2. “The growth of IT enabled Services (ITES) has opened
windows for job opportunities, service offerings and
foreign investments in India. Nasscom says that India
is well positioned to derive benefits from the ITES
market and become a key hub for these services.”
- NASSCOM
“India’s sunshine sector — IT-ITES — continues to
maintain its pace of growth with a dogged
determination. It continues to chart double-digit
growth and will exceed US$ 36 billion in annual
revenues in FY06. Out of this, software and services
exports are estimated to grow by 32 per cent, to reach
US$ 36 billion in FY07.”
- Strategic Review
3. Outsourcing of such processes that can be enabled
with information technology and covers areas as
diverse as finance, HR
, administration, healthcare, telecommunication, man
ufacturing etc.
Form of outsourced service which has emerged due to
involvement of IT in various fields such as banking &
finance, telecommunications, insurance etc.
Examples of ITeS: Medical Transcription, Back-office
accounting, Insurance claim, Credit & Processing etc.
4. The idea of OUTSOURCING has its roots in the “Competitive
Advantage Theory” propagated by Adam Smith in his book
“The Wealth of Nations” which was published in 1776.
The IT industry in India has existed since the early 1980s, it
was the early and mid 1990s that saw the emergence of
outsourcing. One of the first outsourced services was medical
transcription, but outsourcing of business processes like data
processing, billing, and customer support began towards the
end of the 1990s when MNCs established wholly owned
subsidiaries which catered to the process off-shoring
requirements of their parent companies. Some of the earliest
players in the Indian market were American Express, GE
Capital and British Airways.
5. First Phase: In this phase, many MNC’s established captive
units in India for customer support and transaction
processing. Genpact was the first MNC to pioneer the ITES
in India when it opened an Indian-based international call
centre in 1997 to perform tasks such as money
collection, credit-card servicing and data management.
Second phase: In this phase, third-party units were set-up
in India by MNC’s for outsourcing activities, NRIs, Indian
independents and Indian IT companies established
software services such as Infosys, Wipro and Satyam
ventured into the ITES business in 2002 by establishing
subsidiaries. More developed IT outsourcing firms tended
to move towards higher value-added products competing
to a great extent on specialized talent.
6. Third phase: Third phase is characterized by the increasing
trend towards geographical dispersion of activities, mergers &
acquisitions have also taken place within the industry in this
phase. With this process, many smaller ITES companies found
it difficult to survive and these activities has continued. Going
forward, competing small and medium-sized industries with
complementary skills are likely to merge their operations to
compete with larger global firms.
Fourth phase: In the current and fourth phase of
evolution, there is an increasing trend towards Indian
companies acquiring small to medium-sized businesses in
overseas locations. These foreign acquisitions mark a contrast
to the practice of foreign MNCs setting up ITES units in India
to take advantage of their lower costs here. There is also a
growing trend of niche players in industries to set ITES units
7.
8. Customer Interaction services including call centers.
Back office operations/revenue accounting, data
entry, data conversion including finance and
accounting and HR services.
Transcription/Translation services.
Content development/animation/engineering/design
and GIS.
Other services including remote education, data
search, market research, network consultancy and
management as IT enabled services.
9. I T E S in d u s t r y in In d ia
1 5
1 0
U S D b n
5
0
F Y 2 0 0 4 F Y 2 0 0 5 F Y 2 0 0 6
15. Infrastructure:
a) SEZ, IT Parks
b) Expansion of road network
c) Lower land costs
d) Internet facility easily available
e) Bandwidth sharing among multiple entities.
f) Broadband, Fixed and Wireless users on the increase
16. Proactive Regulatory bodies:
a) Presence of fair and well established judiciary system.
b) Measures to protect the IPR – IT Act 2000, IPR
Laws, India Copyright Act.
c) Review of IT Act in 2005.
d) Preparation of guidebook on Information security in
2005.
e) Launch of National Skill Registry to improve the
recruitment practices in the country.
f) Expansion of the Cyber Lab to multiple locations to
assist the Police Force with relevant IT training.
17. Top Sector attracting FDI:
Sector No. of deals Value (bn Rs.)
IT-ITeS 42 23.9
Manufacturing 23 17.4
Healthcare 13 10.3
Textiles 12 7.5
18. Several new areas are emerging:
Legal: Worldwide spending on legal services amounts
to about $250 million a year. As yet, only a tiny
proportion gets offshore.
IT Audit
Patient diagnosis
Remote Networking Support
Animation and Gaming: The Indian market (from
developer’s perspective) is expected to be about $1
billion for animation and $300 million for gaming in
2009.
