Watch out for India's IT-BPO sector

The Indian IT-BPO sector is expected to rake in revenues in excess of $47.8 billion -- almost a 10-fold increase over the aggregate revenue of $4.8 billion in FY1998.

The sector, including domestic and exports segments, is growing at an estimated 28 per cent in FY07. Moreover, direct employment is expected to exceed $1.6 million, according to Nasscom's just-released Indian IT Industry 'Strategic Review 2007' report.

Inward foreign investment may scale new heights this year with multinationals planning to invest over $10 billion in the next few years.

Service and software exports remain the mainstay of the sector with the US (67 per cent) and the UK (15 per cent) still remaining the dominant markets. FY07 export growth is likely to beat forecasts and exceed 32 per cent as firms are keenly exploring new areas for business development.

Banking, financial services and insurance and technology (hi-tech/telecom) are the main verticals accounting for almost 60 per cent of the total; manufacturing, retail, media utilities, healthcare and transportation follow.

IT services exports, which account for 55-57 per cent of the total exports, are growing at an estimated 36 per cent and are expected to touch $18.1 billion in FY07. New areas of application and infrastructure management and testing are gaining traction with their share in the business mix growing steadily.

BPO operations continue to grow in scale, the report said, as total exports for this segment are expected to exceed $8.3 billion in FY07 a growth of 32 per cent over the previous year.

Increasing traction in offshore product development and engineering services is supplementing India's efforts in its own Intellectual Property creation. This group is growing at 22-23 per cent and is expected to report $4.9 billion in exports.

Worldwide technology-related spends are forecast to reach $2.1 trillion by 2010. Growth in global sourcing is expected to outpace growth in total spends, with up to $110-120 billion of the total amount spent on software and services in 2010 likely to be sourced through the global delivery model.

All these developments, the report states, make the outlook for the IT-BPO remain bright and the sector is well on track to achieve its aspired target of $60 billion in export revenues by 2010.