Nasscom-McKinsey Report 2005 has raised the magical figure even higher by forecasting the Indian IT-ITeS industry will grow to $120-$150 billion in revenues by 2015, contributing 10-12% to GDP. It says IT and BPO could do to India, what oil did for Saudi Arabia or electronics to Taiwan.
There is a mid-course correction though. While the 2002 forecast had pegged IT-ITeS exports at $54 billion by 2008, the 2005 report has reduced that to $50 billion. While in 2002, the projected compounded annual growth rate (CAGR) running up to 2008 was pegged at 34%, in 2005, it’s been lowered to just 28% (2005-10).
But corrections are part of the game of forecasting. Clairvoyance, after all, is not a proven science yet. The march from $17.9 billion to $150 billion in the next decade will require a method that hasn’t been a hallmark of the industry so far.
Some statistics to note
By 2010, India will be teeming with a graduate pool of 17,73,000 in the age of 20-35 years.
Rs 74,000 cr of the total Rs 78,000 crore of IT-ITeS comes from software technology parks.
Of the Rs 74,000 cr, 88% comes from just five cities
Bangalore (37%)
NCR(17%)
Chennai(15%)
Hyderabad (11%)
Mumbai(8%)
By 2010, IT and BPO industries will have to employ an additional 1 million workers
Cost of operation in Tier II and Tier III cities is typically 15-20% lower than Tier I cities.
IT and BPO employees are projected to account for 20% of the 1 million airline trips by Indians in 2010.
Between 2002-05, while the billing rates have increased at only 2% p.a., wage costs have increased at 15% p.a.
In voice BPO, for instance, the average cost per hour is expected to come down from $10-12 currently to just $7-10 per hour by 2010.
Travel, insurance and banking verticals in BPO are projected to record maximum growth at 55%, 42% and 37%, respectively.
Insurance, retail banking and HR/Finance are, the most untapped sectors. McKinsey estimates their potential at $35 billion, $40 billion and $25 billion respectively.
In the IT sector, consulting, SI(System Integration) and traditional IT outsourcing are projected to record the most growth at 30%, 35% and 60% by 2010, respectively.
To counter falling billing rates, BPOs will need to provide KPO kind of work like legal, architect design outsourcing which offer rates as high as $90 per hour.
Currently, the IT spending in India as a percentage of GDP is only 50% of that in China or Russia. Increase in IT spending will clearly add more revenues in the e-governance domain. Hiking it could bring us close to the $150 billion target.
