The National Association of Software and Services Companies (NASSCOM) has assumed that Indian information technology (IT) and business process outsourcing (BPO) industries may slip down to 3-4 percent in growth rate in the current fiscal as against that of last year.
The major cause behind the slowdown would be uncertainty in the global economy and frequent fluctuation in Dollar that play a major role in IT and related industries. The whole world is affected by the US growth recession and India is no exception, as per the apex body of Software and BPO sector indicated.
This fiscal, IT and BPO sector will grow at 23 to 24% as against last year’s 29% that was translated into USD 64.
Advocating the strong fundamental of the IT industry, Chairman of NASSCOM Ganesh Natarajan said, “We must look at the next three to four years rather than focus on the next one year. We have strong fundamentals to sustain us in the long run.”
As the US market is going down and the outsourcing revenue is decreasing, India is now looking for new areas to explore new outsourcing opportunities especially in New Zealand, Australia, European Union and Japan.
But, Indian IT sector is facing the manpower crisis and accordingly it will be more critical in coming days. According to NASSCOM estimation, there will be a shortage of 5 lakh manpower in the sector by 2010.
The IT sector will get 40% of revenue from the new deals while it has got 60% earning from the existing deals. The US share has dipped in terms of total earning from 69.40% in fiscal year 2004 to 61.40% in 2007 fiscal. On the other hand, the contribution of European market has grown up from 22.60% in fiscal year 2004 to 30.10% in 2007 fiscal.
The IT industry is also suffering from the spiralling prices of deals and increasing pressure of salary hike as the clients are not ready to pay more as against their earlier deals.
“The competition has also been grown up and India is facing tough competition from neighbour countries like China, Philippines, Sri Lanka and Pakistan,” NASSCOM informed.
The BPO sector is now seeking for tier-II and tier-III cities to expand the business of BPO, despite of concentrating only seven cities. ‘Forty-three new cities have been identified for BPO growth that will help the state governments to improve social and physical infrastructure in these cities,’ reported NASSCOM in a study. Moreover, the burden on the salary is also expected to be decreased.
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