driven by a robust economy, increased IT spending by government and adoption of IT by SMBs.

The data centre services market in the country is forecast to grow at a compound annual growth rate (CAGR) of 22.7 per cent between 2009 and 2011, to touch close to US$ 2.2 billion by the end of 2011, according to research firm IDC India's report published in March 2010. The IDC India report stated that the overall India data centre services market in 2009 was estimated at US$ 1.39 billion.

India will see its number of internet users triple to 237 million by 2015, from 81 million registered in September 2010, according to a report titled 'Internet's New bn', by the Boston Consulting Group (BCG). BCG said Internet penetration rate in India is expected to reach 19 per cent by 2015, up from the current seven per cent.

TRAI said on December 7, 2010 that it was targeting a 10-fold increase in broadband subscribers to 100 million by 2014. The country has 10.29 million subscribers now. "We will have 100 million broadband subscribers by 2014," J.S. Sarma, Chairman, Telecom Regulatory Authority of India (TRAI) said at the fifth India Digital Summit 2010 organised by the Internet and Mobile Association of India.

Overall India PC market sales touched 27.9 lakh units during the July-September 2010 quarter recording a 27 per cent year-on-year (y-o-y) and an 18 per cent quarter-on-quarter (q-o-q) increase. Desktop PC sales accounted for nearly two-thirds of total PC sales at 1.67 million units, representing a 15 per cent increase y-o-y. The sales of Notebook computers grew at 52 per cent y-o-y to cross 1.11 million units for the quarter, according to research firm IDC India.


India is a preferred destination for companies looking to offshore their IT and back-office functions. It also retains its low-cost advantage and is a financially attractive location when viewed in combination with the business environment it offers and the availability of skilled people.

Some big deals in the outsourcing space include:

Four Soft Ltd, which offers software solutions for the logistics and transportation industry, has signed a large contract with Jacobson Companies, for implementing its multimodal transport management system and business intelligent tool across Jacobson locations globally.

Information technology (IT) services and solutions provider Patni Computer Systems has signed a five-year contract worth over US$ 32.09 million with UK-based IT services provider 2e2. Patni will provide a range of support services to 2e2s end-user clients and in-house support services.

Firstsource Solutions, a Mumbai-based business process outsourcing (BPO) provider, has announced a five-year outsourcing partnership with Barclaycard, the UK-based credit card and consumer lending business of Barclays PLC.

Vertex, a global customer management outsourcing (CMO) and business process outsourcing (BPO) company, has announced a joint venture with Shell Transource to address the domestic BPO market. Vertex will own over 70 per cent in the joint venture, with Shell Transource holding the rest.

Patni Computer Systems has secured outsourcing engagements from the Scandinavian insurance company Codan Group and the UK-based Serco Learning.