With the IT enabled Services sector poised to grow rapidly world-wide over the next few years, the Indian ITeS industry is taking rapid steps to take advantage of this opportunity. The Nasscom-Deloitte study on Indian IT Industry: Impacting the Economy and Society says the IT/ITES industry's contribution to the country's GDP has increased to a share of 5.2 per cent in 2007, as against 1.2 per cent in 1998.

And with a growth of 27 per cent in 2007, in 2008, the Indian ITES market is set to cross US$ 25.43 billion. Already, twenty-nine India-based companies have recently been listed among the best 100 IT service providers.

The Indian Information Technology enabled Services (ITeS), which started with basic data entry tasks over a decade ago, is witnessing an expansion in its scope of services to include increasingly complex processes involving rule-based decision making and even research services requiring informed individual judgment. It now offers services such as knowledge process outsourcing (KPO), legal process outsourcing (LPO), games process outsourcing (GPO) and design outsourcing among others.

Realizing its potential, after IT Parks and IT SEZs, the government has cleared a proposal for creating much larger Information Technology Investment regions (ITIRs) to give a fillip to the country's growing IT and ITeS sector.

Moving up the Value-chain

The number of patent filings from Indian R&D centers has been growing over the years. More and more cutting-edge products are being developed in India. While outsourcing lower-level technical jobs to India has been a practice of multinational technology firms, the increasing reliance on Indian R&D operations is a growing trend. Aviation majors like Boeing and Lockheed Martin looking at setting up captive R&D centres in India. In fact, estimates by National Association of Software Services Companies (Nasscom) and Booz Hamilton say that engineering services outsourcing could touch US$ 40 billion by 2020.

• India has overtaken the US and China to emerge as the largest developer location for Sun Microsystems.
• Yahoo! Inc and Tata Sons subsidiary firm Computational Research Laboratories (CRL) have entered into an agreement to make available-EKA, the fourth fastest supercomputer in the world- for cloud computing research in India.

India with its natural competitive advantage is likely to play a huge role in various segments of the ITeS industry. For example, the Indian animation industry is rapidly growing as a major outsourcing hub with a growth rate of 30 per cent. Similarly, the financial services knowledge process outsourcing (KPO) industry is expected to be worth $5 billion by 2010.