NASSCOM: India's Outsourcing Potential to Grow Fivefold by 2020
According to India's trade organization, National Association of Software and Services Companies (NASSCOM), the country's IT and BPO services outsourcing market is expected to grow nearly five times in the next ten years. That amounts to $225 billion in terms of sales by the year 2020.
Som Mittal, president of NASSCOM said in a statement, although short-term challenges are real, the industry's potential is still tremendous. This IT and business outsourcing sector will not be constrained by demand, he added. The story was reported by informationweek.com.
Several businesses in the U.S. and Europe outsource a segment of their business, i.e. tech functions to India in attempts to slash costs amid a global recession. The end result also achieves a spike in productivity and extension of global footprint for these Western firms. Although President Obama indicated to keeping more jobs in-shore within the U.S., no measures have been implemented to inhibit offshoring in the first nine months of the his administration.
NASSCOM has indicated that Indian outsourcers will need to look beyond established IT hubs like Hyderabad, Bangalore and Delhi to open up second-tier hubs in Kolkota, West Bengal. This would provide more room for growth within the industry, officials pointed out. Mittal outlined that the constructing an ecosystem is crucial for growth within the outsourcing industry. The sector is also required to concentrate on security, trade relations and talent development so that growth can be sustained.
Total outsourcing sales tagged at $58.8 billion in the current financial year. Incidentally, $46.3 billion emanated from sales to customers abroad, reported NASSCOM. Moreover, exports are projected to add 4%-7% in the present financial year, and are expected to hit double digits in the following fiscal year.
Nearly all of the growth is expected to stem from sectors that have yet to discover the benefits of offshore outsourcing, said Mittal, adding that 80 percent of growth is likely to be spurred by opportunities external to core markets, customer segments, and verticals.
Industries, i.e. manufacturing, technology and financial services are forerunners in the outsourcing realm, while healthcare and transportation have been untapped by Indian outsourcers. The key players in the global outsourcing market are industrial giants like Infosys, Wipro, and TCS along with several mid-tier players.