India continues to dominate global outsourcing industry

India's IT-BPM sector accounted for 56 percent of the world market in 2015.
Written by V L Srinivasan, Contributor

Cashing in on growth in an innovative and vibrant startup ecosystem and an economic revival, India continued its dominance in the global outsourcing market in 2015.

According to National Association of Software and Services Companies (Nasscom), the voice of the Indian IT industry, the sector also continues to be one of the largest employers in the country directly employing nearly 3.5 million professionals, adding over 230,000 employees during the year. The global outsourcing industry recorded a growth of about 8.5 percent during last year, Nasscom said.

Head of research at Nasscom, Achyuta Ghosh, said that while global tech spending witnessed a sluggish growth, the Indian IT-BPM (Business Process Management) industry grew in double digits and the revenues from the IT-BPM exports stood at $108 billion. India accounted for 56 percent of the global outsourcing market last year compared with 52 percent in 2012.

"India is a unique example of the 'big getting bigger' in an extremely competitive landscape. Its IT-BPM exports have doubled in last six years, driven by increasing focus of the industry in new drivers such as digital technologies, growth of an innovative startup ecosystem, and adoption of multiple business models such as partnerships, collaboration, local presence and mergers and acquisitions," Ghosh told ZDNet.

According to him, India has emerged as a global digital hub rapidly building up capabilities and offerings. There is special focus on creating skill sets around Big Data, Internet of Things (IoT), Cloud, Social Media, and Mobility, in addition to developing solutions that emphasise design, creativity, agility, and customer experience.

"There was hyper-growth in the technology startup and product landscape in the country, which has more than 4,200 startups as of today. India is ranked third in the world -- after the US and UK -- among startup communities and most of them were in high impact areas such as healthtech, analytics, IoT, and cybersecurity. The industry is pursuing a multifaceted collaboration strategy to co-create innovation with startups," he added.

In its report entitled The IT-BPM Sector in India: Strategic review 2015, released a year ago, Nasscom said that India remained an excellent business delivery centre for the sector.

"Currency movements and increased operational efficiencies have ensured that India's position as the world's most cost-competitive sourcing destination has only become stronger in the past year. Even Tier-I cities in India like Bengaluru continue to be between eight to 10 times cheaper than source countries and significantly cheaper than other low-cost destinations," the report said.

Additional cost benefits have been passed on to customers through astute internal initiatives including moderate wage inflation, adopting automation and non-linear models to control salary expenses, introducing newer career bands, and flattening the organisational pyramid, among others, it added.

Nasscom president R Chandrashekhar pointed out that India was jumping the technology maturity curve and was emerging as a digital economy. The recent announcements by the federal government on Digital India, Make in India, and Skilling India were creating a renewed thrust on the domestic market.

"The Indian IT-BPM industry is expected to continue to partner and handhold clients to enable business success in the digital era, and is well set on its goal to reach revenues of $300 billion by 2020. At the same time, challenges around economic volatility, protectionism, competition, and customer understanding will need to be addressed by concerned stakeholders," he said in the report.

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