GOVERNMENT SPEAKS  

"Both the telecom and the IT sectors contributed tremendously to India's GDP growth of 8.5 per cent"

Dayanidhi Maran, Union Minister for Communications and Information Technology
Government of India

INDUSTRY SPEAKS

"The Indian Government has given unstinting support to the telecom sector, which is a critical  infrastructure for economic growth of the country and has a direct multiplier effect on the economic growth."

Cellular Operators Association of India

"The Indian IT industry has now reached a stage of maturity where it can be a very reliable and safe partner for meeting the requirement of our global partners. While we are yet very cost competitive, the Indian it industry has gone beyond that and is providing unique scenario to
customers in terms what they need.
"

Kiran Karnik, President, NASSCOM

 

LEADERS SPEAK

"India today is one of our top priorities in Asia Pacific, and we remain fully committed to service in the market."

Allen Ma, President, BT Asia Pacific  

*

"Realization of the importance of information security is increasing, in the case of new players in particular. If India is somehow viewed as a a place where information is not secure, then that would reverse the outsourcing trend for India."

Harris Miller, President, IT Association of America (ITAA)

*

"India’s positioning as the primary global offshoring destination (along with China) will ensure that the country’s economy rapidly grows and its people will see the benefits." 

Martyn Hart, Chairman, National Outsourcing Association (NOA), UK

*

"The story of Indian companies needs to be told i.e. how they are creating local jobs and opportunities. How they are allowing US companies to stay in business and be competitive. How productive increases in the US have to do with the Indian IT industry too."

Sanjay Puri, Chairman, US India Political Action Committee (USINPAC)

*

"The prospects (of India and Australia forging an alliance to emerge as IT super power in the Asia-Pacific region) are very positive."

Rob Durie, CEO, Australian Information Industry Association (AIIA)

*

"India will continue to expand its market dominance in this (BPO) field, yet to prevent political backlash it will be imperative for India to provide U.S. companies greater market access, to reduce its trade deficit, and to continue to buy American, which would include meaningful defense cooperation."

Ron Somers, President, US India Business Council (USIBC)

*

"Information Technology is an important tool for fostering development. Global communications and the Internet are key engines of economic growth."

Don McKinnon, Secretary-General, The Commonwealth

*

"One of the key areas of cooperation under the ASEAN-India dialogue relations is science and technology with focus on IT. We have been working on a number of projects in the area of e-learning and information security system."

His Excellency Ong Keng Yon Secretary-General, Association of Southeast Asian Nations (ASEAN).

*

"Indian IT sector is very much part of our work to reduce the digital divide that we are working on."

Mohan Kaul, Director-General; Chief Executive, Commonwealth Business Council

*

"The CECA will in all probability smoothen some of these problems but a more proactive approach to attracting investments into much needed IT infrastructure can be adopted."

M. Rajaram, Chairman of the Singapore Indian Chamber of Commerce and Industry (SICCI)

*

 "Indian IT is strong and well-known. Our expectation is that India would relocate its Assembly Line (hardware, software and semi-conductor) industries into Cambodia. If this is possible Cambodia would be able to provide jobs to its people as well as to boost exporting." 

Oknha Kith Meng, President, Phnom Penh Chamber of Commerce (Cambodia Chamber of Commerce)

*

GOALS  

1. Seven million broad band subscribers by 2007

2. 20 million broadband and 40 million Internet subscribers by 2010, which translates into penetration levels of 1.70 per cent and 3.40 per cent respectively

3. Broadband network of 10 million subscribers by 2010 and 35 million subscribers by 2020 in urban India across homes, enterprises and public kiosks.

4. Achieve broadband coverage by providing  access to at least 50 per cent of the rural population by 2010 and 100 per cent by 2020 through rural broadband kiosks.

5. Make appropriate and locally relevant e-education, e-Governance, entertainment and e-commerce services and employment opportunities available through broadband connectivity to all cities, towns and villages in India.

Department of Telecommunications, Ministry of Communications and Information Technology, Government of India

SERVICE PROVIDERS

Bharti

BSNL

Hutch

TATA Indicom

IDEA

Aircel

Reliance

Spice

MTNL

BPL

Important Links

Telecom Regulatory Authority of India

Association of Basic Telecom Operators

Indian Electrical & Electronics Manufacturers' Associatio

Electronic and Computer Software Export Promotion Council

Manufacturers Association of Information Technology

National Association of Software & Service Companies

Electronic Components Industries Association

Association of Mutual Funds in India

Organisation of Pharmaceutical Producers of India

Computer Society of India

Electronics & Software Export Promotion Council (ESC)

Telecom Equipment Manufacturers Association of India (TEMA)

Export Import Policy, Customs and Central Excise, DGFT

Computer Association of Eastern India

 


India Unstoppable-II

Challenges call for focused efforts

IT-ITES industry has recorded 33 per cent growth in exports, clocking revenues of $ 23.6 billion in FY 2005-06, as compared with export revenues of $ 17.7 billion in fiscal 2004-05. Fiscal 2005-06 also saw the overall Indian IT-ITES industry (including domestic market) growing by 31 per cent registering revenues of $ 29.6 billion, up from $ 22.5 billion in 2004-05. This is revealed in a NASSCOM survey.

Of the total IT-ITES exports in FY 2005-06, IT software and services grew by 33 per cent, registering revenues of $ 13.3 billion; while ITES-BPO segment clocked revenues of $ 6.2 billion, recording a growth of 37 per cent. Engineering services and product exports grew from $ 3.14 billion in FY 04-05 to $ 4 billion in FY 05-06. Domestic market clocked revenues of $ 6 billion in FY 04-05 from $ 4.8 billion in FY 05-06.


IT & ITES clock 31.4 per cent growth

THE Indian IT-ITES industry has recorded 33 per cent growth in exports, clocking revenues of $ 23.6 billion in FY 2005-06, as compared with export revenues of $ 17.7 billion in FY 2004-05. FY 2005-06 also saw the overall Indian IT-ITES industry (including domestic market) growing by 31 per cent registering revenues of 4 29.6 billion, up from $ 22.5 billion in 2004-05. This is revealed in a NASSCOM survey.

Of the total IT-ITES exports in FY 2005-06, IT software and services grew by 33%, registering revenues of $ 13.3 billion; while ITES-BPO segment clocked revenues of $ 6.2 billion, recording a growth of 37 per cent. Engineering services and product exports grew from $ 3.14 billion in FY 04-05 to $ 4 billion in FY 05-06. Domestic market clocked revenues of $ 6 billion in FY 04-05 from $ 4.8 billion in FY 05-06.

NASSCOM has projected overall software and services will grow by 25-28% clocking revenues of $ 36-38 billion in FY2006-07. IT-ITES exports are likely to grow by 27-30 per cent in FY 06-07, posting revenues between $ 29-31 billion.

Mr. Kiran Karnik, President, NASSCOM, said, “The excellent performance of the Indian software and services industry once again reinforces our confidence that the industry is on course to meet the projected target of USD 60 billion exports by FY 10, as projected in the NASSCOM-McKinsey Report. This growth is also reflected in the employment trends, both direct and indirect which according to our estimates is to the tune of 4.3 million.

“With less than 10% of the market currently addressed, a large market opportunity exists for the sector which will ensure sustained demand led growth. Factors like evolution of global delivery model, unbundling of large IT outsourcing deals with larger India based delivery shares, and the large contract values due for renewal over next two years are some of the positive indicators for the sector. In the last year India’s strength has emerged through large client wins, cross-border mergers and acquisitions, movement of the industry towards stable pricing model and a gradual positive shift in the outsourcing debate”.

“However, along with the opportunity, there are a challenges that call for focused efforts. These include concerns about the quality and skill sets of graduates, infrastructure, maintaining the attractiveness of India for IT investments and steps to boost the domestic market”, he added.

Sector-wise break-up of revenues
(In $ billion)

Sector

2004-05

2005-06

2006-07 E

IT Software and Services Exports (1)

13.1

17.3

21-22

ITES-BPO Exports

4.6

6.3

8-8.5

Domestic Market

4.8

6.0

7-7.3

TOTAL : (IT Services + ITES-BPO + ES, Product Exports + Domestic Market)

22.5

29.6

36-38

SOURCE: NASSCOM Press statement

Key highlights of the NASSCOM survey

*Industry employee base estimated at nearly 1.3 million in FY2005-06

  • Employment in the exports segment estimated at nearly 930,000 which translates into a year-on-year increase of 32 per cent

  • IT software and services added over 120,000

  • ITES-BPO added 100,000

  • Indirect employment attributed to IT-ITES was 3 million

  • Exports grew by over 33 per cent - was the main factor in the industry performance exceeding expectations

*Industry performance

  • Exports grew by over 33 per cent - was the main factor in the industry performance exceeding expectations

  • Strong growth in the industry corroborates the economics of offshore outsourcing

  • The last year was marked by scope and scale expansion

  • Key trends indicate a strong demand for traditional services (ADM) as well as new services (EAI, package implementation, etc.); continued expansion of service portfolio, higher-value processes and an increased traction in Engineering Services as well as domestic demand

*India has maintained its distinctive lead over other offshore destinations on parameters like financial structure, business environment and people skills / availability.

  • India has 28% of the suitable talent available across all offshore locations

  • Outranks the next destination by a factor of 2.5

  •  Focus on security, quality and leveraging experience to gain from operational excellence and sustained total cost competitiveness, driven by utilization and ability to deliver multiple dependent processes are the key driving factors.

*Six key focus areas for sustained leadership have been defined as

  • Enhance the talent pool advantage by focusing on skill development

  • Urban infrastructure strengthening – plan for emerging cities and aim for proactive regulatory reform to facilitate business in India

  • Operational excellence to be driven amongst industry players to ensure world leading benchmarks in performance in India based delivery model

  • Catalyzing domestic market development

  • Promoting an uncompromised agenda towards global free trade, actively

  • Fostering an ecosystem to breed innovation

*Projections for FY 2006-07 estimate overall software and services to grow by 25-28 per cent

  • Lower growth rate masks the fact that incremental revenue of $6-8bn is higher than ever before

  • Exports growth projected at 27-30 per cent; IT software & services $21-22bn; ITES-BPO $8-8.5bn

  • Domestic market growth forecast at 20 per cent with a significant upside potential in e-governance and high growth sectors e.g. retail, healthcare etc.

* (1) Includes Engineering services and Product Exports (FY 05 – $ 3.1 billion; FY 06 - $ 4 billion)


The NASSCOM survey projects exports growth for the current fiscal ( 2006-07) at 27-30 per cent. IT software & services exports are expected to be in the region of $21-22 billion and ITES-BPO $8-8.5 billion. Industry analysts have projected the global IT and ITES market to reach $ 3,400 billion by 2012.

Domestic market growth forecast at 20 per cent with a significant upside potential in e-governance and high growth sectors e.g. retail, healthcare etc. The National e-Governance Plan (NeGP) covers 26 Mission Mode Projects with 8 support components to be implemented at Central, state and local government levels at a total cost of over Rs 23,000 crore in a phased manner spreading over five years. Major government development programmes like NREG scheme will be implemented on an e-governance format. States have the flexibility to add up to 5 state-specific projects.

Besides, a Rs 3334-crore State Wide Area Networks (SWANs) scheme is being implemented in different states and Union Territories. The Private-Public Partnership in establishing 100,000 Internet and broadband-enabled Common Service Centres for 600,000 villages in all the 6000 blocks in the country is slated for completion by 2007.

India: Fort Knox of Data Security?

“The growth and success of the Indian ITES BPO sector is due to a combination of strengths India possesses, of which high security standards and world class practices are a key part. Recognition of this comes from various independent studies. For example, the A. T. Kearney Global Services Location Index 2005 ranks India highest in a detailed analysis comparing 40 sourcing destinations across the world. The fact that India is very secure, from a data protection viewpoint, has also been confirmed by independent surveys by various credible organizations, including the Financial Services Authority and the Banking Code Standards Board, both of the UK.

Yet, owing to the critical and sensitive nature of work being outsourced to Indian companies, concern from customers about the protection of their data is but natural. The Indian IT-BPO industry has been able to adequately meet all such worries and has remained ahead of the curve in ensuring data security.

”Indian IT and ITES-BPO companies consider fool-proof security to be an indispensable element of global service delivery, and lay special emphasis on ensuring that their security policies and practices minimize any form of information risk. We aim to be the global outsourcing hub for the world and understand the associated responsibility from a data security perspective.

“….if national comparisons are to be made at all, the Indian IT industry is certainly far ahead. Research conducted in 2005 found many more security breaches in UK and the US than in India. In the past 18 months, according to reports by privacy watch-groups, the incidents of identity theft in the US alone have been 148, affecting nearly 94 million identities. In the UK, the Home Office estimates that identity thefts result in losses of over a billion pounds, and a quarter of all UK citizens have either been affected by ID theft or know someone who has been.

“NASSCOM has taken a holistic view of information security through its ‘Trusted Sourcing’ initiative to strengthen the regulatory framework and further improve India’s attractiveness as an outsourcing destination. NASSCOM’s National Advisory Board guides its multi-pronged ‘4E’ framework, involving engagement (with all stake-holders), education, enactment (legal framework) and enforcement.

“A Self Regulatory Organisation (SRO) for the IT-ITES industry is in the works, to help further upgrade data protection and security practices. Another important initiative now actively underway is the National Skills Registry. Launched in January 2006, NSR has already registered 25000 employees, and 24 companies - accounting for approximately 30% of industry’s total workforce.

“On the policy side, the industry has closely engaged with the Government to suggest amendments to the IT Act 2000, which will further strengthen the legal framework, taking note of the evolving nature of technology and also of cyber crime. We expect the amendments to be tabled in the forthcoming session of Parliament.

“However, effective enforcement of these laws is most critical, which requires well trained police and enforcement authority officials, well versed with technology. Even the best law will be a dead letter if not executed well. As part of the ‘4E Framework’, NASSCOM has conducted training in cyber crime handling for over 1800 police officials, and organised workshops and seminars for judiciary, law makers and other In India, we are determined to keep all procedures under review in order to stay ahead of criminals no matter where in the world they may be based. Security is and will remain our number one priority. We want India to be the “Fort Knox” for data."

(Extracts from article “Fort Knox of Data Security?written by Kiran Karnik, President, NASSCOM as updated on 16th October 2006)

Creating a robust talent pipeline

The Indian ITES-BPO industry has been on a high–growth path and has clocked revenues of $ 6.3 billion in fiscal 2005-06. According to the NASSCOM-McKinsey Report 2005, India will face a potential shortage of semi-skilled workforce in the next decade or so, particular in ITES-BPO industry. Currently, only about 25% of technical graduates and 10-15% of general college graduates are suitable for employment in the offshore IT and BPO industries, respectively. As countries from around the world enter the offshore market; it is necessary that India must improve the quality and skills of its workforce.

NASSCOM has introduced the NASSCOM Assessment of Competence (NAC) course. The pilot programme was launched in August 2005. NASSCOM and Hewitt, with active participation of ITES-BPO industry players, designed NAC, a national assessment and certification program, which is aimed at creating a robust and continuous pipeline of talent by transforming the "trainable" workforce into an "employable workforce”.

NAC aims to address the possible talent shortage by creating a robust and continuous pipeline of talent through a standard assessment and certification. This will provide insights into the real training and development needs of talent and hence help companies, Governments and Universities develop customized talent development initiatives and programs.

“One of our key focus areas during the last year has been to build NAC as an industry certification that integrates industry requirements with university and college courses, on the lines of SAT, GMAT and GRE examinations”, says Karnik. “NASSCOM’s proactive initiatives like NAC and IT Workforce Development, combined with educational institutions’ and state government’s efforts, to create employment will definitely help build the necessary workforce for the requirement of the IT-BPO industry in a long term perspective,” he hopes.

FDI

Indian government has raised the ceiling of foreign direct investment (FDI) in telecom sector to 74 percent from original 49 percent. Indian shareholding will not be less than 26 percent. As per the revised guidelines on FDI, all telecom firms are now allowed to appoint foreign CEOs, subject to clearance of the Home Ministry and will have access to networks from remote locations.

Foreign investments will include investment by Foreign Institutional Investors, Non-resident Indians, Foreign Currency Convertible Bonds, American Depository receipts, Global depository Receipts and Convertible Preference Shares (CPS).

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Previous: India Unstoppable

Updated on May 29, 2007

 

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