As the information technology (IT) sector gets over the recession blues, India looks set to retain its place as a key offshoring destination for IT services, says Peter Bendor-Samuel, founder and CEO of IT research and consultancy firm Everest Group. Bendor-Samuel spoke to HT ahead of the annual Nasscom India Leadership Forum in Mumbai. Excerpts.
On the near-term outlook
We see evidence that the recovery is on track. The outsourcing market experienced a steady state during the last nine to twelve months, with some marginal growth. Going forward, we expect the market activity to expand.
On key demand drivers
BFSI (banking, financial services and insurance) and MDR (manufacturing, distribution and retail) will be the primary revenue drivers for IT in India. These verticals currently account for 40 to 50 per cent of market share.
On high growth regions
North America and Europe will be important growth areas for Indian IT companies. Europe is a key geography, contributing 30 to 35 per cent of the total deals (while) North America contributes around 35-40 per cent.
On corporate IT spending
Despite a lack of significant growth in IT spend during the downturn, we expect the level of spend to increase over the next few quarters.
On offshoring’s future
Although China, Singapore, and other offshore locations are experiencing growth in outsourcing revenue, India is still the key destination for offshoring of IT services. India has significant competitive advantages, such as lower costs and scalability of operations. Limited English language skills in China constrain its ability to support large scale offshore work for US and UK.
Singapore has good English skills but has a much smaller talent pool than India’s.
The primary reason India ranks high as an offshore destination for IT services is its fairly mature, established group of suppliers that have significant experience in serving global clients across multiple processes and functions. Such suppliers include Infosys, Wipro, TCS, HCL and Mahindra-Satyam.