Indian IT should offer beyond cost arbitrage

Evidently, India has been losing it's position as the most preferred destination for IT outsourcing because of emerging competitors like China,, Vietnam and the South American region, since they offer a better cost arbitrage advantage. Many industry leaders believe that lowering services cost in India is not the way to go. In the coming years, India can compete to stay in the #1 positiononly by offering a value add on its services. The next wave of outsourcing will be in the knowledge sector, exploiting the country's vast pool of scientific and engineering talent.

Changing business models in IT and emergence of new technologies will be India's key driver in retaining its position as the global sourcing leader and an innovation hub in the coming years, it was revealed at NASSCOM India Leadership Forum 2013. NASSCOM announced that domestic revenues are expected to grow at a rate of 13-15 per cent and are expected to reach Rs1,180-1,200 billion by 2014. While the first USD 100 billion landmark can be attributed to the cost and quality advantage, the next USD 100 billion will be a combination of higher-value services and increasing non-linear growth. To sustain this growth, Indian IT-BPM industry is focusing on greater efficiencies, verticalized structures, geographical presence, IP based solutions, domain and increased collaboration across all stakeholders. SomMittal, NASSCOM's president, was quoted in the media saying IP creation, reinvented business and delivery models, expanding the market to tap business opportunities in the vertical and a customer-centric relationship chain across business, finance and IT, will be the key drivers to take India beyond the cost advantage.

India is the only country that offers the depth and breadth of offerings across different segment of this industry - IT Services, BPM, Engineering, R&D, Internet & mobility and software products. IT services is a US$ 50 billion sector, BPM is a US$20 billion sector, engineering crossed US$10 billion and software products, Internet & mobility are emerging opportunities, a NASSCOM press release states. Today, existing and new companies are expanding their offerings to build India as the hub for analytics, mobility, cloud, social collaboration and emerging verticals like healthcare and medical devices.
Changing business models, emergence of new technologies, buyer segments and solutions for emerging markets will help India retain its position as the global sourcing leader and an emerging trustworthy innovation hub. Krishnakumar Natarajan, vice chairman, NASSCOM said "The rapid adoption of Internet and mobile is creating enormous opportunities for entrepreneurship in the country. A growing ecosystem of early stage funding, incubation and peer learning is creating innovative start-ups building technology solutions and products for India and the global market. Initiatives like creating a strong and robust ecosystem for start-ups, innovation clusters and centres of excellence (CoEs) will encourage entrepreneurship and build the next generation of Global companies from India".

Some of the key growth drivers that are expected to open new opportunities for the industry are smart computing, ‘anything'-as-a-service, technology enablement in emerging verticals and the SMB market.