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Information Technology

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Information Technology

February, 2011

The Indian information technology (IT) industry has played a key role in putting India on the global map and is now envisioned to become a US$ 225 billion industry by 2020.

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 2011,’ the sector is estimated to aggregate revenues of US$ 88.1 billion in FY2011, with the IT software and services sector (excluding hardware) accounting for US$ 76.1 billion of revenues.

The report estimates export revenues to gross US$ 59 billion in FY2011 and contribute 26 per cent as its share in total Indian exports (merchandise plus services), employing around 2 million employees.

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

NASSCOM said that the domestic IT-BPO revenues excluding hardware are expected to grow at almost 16 per cent to reach US$ 17.35 billion in FY2011. 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.

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.

India's personal computer market grew 30 per cent in 2010 — the highest since 2007, research firm IDC revealed. Hewlett Packard emerged the top company in India, leading in both notebook and desktop categories. HP regained market leadership after two quarters with a 17.3 per cent market share, taking the pole position from Dell Inc that got 14.2 per cent of the market. Nearly 25 lakh personal computers were shipped to Indian consumers, pushing up the overall sales by 26 per cent. Around 14.5 lakh desktop PC units were sold in the fourth quarter last calender year, a 14 per cent increase over 2009.

Outsourcing

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 2e2's 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.

Tata Consultancy Services Ltd (TCS) has announced the launch of its first BPO centre in the Philippines. This is also the firm's first BPO centre in the South-East Asian region.