Indian BPO vendors target business from emerging markets

February 16, 2012: During a period of economic uncertainty in the west, the Indian Information Technology sector is expected to get business from the emerging markets across the world. Presently 90 per cent of the business comes from the developed western economies. But the slowdown in these markets has raised suspicions about the continued flow of outsourcing activities.

How ever the Indian Information Technology Minister, Kapil Sibal has observed that the emerging economies will be a profitable market for the Indian IT service providers. He said that emerging countries are where half the world’s population resides and technological innovations are offering solutions to their problems.

The Indian outsourcing sector has played an important role in transforming India into a developing market economy. The contributions of the outsourcing sector accounts to 5 per cent of the GDP. How ever the economic uncertainty in the western markets will impact the outsourcing sector in India. So the outsourcing sector is expected to experience a decline in the revenue growth during the next financial year. This was confirmed by the National Association of Software and Services Companies (NASSCOM). The forecasts made by NASSCOM have projected that the revenue from export will increase at a rate of 14 per cent during the next financial year. During the current financial year, it is estimated to grow at 16.3 per cent. This clearly indicates that the revenue growth will decline, where 90 per cent of the revenue comes from the western developed economies.

To balance the growth trends and to fight the slow down in the western markets, the Indian Information Technology Companies have started to look for business opportunities in the emerging markets such as Russia, Latin America and China. Rajendra Pawar, Chairman, NASSCOM said that the Indian Information Technology industry is resilient and will tide over the uncertain time.

The Indian IT industry serves 58 per cent of the outsourcing market, where the prime motive behind outsourcing is cost reduction. In the previous year, the share was 55 per cent. The large English speaking population is one of the factors that attract companies from the United States and European region.

The Indian IT industry is planning to achieve revenue of USD 225 billion by 2020. This includes revenue from both exports and domestic business. In order to achieve this, revenue has to grow at a rate of 13 to 14 per cent on an average over the next 8 years. 

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