The Hindu Business Line : IT, BPO market in for ‘slowest’ growth

According to market intelligence firm, IDC India, the local IT and BPO market is expected to grow at 13.4 per cent in 2009, the slowest since 2003. This will come largely on the back of slower IT consumption in some key verticals including retail and financial services.

In fact, the Indian domestic IT and BPO market is slated to see 16.4 per cent CAGR in the coming five years leading to 2013, compared with 24.3 per cent growth recorded between 2003 and 2008.

The forecast also suggests that key structural changes taking place on the back of a global economic slowdown would propel a new ‘market order’ in the domestic IT and BPO industry.

Phase 2

IDC said that the next phase of growth would be different from the earlier phase, in which the domestic market had witnessed unprecedented growth, nearly tripling the market size from Rs 34,000 crore in 2003 to Rs 1,01,031 crore in 2008, a CAGR of over 24 per cent.

The new growth Phase (2.0), expected to evolve from 2009 onwards, will be built on the back of new and innovative services sought by consumers and enterprises alike. The technology behind these services — infrastructure, applications and connectivity — would need to orchestrate and re-orient completely in order to support their mass adoption.

IDC said that the combined domestic IT and ITeS market grew by 17.3 per cent in 2008. The IT market grew at 15.4 per cent in 2008 to Rs 94,185 crore; and the BPO market grew 53.2 per cent in 2008 to report revenues of Rs 6,846 crore.

Revenue growth

However, the overall IT and ITeS revenue is expected to grow at a slower 13.4 per cent in 2009 to Rs 1,14,574 crore. While the IT market is projected to grow at 11.4 per cent, the BPO market is likely to notch 40.8 per cent growth.

“The issues in the short run, more pronounced throughout 2009, will be productivity, cost savings and customer retention. This would eventually pave way for innovative services (for both consumers as well as enterprises) by leveraging the existing infrastructure built so as to align with emerging opportunities,” Mr Kapil Dev Singh, Country Manager, IDC India, said.

product categories

The major product categories expected to grow at a rate higher than the industry average include collaborative applications (23 per cent), storage software (19 per cent), system and network management software (19 per cent).

Within the ambit of IT services, segments reporting higher than average growth include desktop management (22 per cent), information systems outsourcing (32 per cent), network management (23 per cent) and application management (20 per cent).

Within the IT solution categories, the faster growing ones would be virtualisation (28 per cent), unified communications (25 per cent) and business continuity services (20 per cent). All these categories point towards the need for better management of IT infrastructure for their most optimal deployment and use in achieving enterprise business goals, it said.

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IT, BPO market in for ‘slowest’ growth