Domestic outsourcing market looks good
Indias booming IT market has seen the domestic demand growth outstrip exports for the first time in over a decade, thanks to the maturing outsourcing market, says a new survey. The domestic IT demand grew 34 per cent in 2007 08, compared with 27 per cent for exports, which is the opposite of what happened the last fiscal, says the annual IT industry survey of Dataquest the flagship publication of CyberMedia Group.
In value terms, exports, at Rs.1,897.92 billion 47.45 billion, still account for twothirds of total revenues while the domestic sales were estimated at Rs.990.18 billion 24.75 billion.
The jury is still out on the actual reasons behind the remarkable reversal, and the sceptical IT industry honchos offer several like small base for the domestic market and the appreciation of the rupee that has slowed down export growth.
Interestingly all this is true. But that does not take away from the creditable performance of Indias domestic IT market, it says, while attributing the trend reversal to a 65 per cent growth in business process outsourcing BPO industry.
The value of outsourcing depends largely on the structure of the relationship. This is where Indian domestic transactions in the BPO space underwent a major shift in fiscal 200708, the survey says.
At 24.5 billion, the Indian domestic IT market is not exactly a small market. Yet, in dollar terms, it grew 50 per cent. In other words, it added half of itself to it.
The survey also finds that some interesting trends in the outsourcing industry where the players are evolving from shortterm, projectdriven deals to longerterm, comprehensive outsourcing initiatives will help the IT industry.
Over the next few years, staff augmentation and projectbased deals would gradually dwindle to be replaced by more comprehensive outsourcing engagements, the survey adds.
During the year, the market saw IT services companies bag multimillion dollar deals for periods ranging from 5 to 10 years, apart from large outsourcing deals in the egovernance and eprocurement space.
IBM Global Services bagged the accounts of Vodafone, Idea Cellular and IGI. HP secured Bank of India and Britannia orders. TCS clinched a huge passportprocessing contract.
This change has been an eyeopener of sorts because, for the first time, people seem to have woken up to the potential of the domestic BPO market, the survey says while pointing towards other reasons for the domestic IT growth.
It says the demand for mobility drove notebook sales by 59 per cent while the need to save on electricity made many users dump cathode ray tube monitors and switch to liquid crystal display LCD monitors a trend that resulted in the nonbundled monitors market growing by 71 per cent.
Another small segment also saw magnificent growth. Automated teller machines, or ATMs deployed by banks grew by 150 per cent to emerge as the only sub segment within the domestic market to witness a threefigure growth, the survey says.
In fact, the overall hardware market including systems, peripherals, and other products expanded by 35 per cent over last year.
Much of this growth can be attributed to the spread of computing to smaller towns and cities of India and, of course, the growing clout of the small and medium businesses SMBs, the survey says.
Source : http://www.offshoringtimes.com/
