IT and BPO – Its business as usual!

The recent Nasscom leadership conference organized by the National Association of Software and Service Companies (Nasscom) in Mumbai served to reinforce the strength of both the information technology and business process outsourcing (BPO) sectors and was a reaffirmation of the optimism that every participant has in the continuity of India’s leadership in this sector.

In spite of the Cassandras who jump at every human resource issue and draw sweeping conclusions that paint dark days for the industry, the outlook remains excellent, notwithstanding some internal and external pressures.

The industry is likely to achieve exports of $40 billion in the year ending March (2007/08), which will be a 28 per cent growth over the previous year and seems to be well positioned to achieve the $60 billion goal it set for 2010, representing 24 per cent growth in the next two years. With employment touching two million and the industry’s impact on indirect employment and infrastructure creation at least in
the key IT cities still substantial, the potential for growth and job creation was reinforced at the recent conference.

The industry in India is, of course, coupled with the global economy and is touched and influenced by developments and macroeconomic factors impacting the world. With the sub-prime loan crisis and also other factors affecting the US economy, there would be some impact on the IT industry as well. While there may be some slowing down of IT spending in the short term, the width and depth that most companies have built keep the medium and long-term growth projections of the industry valid. There has been adequate diversification in terms of geography, industry segments and width of service offerings in the Indian IT/BPO industry. In particular expanding BPO services, remote infrastructure management services, engineering and design offerings have opened up new revenue opportunities.

At the level of individual companies strategies will vary, but most are already focusing on operational and performance excellence, improving capacity utilization, productivity and cost efficiencies. And while wage increases are expected to be moderate this year, no industry-wide layoffs or salary cuts are envisaged. There are opportunities for innovative Indian companies to dominate emerging trends in IT like Service Oriented Architecture, hosted software and “platform BPO” (linking BPO to technology platforms) which help customers reduce cost and present a new vista of growth for the sector.

Recognition of the entrepreneurial nature of this industry through a continuation of the STPI (Software Technology Parks of India) scheme will ensure widespread success in job creation as well as new entrepreneurial startups. The forthcoming budget should also recognize the need to initiate public-private partnerships in education, training and capacity building for IT, BPO and the biotech industries and a few thousand crores of rupees need to be allocated to the development of a research culture through institutions of excellence that will revive the dwindling numbers of PhDs and enable technology innovations to flower in the country. An atmosphere to sustain innovation has to be supported to enable the industry’s continuing success.

The author is the Global CEO of Zensar Technologies Ltd