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ITES and BPO Services

The year 2008-09 was marked by unprecedented global economic crisis. In spite of this uncertain global outlook, the Indian Information Technology-Business Process Outsourcing (IT-BPO) industry was able to achieve sustainable growth in the fiscal year 2008-09. The revenue aggregate of IT-BPO industry is expected to grow by over 12 per cent and reach US $ 71.7 billion in 2008-09 as compared to US $ 64 billion in 2007-08. Industry performance was marked by sustained double-digit revenue growth, steady expansion into newer service-lines and increased geographic penetration.

The Indian software and services exports including ITES-BPO exports is estimated at US $ 47 billion in 2008-09, as compared to US $ 40.4 billion in 2007-08, an increase of 16.3 per cent. The IT services exports is estimated to be US $ 26.9 billion on 2008-09 as compared to US $ 23.1 billion in 2007-08, showing a growth of 16.5 percent in 2008-09, a year -on-year (Y-o-Y) growth of over 17.4 percent.

While US & UK remained the largest export markets (accounting for about 60 per cent and 19 percent respectively, in 2007-08), the industry is steadily increasing its exposure to other geographies. Exports to Continental Europe in particular have witnessed steady growth. Over 600 multinational companies are known to be sourcing product development and engineering services from their centres in India. The growing nature of responsibilities and ownership assumed by these India-based resources are helping India evolve into a strategic hub for R&D.

The industry has enhanced India's credibility as a business destination by creating a fundamentally new model of global 24X7 service delivery, forging relationship with 75 per cent of the Fortune 500 companies, generating immense savings for customers (savings from global sourcing for customers amounted to an estimated US $ 20 billion to US $ 25 billion in 2008) and promoting a focus on quality (65 per cent of all Capability Maturity Model Level 5 firms are based in India) in addition, the industry has fostered the emergence of a large number of first generation entrepreneurs.

With the BPO going strong for the past few years, the Knowledge Process Outsourcing (KPO) - which may be called the highest level of the BPO - is still at a nascent stage of development in the country. This evolution of the market to the KPO will drive trends that will ensure very high-value service. in off shoring. These opportunities in the KPO will help the Indian market climb the global value and knowledge chain.

Though the IT-BPO sector is export-driven, the domestic market is also significant. The revenue from the domestic market (IT Services and ITES-BPO) is also expected to grow to about US $ 12.5 billion in the year 2008-09 as compared to US $ 11.7 billion in 2007-08 an anticipated growth of about 6.8 per cent. BPO demand in the domestic market has witnessed noticeable growth over the past few years.

The phenomenal growth of the Indian IT Software & Services and ITES-BPO sector has had a perceptible multiplier effect on the Indian economy as a whole. It has created immense opportunities for employment and has contributed to the growth of national income. It has also spawned the mushrooming of several ancillary industries such as transportation, real estate, catering and has created a rising class of young consumers with high disposable incomes, triggered a rise in direct-tax collections and propelled an increase in consumer spending.

The total IT Software and Services employment is expected to reach 2.23 million in 2008-09 (excluding employment in hardware sector), as against 2.01 million in 2007-08, a growth of 10.9 percent end of year. This represents a net addition of 226,000 professionals to the industry employee base in 2008-09. The indirect employment attributed to the sector is estimated to be about 8.0 million.

The industry has also set a precedent for talent practices in India. It has created career opportunities for the youth, provided global exposure and offered extensive training and development. Furthermore, the industry has been a front runner in diversity at the workplace (over 30 per cent of employees are women; over 60 per cent of industry players employ differently-abled people).

The IT-ITES industry's contribution to the national GDP is estimated to increase from 5.5. percent in 2007-08 to 5.8 per cent in 2008-09.

Source: National Portal Content Management Team, Reviewed on: 10-01-2011