India Vision 2010: What driveth IT?

bhavITva 2007 offers a discussion forum that will bring together corporates , partners, industry analysts and young minds on a common platform to discuss "India Vision 2010: What driveth IT?" Four key areas have been identified as possible drivers that could lead the Indian IT and ITeS industry into the next level:

Engineering Services

The offshore engineering services segment is set to be the next big thing for Indian IT firms. According to a study done by the NASSCOM and management consulting firm Booz Allen Hamilton, the Indian IT firms can account for nearly $40 billion from offshoring of engineering services by 2020. The report also indicates that the market is highly fragmented by industry with automotive at 19 per cent, aerospace at 8 per cent and utilities at 3 per cent in 2004. High-Tech and telecom is the dominant and fastest growing sector, with 30 per cent of the market, and the traditional engineering powerhouses - USA, Germany and Japan have a lead in engineering spend. India enjoys a relatively strong position in the automotive and high-tech/telecom engineering services market with a $25-billion opportunity by 2020.

Knowledge Process Outsourcing

NASSCOM estimates, the KPO industry is expected to grow by 45 per cent by 2010. Out of the $16 billion, which the KPO industry is estimated to earn, around $12 billion would be outsourced to India. Also, KPO will yield more revenue than BPO when it amounts to value per unit. It is estimated that India will have more than 2.5 lakh KPO professionals by 2010. At present, the figures stand at 25,000. KPO is expected to contribute 57% to India's GDP by 2010 and KPO will contribute 1.8% to the Indian service sector by 2010 as against 0.24% in 2003. Investment banking research, sales and marketing research, IP/patent research, R&D, legal research and case writing ,animation design - the plethora of opportunities available in the KPO domain seem limitless.

Product Development

McKinsey-NASSCOM analysis forecasts that the product and technology services revenues of Indian companies could reach $8 billion-11 billion by 2008. Over 23,300 software companies in the US, with combined revenues of over $103 billion, spend 18-25 per cent of their revenues on product development. That adds up to a $19 billion-26 billion annual spend on product development. Margins in the products business are much better than in IT services. Billing rates per engineer per month can be as high as $7,500, compared to the $2,000-$4,500 that services firms make.

Remote Infrastructure Management

Research analysts Gartner estimate that the size of global Infrastructure Management Services (IMS) market is estimated to lie between $86 billion to $150 billion. It is estimated that 40-60% of the overall IMS pie can be efficiently delivered through a global delivery model. This translates to a market potential of $ 55 billion for Indian vendors. India is currently delivering business worth $0.3 billion in this space. Gartner predicts that it will do business worth $ 2 billion in next 5 years. Infrastructure management projects are very attractive for the reason that the deal sizes are quite large compared to deal sizes of normal application maintenance projects. An appealing statistic is that 54% of the deals bagged by global players come under this category. Also close to 90% of the deals signed in the IT vertical are in infrastructure management services.