ITES BPO

Notes:

• Figures may not add up due to rounding off.
• IT-BPO refers to IT Services, BPO, Engineering Services and R&D, Software Products, and Hardware
• Software and Services refers to IT Services, BPO, Engineering Services and R&D, Software Products.
• The Growth% given above refers to y-o-y USD growth rates (not currency adjusted).

• Indian IT-BPO grew by 33 per cent in FY2008 to reach USD 64 billion in aggregate revenue, thus revalidating its strong fundamentals, despite concerns of a slowing US economy and supply constraints.
• Of this, the Software and Services segment accounted for USD 52 billion, growing by 28 per cent (currency-adjusted) over FY2007.
• IT-BPO exports (including hardware exports) reached USD 40.9 billion in FY2008 as against USD 31.8 billion in FY2007, a growth of 28 per cent.
• Software and services exports (includes exports of IT services, BPO, Engineering Services and R&D and Software products) reached USD 40.4 billion, contributing nearly 63 per cent to the overall IT-BPO revenue aggregate.
• While the US (61 per cent) and the UK (18 per cent) remained the largest IT-BPO export markets in FY2007, the industry footprint was steadily expanding to other geographies - with exports to Continental Europe in particular growing at a CAGR of more than 55 per cent over FY2004-2007
• The industry?s vertical market exposure was well diversified across several mature and emerging sectors. Banking, Financial Services and Insurance (BFSI) remained the largest vertical market for Indian IT-BPO exports, followed by High-technology and Telecom. These sectors together accounted for nearly 60 per cent of the Indian IT-BPO exports in FY2007.
• Manufacturing, Retail, Media, Healthcare, Airlines and Transportation, and Utilities were the other key segments.
• Domestic IT market (including hardware) reached 23.1 billion in FY2008 as against USD 16.2 billion in FY2007, a growth of 43 per cent. Hardware remained the largest segment of the domestic market with a growth rate of 44 per cent in FY2008. Software and services spending supported by increasing adoption, grew by over 41 per cent during the year.
• As a proportion of national GDP, the Indian technology sector revenue has grown from 1.2 per cent in FY1998 to an estimated 5.5 per cent in FY2008. Net value-added by this sector, to the economy, was estimated at 3.3-3.9 per cent for FY2008.
• Direct employment in Indian IT-BPO crossed the 2 million mark, an increase of about 389,000 professionals over FY2007; indirect job creation is estimated at about 8-9 million.
• IT services (incl. engineering services, R&D, Software products) exports, BPO exports and Domestic IT industry provides direct employment to 860,000, 700,000 and 450,000 professionals respectively.

• IT services (excluding BPO, Engineering Services, R&D and Software products), contributing to 57 per cent of the total software and services exports, remains the dominant segment and crossed USD 23 billion, a growth of 28 per cent in FY2008.
• The segment is witnessing a noticeable shift from projects towards multi-year outsourcing-based relationships; remote infrastructure management is emerging as a key growth driver.

• Project-oriented services contributing to about 52 per cent, continues to be the largest segment of the IT Services exports. Outsourcing segment and Support and Training segment account for about 40 per cent and 8 per cent of the IT Services export segment respectively.
• Domestic IT services spends grew at over 43 per cent in FY2008, showing strong signs of increasing sophistication as building enterprise IT infrastructures and applications, networking and communication became key priorities for India Inc.

• Complementing the strong growth in IT services and BPO exports is the continued expansion of the product development and engineering services segment, which also reflects India?s increasing role in global technology IP creation.
• Export revenues from the relatively high-value-added services engineering and R&D, offshore product development and made-in-India software products grew at nearly 29 per cent to reach USD 6.4 billion in FY2008.
• Domestic spending in this segment grew by over 37 per cent in FY2008.
• Embedded solutions development, product design and prototyping are some of the key engineering services being sourced from India.

• BPO exports, accounting for about 27 per cent, is the fastest growing segment across software and services exports driven by scale as well as a rapidly expanding service landscape
• Domestic BPO spends are also growing rapidly, led by the BFSI, Telecom and Airline industries. Revenue from the domestic BPO segment grew by nearly 41 per cent over FY2007 to touch USD 1.6 billion.
• Horizontal BPO, accounting for about 80 per cent of Indian BPO exports, represents the larger and relatively more established set of services being delivered from India.
• Vertical specific services now contribute nearly 20 per cent of the BPO exports, led by an increasing number of processes, being offered across multiple verticals and by a growing number of providers. Vertical-specific BPO services refer to offerings that require a high degree of vertical specific knowledge that is not easily replicable across industries (e.g. insurance claims processing).
• Other aspects of Indian BPO, besides the growing breadth and depth of the service portfolio, that reflect its increasing maturity include the increasing global delivery footprint and continuous emphasis on enhancing service delivery efficiency and productivity.

• Despite the declining trends in pricing observed across key categories, increasing volumes have ensured that the domestic hardware revenue aggregate continues to grow. While hardware exports remained steady, domestic hardware segment grew by 44 per cent over FY 2007 to reach USD 11.5 billion.
• PCs (including desktops and notebooks) continue to lead hardware spending patterns. With their prices coming down, notebooks are increasingly being adopted as the computing device of choice. For the desktop segment, consumers are showing an increased trend of moving away from locally assembled items towards branded products with relatively higher-end configurations.

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