The offshoring model may still have tremendous scope but there are some serious concerns worth keeping an eye on.
Sridhar Mitta, Managing Director and CTO, e4e India
I want to look at the Indian IT industry in a much broader context than just software programming. So while it started with wage arbitrage and process improvement, there are many other things happening today and many more things possible tomorrow.
Even in a narrow definition of IT, which means programming and product development, the offshorable component of the US market alone is some $ 300 billion.
India is doing around $20 billion. So what we have done is little compared with what can be done -- reason enough to believe that the industry will grow.
It is possible that existing IT companies may saturate, but the market is far from it. Wipro or TCS, touching $2 billion in revenues, have their size as a strength, but may become victims of their past success if they don't identify new niches and new business models.
In the next five years, just like Wipro and Infosys did 15 years ago, a new set of small companies will come up bringing with them new business models and new ways of doing things.
They will expand the market way beyond what the existing companies are doing.
Today, we are in a peculiar situation where just the top five companies are bringing in a significantly large portion of India's IT revenues.
We see the business through their eyes rather than the potential in the market and our ability to meet it.
But the new players will not stop at wage arbitrage or process improvement, but may even start with applying technology and business models.
The old way was about cost reduction, but the new way is to create new markets. I see brand new companies, young start-ups, new business models, new technologies all coming up and a market that is broad based compared with what we see as IT now.
In next few years, anything that is of economic value and amenable to conversion into digits is open to offshoring.
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