By: NEHA THIRANI
Source: http://india.blogs.nytimes.com
Category: Investment In India
India’s internet technology industry continues to expand, despite weak economies in key markets in United States and Europe, thanks to domestic growth and a push into new regions like the Middle East and Africa.
Revenues for India’s information technology and outsourcing industries are expected to cross $100 billion this financial year, a 14.8 percent increase from last year and double 2007, the National Association of Software and Services Companies (NASSCOM), India’s technology industry association said in a recent report. The group, which has over 1,200 corporate members, predicts that revenues will reach $225 billion by 2020.
“There has been consistent growth in the domestic IT market,” said Rajendra Pawar, chairman of NASSCOM, explaining the rise in a press conference on February 15, 2012. Total revenues in the sector will reach $101 billion in the year that ends March 31, 2012, the report said. Exports, or work done for clients outside India, will make up $69 billion of that figure. Growth in the domestic market is expected to be 16.5 percent, to $32 billion.
A rise in global technology spending is also a key factor behind the industry’s increase, NASSCOM officials said. Information technology spending rose 4.5 percent in the current fiscal year, as companies realize they need to spend aggressively on adapting to new technologies, said Som Mittal, president of NASSCOM. “Companies are not being conservative on the transformation aspect of their spending; as shifts to mobile technology and so on take place, it becomes necessary to move quickly and adapt,” he said.
Changing business models are also helping the industry grow in India — India’s share of global outsourcing was 58 percent this fiscal year, up three percent from last year.
The last decade has been turbulent, Mr. Pawar noted, but still the industry grew nine times, by revenues.
He credits “inner transformations in the industry such as hyper-specialization,” where clients are seeking service providers who specialize in their field and can provide customized solutions. For instance, insurance companies prefer to work with companies who have gained knowledge and expertise in insurance related business processes. “In addition to the large companies of the sector, which frequently draw headlines, there are a lot of new young companies that are collectively contributing about two billion of the hundred billion.”
Indian information technologies are spreading, geographically, and offering existing customers new services, NASSCOM said. While previously a majority of the industries revenues came from the United States and Britain, new business is coming from new geographies like Eastern Europe.
India’s information technology and outsourcing industries continue to be one of the largest employers in the country. Over 230,000 jobs were added in the current fiscal year, bringing total direct employment to about 2.8 million people. The number of foreigners in the industry has grown significantly as well – as of this year, some 40,000 employees are not Indian.
Indian information technology companies are making acquisitions abroad and expand overseas, but they are also hiring foreigners because India’s pool of experienced talent is running dry. In India, there is enough entry-level talent to support the industry’s 16 to 20 percent annual growth, Mr. Mittal said. “But experienced personnel are not as easily available,” he said.
The falling value of the rupee in recent times has had a slight, tangential, effect on the industry, NASSCOM officials said. Mr Pawar said there has as yet been no real pressure on the prices that information technology companies charge, because currency is too complex for companies to factor in as off now.
The industry has so far been sheltered from the effects of the Eurozone crisis as well, as Indian companies have not reported problems in payments and pricing coming from customers in Europe as off yet. “Cash problems as we know are mostly with governments, not companies,” said Mr. Pawar. “However, the Euro zone problem is big enough that it will affect companies, who in turn will tighten their belts on spending. When it will go from being a cash problem in the government to a cash problem in companies is yet to be seen.”
However, analysts believe that future instability in the value of the rupee and the global economy could affect the industry significantly. “Price wars could be on the agenda if the Rupee continues to remain weak and that the economic crisis in Europe means less growth for the Indian industry,” said Fred Giron, principal analyst at Forrester Research.
NASSCOM’s forecast of $225 billion in revenues for the industry by 2020 is heavily dependent on domestic spending. “There is great scope as we are currently under-invested in technology as a country,” said Mr. Mittal. The industry group predicts about $50 billion of the $225 billion will come from Indian companies, particularly in the healthcare, utilities, media and entertainment industries.
Forrester’s analysis is similar. “I believe that the domestic market is where most of the growth will be coming through 2015,” said Mr. Giron. “Forrester estimates that the India domestic market in India will grow at 14% in 2012 and will be the fastest growing market in Asia.”
However analysts say that a continued slump in global economic growth, potential protectionist moves against off-shoring activities in the United States, and a policy paralysis in India may hamper future prospects.
In order for the industry to reach its projected growth, NASSCOM officials say the Indian government needs clearer policy, and investments in skill development that focus on ensuring that more people are being equipped with the right kind of education background for the jobs available in the field. While most work is currently located in the top six cities of India, industry officials say they are promoting opening centers in the smaller cities in India. “We have to also look into improving the business environment to attract more foreign investment into the country,” said Mr. Mittal. “We would like to make India an R&D hub.”
Source: http://india.blogs.nytimes.com/2012/02/23/fast-growth-for-indias-outsourcing-industry-despite-weak-global-economy/
Source: http://india.blogs.nytimes.com
Category: Investment In India
India’s internet technology industry continues to expand, despite weak economies in key markets in United States and Europe, thanks to domestic growth and a push into new regions like the Middle East and Africa.
Revenues for India’s information technology and outsourcing industries are expected to cross $100 billion this financial year, a 14.8 percent increase from last year and double 2007, the National Association of Software and Services Companies (NASSCOM), India’s technology industry association said in a recent report. The group, which has over 1,200 corporate members, predicts that revenues will reach $225 billion by 2020.
“There has been consistent growth in the domestic IT market,” said Rajendra Pawar, chairman of NASSCOM, explaining the rise in a press conference on February 15, 2012. Total revenues in the sector will reach $101 billion in the year that ends March 31, 2012, the report said. Exports, or work done for clients outside India, will make up $69 billion of that figure. Growth in the domestic market is expected to be 16.5 percent, to $32 billion.
A rise in global technology spending is also a key factor behind the industry’s increase, NASSCOM officials said. Information technology spending rose 4.5 percent in the current fiscal year, as companies realize they need to spend aggressively on adapting to new technologies, said Som Mittal, president of NASSCOM. “Companies are not being conservative on the transformation aspect of their spending; as shifts to mobile technology and so on take place, it becomes necessary to move quickly and adapt,” he said.
Changing business models are also helping the industry grow in India — India’s share of global outsourcing was 58 percent this fiscal year, up three percent from last year.
The last decade has been turbulent, Mr. Pawar noted, but still the industry grew nine times, by revenues.
He credits “inner transformations in the industry such as hyper-specialization,” where clients are seeking service providers who specialize in their field and can provide customized solutions. For instance, insurance companies prefer to work with companies who have gained knowledge and expertise in insurance related business processes. “In addition to the large companies of the sector, which frequently draw headlines, there are a lot of new young companies that are collectively contributing about two billion of the hundred billion.”
Indian information technologies are spreading, geographically, and offering existing customers new services, NASSCOM said. While previously a majority of the industries revenues came from the United States and Britain, new business is coming from new geographies like Eastern Europe.
India’s information technology and outsourcing industries continue to be one of the largest employers in the country. Over 230,000 jobs were added in the current fiscal year, bringing total direct employment to about 2.8 million people. The number of foreigners in the industry has grown significantly as well – as of this year, some 40,000 employees are not Indian.
Indian information technology companies are making acquisitions abroad and expand overseas, but they are also hiring foreigners because India’s pool of experienced talent is running dry. In India, there is enough entry-level talent to support the industry’s 16 to 20 percent annual growth, Mr. Mittal said. “But experienced personnel are not as easily available,” he said.
The falling value of the rupee in recent times has had a slight, tangential, effect on the industry, NASSCOM officials said. Mr Pawar said there has as yet been no real pressure on the prices that information technology companies charge, because currency is too complex for companies to factor in as off now.
The industry has so far been sheltered from the effects of the Eurozone crisis as well, as Indian companies have not reported problems in payments and pricing coming from customers in Europe as off yet. “Cash problems as we know are mostly with governments, not companies,” said Mr. Pawar. “However, the Euro zone problem is big enough that it will affect companies, who in turn will tighten their belts on spending. When it will go from being a cash problem in the government to a cash problem in companies is yet to be seen.”
However, analysts believe that future instability in the value of the rupee and the global economy could affect the industry significantly. “Price wars could be on the agenda if the Rupee continues to remain weak and that the economic crisis in Europe means less growth for the Indian industry,” said Fred Giron, principal analyst at Forrester Research.
NASSCOM’s forecast of $225 billion in revenues for the industry by 2020 is heavily dependent on domestic spending. “There is great scope as we are currently under-invested in technology as a country,” said Mr. Mittal. The industry group predicts about $50 billion of the $225 billion will come from Indian companies, particularly in the healthcare, utilities, media and entertainment industries.
Forrester’s analysis is similar. “I believe that the domestic market is where most of the growth will be coming through 2015,” said Mr. Giron. “Forrester estimates that the India domestic market in India will grow at 14% in 2012 and will be the fastest growing market in Asia.”
However analysts say that a continued slump in global economic growth, potential protectionist moves against off-shoring activities in the United States, and a policy paralysis in India may hamper future prospects.
In order for the industry to reach its projected growth, NASSCOM officials say the Indian government needs clearer policy, and investments in skill development that focus on ensuring that more people are being equipped with the right kind of education background for the jobs available in the field. While most work is currently located in the top six cities of India, industry officials say they are promoting opening centers in the smaller cities in India. “We have to also look into improving the business environment to attract more foreign investment into the country,” said Mr. Mittal. “We would like to make India an R&D hub.”
Source: http://india.blogs.nytimes.com/2012/02/23/fast-growth-for-indias-outsourcing-industry-despite-weak-global-economy/
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