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BW Businessworld

The Best Years Are Only Ahead

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Can India’s it sector sustain its early-mover edge? BW spoke to industry veteran and president of premier lobby group Nasscom, Som Mittal, who has worked with companies such as Wipro, Digital Equipment, Compaq and HP. Excerpts from the interview:

Is the exponential growth we saw in the past decade history now?
Absolutely not; Indian IT's best years are ahead of it. In 2002, Indian IT exports were $8 billion; in 2012, we did $69 billion. Nasscom projects it to be $175 billion by 2020. This year, the industry will grow 11-14 per cent. Last year, coming out of a downturn, it saw 16 per cent. Yes, on a $69-billion export base, we may not grow 35 per cent a year. But most industries would give an arm and a leg to have this kind of growth. Indian IT has several advantages. The expertise of remotely delivering value, a proven pool of talent, companies with cutting edge practices, an ecosystem that encourages MNCs to tap local expertise and, the best part, the hunger to constantly reinvent ourselves to meet global customer needs.

But Nasscom was also equally gung-ho about BPOs and had projected that revenues from the segment would touch $30 billion by 2012. We only did $16 billion...
Certain segments of the BPM market, such as low-end voice might have migrated to the Philippines as you say. This is an India-plus-one model, which some customers wanted because of cultural affinity, etc. But remember several Indian firms have stepped up operations there. And in most of the higher, value added, non-voice transaction-based BPO work, India remains the preferred destination for those seeking business value, because the scale and degree of talent available here is hard to replicate.

Where is the next wave of growth going to come from?
Today, about 55 per cent of the sector’s earnings come from the US. It will continue to be a key market along with the UK, Australia and West Asia. Latin America, China, continental Europe will be the big markets of the future. Japan, in spite of being the second largest technology market, has been a challenge due to cultural issues. China has been a closed market for different reasons and we are concerned about it. The fast-growing domestic market is a huge and attractive opportunity.

There are 3-4 vectors along which we are working to ensure that our goal of $175 billion is met. New geographies is one. Targeting newer verticals is another. At present, financial services, technology and telecom plus manufacturing account for 75 per cent of our revenues. We want to focus on opportunities in healthcare, media, entertainment and utilities. In emerging areas such as cloud, mobility, analytics, we want to work with the industry and the government to ensure we have the right kind of talent supply. We also want Indian IT to move beyond the Fortune 1000 firms and focus on small and medium businesses.

All this is not easy. There are issues of data security and privacy. Beyond economic benefits, we need to be more forceful in pointing out the benefits that Indian IT brings in value creation. We need to locally encourage entreprenuership, tackle early-stage funding issues and create processes conducive to small and innovative firms. As long as we have a level playing field, Indian IT will rise up to challenges.

(This story was published in Businessworld Issue Dated 28-01-2013)