ITeS

ITes

The Indian IT-ITeS sector has remained a major growth industry for the Indian economy in the last decade, contributing significantly to the revenue stream of the country. It is also responsible for employment generation and value creation within the country and has emerged as an important brand segment for India. Changing customer demands and requirements has led to greater efficiency and flexibility within the sector. Over the years, the industry diversified its product offerings, expanded into new markets, changed its pricing models and undertook significant research & development activities. All these factors have made the Indian IT-ITeS sector a leading industry not just within the country but abroad as well. Exports continue to dominate the revenues earned by the Indian IT-ITeS Industry. As per the estimates of the Department of Information Technology, IT-ITeS exports grew at a CAGR of 28.6% from Rs. 34,900 crore in FY02 to Rs. 2.1 lakh crore in FY09. Despite being an export driven sector, the ITeS-BPO segment has performed well in the domestic market as well, with domestic sales within sector growing at a CAGR of 22.2% from Rs. 11,900 crore in FY02 to Rs. 56,900 crore in FY09.

Among the verticals serviced by India’s IT-ITeS-BPO industry those that account for the largest share of revenue are banking, financial services and insurance (BFSI-41%), Hi-Tech/Telecom (20%), manufacturing (17%), retail (8%), with smaller contributions coming from media, publishing and entertainment, construction and utilities, healthcare and airlines and transportation.

IT-ITeS exports constitute the major source of employment in this industry, with its share increasing over the years. The share of IT-ITeS exports segment in total employment of the IT Software & Services Industry has grown from 52.9% in FY02 to 77.6% in FY09 whereas, the share of the domestic market in total employment of the IT Software & Services Industry has declined from 47.1% in FY02 to 22.6% in FY09. Over the years the growth drivers for this sector have been the verticals of manufacturing, telecom, insurance, banking, finance and of late the retail industry. However, the shape of the ITeS-BPO industry continues to change going forward. Future growth for the industry is expected to come from areas like mobile applications and healthcare, among others. More and more SMEs, the backbone of the Indian industry are gradually taking on IT applications and services. By the end of FY11, India’s Software and Services exports are expected to touch Rs. 2.8 lakh crore and by FY12, which is the terminal year of the eleventh five year plan, the figures are expected to touch Rs. 3.3 lakh crore.

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