Tuesday, September 09, 2008

Outsourcing hike lead to domestic growth in India:IT Industry Survey

As a result of maturing outsourcing market, India's IT market has hiked so high for the first time in over a decade to 34 per cent in 2007 -08, as compared to 27 per cent for exports, which is the opposite of what happened the last fiscal, says the annual IT industry survey. In value terms, exports, at Rs.1,897.92 billion 47.45 billion, still account for two thirds of total revenues while the domestic sales were estimated at Rs.990.18 billion.

The creditable performance of India's domestic IT market, with 65 per cent growth in business process outsourcing BPO industry has made it possible. The value of outsourcing depends largely on the structure of the relationship. This is where Indian domestic transactions in the BPO space underwent a major shift in fiscal 2007-08. At 24.5 billion, the Indian domestic IT market is not exactly a small market. In terms of dollar it grew 50 per cent the survey adds.

The survey further finds some interesting trends in the outsourcing industry where the players are evolving from short term, project driven deals to longer term, comprehensive outsourcing initiatives will help the IT industry. Over the next few years, staff augmentation and project based deals would gradually dwindle to be replaced by more comprehensive outsourcing engagements is expected.

During the year, the market saw IT services companies bag multi million dollar deals for periods ranging from 5 to 10 years, apart from large outsourcing deals in the e governance and e procurement space. IBM Global Services bagged the accounts of Vodafone, Idea Cellular and IGI. HP secured Bank of India and Britannia orders. TCS clinched a huge passport processing contract.

This change has been an eye opener of sorts because, for the first time, people seem to have woken up to the potential of the domestic BPO market, the survey says while pointing towards other reasons for the domestic IT growth.