| The Indian domestic IT/BPO market is hot property now! |
| Wednesday, 17 March 2010 | |
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The hardware and the IT services markets have traditionally grown faster in India. Economic growth and globalization have made Indian companies adopt best practices and improve capabilities with their products and services to compete in a global market place. BPO, on the other hand, in the domestic market is still nascent but propensity towards adoption is higher. Corporate houses in India have been quick in adopting IT as a first step in standing up to a globalised competitive landscape. Not just the private sector but the government sector also opened up to IT adoption. E-governance initiatives, which actually started about 30 years ago in India, have now reached local government organizations. The use of Information and Communication technologies can now be seen across various government departments. The large IT companies are now getting significant contributions from the domestic India business. TCS reported 8.5% in Q3 FY10 from the domestic market while Wipro Technologies also reports similar business from India. As far as sectors or industries are concerned, telecom and BFSI (banking, financial services and insurance) sectors are the early and large scale adopters. Other sectors like manufacturing and consumer goods companies are emerging. The Indian domestic market for BPO has traditionally not interested the large vendors. However this has changed rapidly, over the last two to three years. In our report on the domestic business process outsourcing (BPO) market about two years ago, we mentioned that the large players were not keen on the domestic BPO market. We now find that this is changing slowly. It is true that the larger deals were signed in the domestic market for IT services – be it the IBM-Bharti deal or the wins by Wipro like Life Insurance Corporation of India (LIC) and Employees State Insurance Corporation (ESIC). Last year, Infosys announced that it was setting up a separate business unit in the Infosys BPO organization for domestic business. This is in spite of the fact that their current domestic India revenues are less than 5% of the total revenues. Recently, IDC predicted that the domestic BPO market will grow at a compounded annual growth rate of 33.3 per cent with revenues of $6.82 billion by 2013. They also predict that this growth will not just come from basic level services but from transformational services as well. |
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