IT-BPO, A Key Sector of Indian Economy

The year 2011-12 was marked by growing global uncertainties. Global recovery has stalled, growth prospects have dimmed and downside risks have escalated. By contrast, the Indian IT-BPO Industry (including hardware) continued to exhibit resilience. It weathered uncertainties in global business environment and reached a significant milestone in the year 2011-12 by aggregating revenue of US $ 101 billion, a growth of about 14.7 per cent over the previous year. Thus, the year 2011-12 is a landmark year for the IT-BPO Industry.

The Indian software and services export including BPO exports is estimated at US $ 68.7 billion in 2011-12, an increase of 16.4 per cent. The IT services exports is estimated to be US $ 39.8 billion, showing a growth of 18.8 per cent. BPO exports are estimated to grow to US $ 15.9 billion in 2011-12, a year-on-year growth of about 12 per cent. IT services contributed 58 per cent of total IT-BPO exports in 2011-12, followed by BPO at 23 per cent and Software products/engineering services at 19 per cent.

USA continues to drive IT-BPO exports growth. Growth is being driven by higher demand for IT services and support. Continental Europe and UK, the second largest markets for Indian IT-BPO exports are seeing their share decline in the last three years. Indian service providers have been aggressively growing business in the Asia-Pacific (APAC) market. Aimed at reducing their geographic dependency and spread currency risk, APAC is growing fastest at nearly 18 per cent; its share in total IT-BPO exports is expected to increase to nearly 8 per cent.

The IT-BPO market is being driven by demand across all key consumer segments. Notwithstanding the growth witnessed in the IT-BPO domestic segment, it accounts for a little over 21 per cent of overall industry revenues. India continued its dominant position as the leading sourcing market as compared to other emerging economies. Its share is global sourcing stood at 58 per cent in 2011.

The IT-BPO sector has become one of the key sectors for the Indian economy because of its economic impact. The sector is responsible for creating significant employment opportunities in the economy. Direct employment within the IT-BPO sector reached 2.77 million, with over 2,30,000 jobs being added in 2011-12.

The spectacular growth performance in the IT-BPO industry in the last decade has helped the industry contribute substantially to India's GDP. In 2011-12, this sector’s contribution to GDP is estimated to be 7.5 per cent. The IT-BPO industry has played a key role in putting India on the world-map. This segment has enormous potential to grow in the year to come. By 2012-13, this would have developed to a potential to touch US $ 100 billion in revenues as compared to US $ 87.7 billion in 2011-12, a growth of about 14 per cent.