Indian IT-Dimensions and Directions

DQI Bureau
New Update

When NASSCOM announced the results for the Software industry for the

financial year 2004-05, it was almost predictable that the industry would

surpass its own expectations. It recorded a 32% overall growth against a

forecast of 25%, powered by a 49% growth in BPO that put the rather weaker 27%

growth in software in the shade. Add to these encouraging numbers a few more

dimensions-over 660 $1-mn-plus clients, industry employment crossing a million

and revenues from the higher end product development and R&D services

clocking an impressive level of $3 bn in an overall software exports pie of

$17.2 bn, and you see a picture of a vibrant industry-one that has truly put

India on the world map and given many more industry sectors the confidence to go

for the global market with a vengeance!


Ganesh Natarajan


overall prognosis for the near term continues to be very optimistic

and it would take a catastrophe to upset the IT applecart at this


A few lesser-noticed statistics are revealing too-Domestic revenues in

Software and BPO services grew by 23%, giving way to some optimism that the

spending on IT, which had been so pitiful in our country, may finally be

turning. The growth of the SME sector-estimated at 20-22%-is again a healthy

number. A third wave of growth is beginning to swell in many parts of the

country. The natural marriage between domestic consumers in government

industries and small but high quality SMEs is still to happen in a big way, but

the signs of partnership are evident.

The overall prognosis for the near term continues to be very optimistic and

it would take a catastrophe to upset the IT applecart at this stage. The NASSCOM

survey points out that market indicators remain strong for the present, with

both onsite and offshore realizable rates hardening, the penetration of Fortune

1000 companies by the significant software and BPO players increasing and new

markets like Japan, Germany and Singapore opening their doors wider to the

offshore outsourcing phenomenon. The identification of new niches like

Engineering Services, Infrastructure and Network Management, and the move up the

consulting value chain has seen Indian players come closer to their well

renowned global counterparts. Though the significant expansion of IBM and

Accenture in their offshore development activities does raise the occasional

concern about wages spiraling out of control in the medium term. The integration

of software and BPO offerings is also a sign of a maturing industry that now

focuses on the transformation of processes and business outcomes rather than

just technology. And the fact that many of the small and mid-sized players have

learnt to focus on niche skills and walk away from low pricing matches have led

to the industry truly emerging as a multi-dimensional high value adding group of

companies rather than just a few winners and a large group of me-too players.


Opportunities in the domestic market too are opening up with global retailers

and India's own expanding chains embracing world class technologies.

Manufacturing is taking off in a big way and other industries including

aviation, logistics, hospitality, pharmaceuticals and the entire range of

financial services are looking at transformational IT solutions to become truly

world class. The low volume of PC production in the country and the slow

adoption of e-Governance except for isolated success stories do give cause for

some concern but there is an overall feeling of optimism in the country that

will provide enough opportunities in IT and ITeS to keep both the domestic and

export sectors growing.

And for all the Cassandras who had scoffed at the ambitious $50 bn goal for

2008-09, here's one in the eye-on a ten year growth percentage that has an

asking rate of 31%, just the sustenance of the present levels of growth will see

that magic number reached and surpassed-more power to Indian IT!

The author is Deputy Chairman & MD of Zensar Technologies and Chairman

of the NASSCOM Innovation Initiative

Ganesh Natarajan