NASSCOM scales down BPM market growth expectations from 14% to 11%

Nov 14, 2012: In the midst of the financial year, NASSCOM (The National Association of Software and Services Companies) has scaled down the growth expectations of Indian IT outsourcing market for this year. Earlier, NASSCOM forecasted a growth rate of 11-14% in Indian IT servicing sector. In contrast to this figure, they now expect the industry will grow at least by 11%. Based on these expected figures, export revenues are projected at $75-77 billion in this year till March 31. If the domestic business is also included, the industry is worth up to $100 billion.

IT outsourcing growth slowdown

Major markets like US and Europe, consumes about 80% of our IT services. Tough and uncertain economic environment in such potential markets is one of the reasons behind the slowdown of software outsourcing industry. Currency movement has also impacted revenue generation in an adverse manner. GICs (global in-house centres) are now moving as a cost-plus model for huge efficiency improvement.

The differences in the growth of India’s top five software servicing companies have adversely affected industry’s composite growth in the past two years. TCS, the largest software services exporter is growing in a steady fashion, and is gaining adequate market share also. HCL Technologies is standing much in the same level as that of TCS, in the growth level.

In contrast to this, Infosys, second largest software services exporter, is expecting to grow only at 5% during the current fiscal. They discontinued giving out quarterly growth guidance, which was given till last year. They claim that they are unable to predict near-term spending patterns to clients. Wipro, another IT major, is also fighting to get back to their growth track. In the post quarters they have reported a sequential growth of 1-2% only.

Growth rate of software service outsourcing sector had showed some improvements in the last month (September). This clearly indicates that the second half of the fiscal is better than the first half.

This year showed wild fluctuations in the value of rupee too. It has seen a high of about 52 against the dollar and a low of 56. Based on local currency measurements, the sector expects a growth percentage of 18-20%.

NASSCOM expects better growth prospects for the industry in the long future. Technology based operations coupled with new technology outsourcing deals will add to the growth of the IT services industry. Technology outsourcing deals, which are requested for renewal, also generate much revenue. Such type of deals has increased by 25% in 2012.

To trace the growth of Indian IT sector in the next 10 years, NASSCOM had set up a committee, headed by Infosys co-founder and chairman emeritus, NR Narayana Murthy. These measures along with digital solutions, infrastructure, engineering services, and business process management will contribute much to the development of Indian software servicing sector.

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