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Nasscom sees 12% growth in IT services in FY15

Business Standard:  March, 2014

Hyderabad: The domestic IT services business is expected to grow 9-12 per cent in the fiscal 2014-15, said R Chandrashekar, president, National Association of Software and Services Companies (Nasscom).

In FY14 and FY13, the domestic IT services market was stagnant at $32 billion, same as that in FY12.

However, Nasscom expects exports to outperform with a growth of 13-15 per cent, valued at $97-99 billion, in the fiscal 2015, led by demand growth in the US and the UK.

The domestic IT business has remained muted in the last two fiscal years due to various reasons ranging from political to slowdown in the industrial sector. However, the software services body projects an end to the political uncertainties that have hampered the growth.

As part of its long-term strategy, Nasscom plans to reduce its dependence on the traditional US and European markets to include China, South Korea, Japan. “These markets may seem small now but have the capability to act as growth drivers in the future,” said R Chandrashekar, president of Nasscom.

In fact, the Indian government through Nasscom has commissioned a study to know the nature of the market in these geographies and was formulating a strategy to partner with firms there for sustained mutual growth.

On why the Indian markets have not been able to tap Chinese demand, he said most of the services there were sourced to local companies.

Despite the industry double-digit growth, Nasscom said the hiring had been below par due to significant hiring outside the traditional IT sector, particularly in the emerging business models in retail, e-commerce among others. Around 1,200 companies having revenues in the region of Rs 50 crore and upwards in the retail, e-commerce, education and startups are changing the hiring turf, he said.

Among its key transformative priorities, Nasscom plans to transform the IT services delivery in education, healthcare, banking, financial and take them to remote areas. It also expects the domestic IT industry to transform from being a mere services provider to a strategic partner, ink collaborations to address the needs of the customers, and work out a roadmap for positioning India as a digital hub for developing new solutions.

Speaking at the ITsAP meet here today, he said the Indian IT industry had not made a big impact on the less-covered healthcare, education, banking and financials sectors. “For reaching out to them, companies have to develop uniquely tailored solutions to suit affordable criteria,” he said. This is where complementary skills of small innovators come to fore.

While many of the large IT companies in the domestic and global arena are struggling to innovate, he emphasised the role of small developers, who are good at frugal innovations. “Increasingly, there is a big realisation to depend on outside innovations. Many of the large Indian IT players are doing that. Their ideas can be packaged to reach out to a wide customer base, efficiently. This is a good trend for the small and medium enterprises in the country,” said Chandrashekar.

According to him, Nasscom has proposed to the government to partner with IT companies instead of just having a vendor relationship.