The Indian information technology industry is cautiously optimistic for 2011 after a tumultuous 2010 due to the continued economic
uncertainty in Europe and the US.
The resilient industry, which is still on the path of recovery from a global tech meltdown, earns 80 percent to 85 percent of its export
income from software services and back office operations in the uncertain markets of Europe and the US.
India’s second biggest software services company Infosys Technologies Ltd views 2011 with cautious optimism due to less than expected
recovery by the US from the Great Recession as also the economic uncertainty in Europe.
The industry has witnessed a turnaround in current fiscal 2010-11 by posting a double-digit growth largely due to renewed investments by
global companies across verticals such as IT infrastructure, software and back office services. The industry’s annual growth had plunged to
6 percent in 2009-10 after recording a scorching 25 percent to 30 percent growth during the previous four years.
We have seen growth returning and business coming back because of transformational needs of our global customers and changing business
models favoring more outsourcing and offshoring of IT services and solutions we deliver cost-effectively,” said Som Mittal, president of
National Association of Software and Services Companies (Nasscom), an industry body.
Nasscom, the apex body of the Indian IT-BPO (business process outsourcing) industry, has projected a 13 percent to 15 percent
year-on-year growth from exports or $56 billion to $57 billion and a 15 percent to 17 percent year-on-year domestic growth or $17 billion
during the current fiscal.
With growth surpassing our expectations during the first half, we will be revising the outlook for this fiscal after the third quarter
(Oct-Dec) results, factoring the anticipated growth in the fourth quarter (Jan-March), Mittal said.
The Indian IT-BPO sector grew 6 percent in 2009-10 to $50 billion in exports and posted a 12 percent year-on-year in the domestic market of
$13.25 billion thus emerging largely unaffected from the global tech meltdown.
Sustaining this year's robust growth in 2011 depends on how fast economies in Europe recover, as there are concerns over some countries
still grappling with financial crisis. Sovereign fallout in any country will have a domino effect on the global economy, said Kris
Gopalakrishnan, chief executive of Infosys.
Notwithstanding the growth during the first half, the year 2010 began sluggishly as the information technology reeled under the ripple
effect of slowdown in 2009-10, evident absence of investments and hiring besides the fear of layoffs of thousands of techies.
The year demonstrated the inherent strength of the industry to get over the global recovery trend. As we exit 2010, the new year looks
promising, as the industry is poised to get back to growth trajectory despite an element of uncertainty looming over Europe due to monetary
and regulatory crisis, said Suresh Senapaty, chief financial officer of Wipro, India’s third biggest software services company.
Evidently, the Indian IT industry went overboard in exploring new markets, scouting for talent and investing in new service lines to
offer end-to-end solutions across verticals due to the revival of fortunes.
Unlike the crisis we faced during the dotcom bust earlier in the decade, the global recession tested our resilience and gave us an
opportunity to provide more for less, as IT budgets shrunk and clients were in consolidation process, said Pramod Bhasin, CEO of Genpact and
past Nasscom chairman.
India’s top software services companies Tata Consultancy Services, Infosys, Wipro and HCL turned aggressive in the Indian domestic market
as state-run enterprises enhanced their investments in IT infrastructure, products and services for the benefit of its citizens.
The industry is thus gearing to offer its services in new areas such as engineering services and product development buoyed by increased
tech spending in the private and public sectors.
The Indian IT industry has 450 delivery centres in 60 countries worldwide, which is an unparalleled global value chain. The industry has resumed
enhancing its global workforce by hiring specialised talent in developed markets and building a truly global delivery model.
Mergers and acquisitions in the industry remained sluggish as companies were in consolidation mode and continued to be averse to risk-taking.
Small and medium business too have resumed hiring to meet the demand for ICT services and products along with the top firms which are offering 100,000 jobs to create bench strength and build capacity as the industry expects better growth in 2011-12.
India dominates the global IT services market with 51 percent share as a top outsourcing destination and a back office operations hub.