IT Outsourcing India

IT outsourcing industry on Tuesday set itself the goal of lifting revenue almost five-fold to 50 billion dollars by the end of 2012 by tapping new markets and a booming local economy.

The IT industry could accelerate growth by an annual 50 percent in the next five years from 35 percent in the last five. This target is based on a study by the National Association of Software and Service Companies (NASSCOM).

Everest Group- A consulting company conducted a study sponsored by NASSCOM which estimates the size of the untapped outsourcing market at about 280 billion dollars. The study also adds: “Accelerated growth to capture the addressable spend in the international and domestic marked could take the industry to 50 billion dollars by 2012.
The targeted growth can create two million direct jobs in India and add up to 2.5 percent to the nation's economic output India’s IT outsourcing industry, excluding large software makers, has grown to 11 billion dollars in annual revenue and 700,000 people by head count by doing work for global companies at a fifth of the cost in the US or Europe.

NASSCOM President Mr. Som Mittal in a news conference in the southern Indian city where he released the findings of the study stated that “We have barely scratched the surface so far”. “The IT industry is at an inflection point, ready to take off” Work farmed out to Indian companies, which account for 40 percent of the world's outsourcing market, ranges from answering calls by bank customers to processing credit-card applications and insurance claims and equity analysis.

About a third of the new business will be generated by under-penetrated industries such as telecommunications, retail, media and energy, the study said.
There are significant untapped opportunities in Europe and Asia while North America will continue to be the largest market.

Raman Roy, Managing Director of Outsourcing firm Quatrro said : “Less tan five percent of the total opportunity has been tapped till now, which is indicative of the growth potential available to the industry”."The target is aggressive but achievable," he said.

India's IT outsourcing industry was hit hard last year by a more than 12 percent appreciation of the rupee that reduced the local equivalent of every dollar it earned.

Due to slowdown in technology spending in the US, the end of a tax holiday and rising wages and other costs, a shortage of skilled professionals and competition from countries such as the Philippines IT outsourcing industry in India is worried.

India needs to protect its cost advantage and create an educational system that teaches students the skills required for the IT outsourcing industry if it is to maintain its competitive edge as an outsourcing location.