India safe bet for IT-BPO sector despite uncertain times

Written by Kirtika Suneja | Mumbai | Updated: Feb 15 2012, 07:40am hrs
Hyper-specialisation, global uncertainties, leadership in uncertain times and emerging opportunities are what the posterboys of the Indian information technology-business process outsourcing (IT-BPO) industry are discussing at the 20th edition of Nasscoms flagship India Leadership Forum (NILF) in Mumbai.

At a time when the US, contributing 62% to the $101-billion sector, is facing unemployment crisis and Europe is going through financial turmoil, the theme of the forum couldnt have been apt.

Though the CEOs of most firms are cautious of the environment, they insist that the India picture is intact with most of the growth and talent coming from the country itself.

We agree that this is not the best of times as growth has come down both globally and in India but we are better than the Western world. We are self critical as we have the potentials to create jobs and growth, said Kris Gopalakrishnan, executive co-chairman, Infosys Technologies.

According to Wipros CEO TK Kurien, the macro-economic condition do not affect the way individual companies work. We sometimes overplay the macro-economic uncertainty and it is difficult to judge the mood as spending has just started.

Interestingly, India had retained its number-one position as the worlds leading sourcing location for IT-BPO services, despite the rise of several alternative sourcing locations, with a share of over 58% in 2011. India-based resources are estimated to account for about 60-70% of the offshore delivery capacities across the leading multi-national IT-BPO players.

For the year ahead, global technology spending is estimated at 4.5% and global sourcing is expected to be a major driver of technology spending. Nasscom estimates for FY2012-13 factor in uncertain economic environment with delayed decision making and differentiated growth across the industry sectors and companies. The outlook would be revisited later in the year when more data is available.

The BPO players too are optimistic. Over 7% growth is good for the economy and 11-14% is robust for the sector. We are always critical of ourselves, added Pramod Bhasin, non-executive vice chairman and former president and CEO of Genpact.

Financial year 2011-12 characterises a landmark year as aggregate revenue for the Indian IT-BPO sector is estimated to cross $100 billion. Continuing as the bastion for the sector, exports accounted for $69 billion, growing by 16.3% over the last fiscal year. The IT-BPO sector continues to be one of the largest employers in the country directly employing 2.8 million professionals, with over 230,000 jobs being added in FY2012. Despite challenges in the global market conditions, India sustained its growth trajectory. Some of the pivotal factors that have been contributing to this growth include new business models, organization efficiencies, services around disruptive technologies such as cloud, mobility, analytics, social media, and flexible product portfolios and verticalised solutions.

For FY2013, the export revenues are expected to grow by 11-14 % while the domestic revenues will grow by 13-16 %.