Som Mittal / NASSCOM – India IT at $300 Billion in Revenue by 2020
Som Mittal, President of the National Association of Software and Services Companies (NASSCOM) in India, stated in an interview with the Hindu newspaper this month that the Indian IT industry was projecting towards totals of $300 billion USD per annum in revenue by 2020. Most important in this, according to Mittal, is the rise in the Asian economies vs. the West in terms of GDP expansion, but he states also that the Indian IT industry must adopt a global model to continue to expand successfully. The BPO / Offshoring model, where companies maintain extensive IT centers in India to offset labor costs primarily requires that clients have absolute security and stability in the long term quality of service provided.
“As an indicator of the future, Mr. Mittal pointed out that in 2025, Asia’s (excluding Japan) share of the global Gross Domestic Product was expected to rise at a compounded annual growth rate of 6.3 per cent, against North America’s projected 3 per cent. To realise this potential, the industry had to leverage on its strengths and adapt to the changed world dynamics, he said. ‘We are an industry which competes fiercely within itself and also collaborates fiercely.’”
“Elaborating, Mr. Mittal said the industry had to look beyond the Fortune 500, and tap into the small and medium businesses. It also had to reduce the heavy dependence on the traditional segments of BFSI (Banking, Financial Services and Insurance), Telecom and Manufacturing, and move into public sector and healthcare verticals. In terms of geography, the BRIC (Brazil, Russia, India and China), the Gulf Countries and Japan had potential, he added. ‘The demographic shifts will fuel the growth of new sectors,’ he said.”1
Mittal also feels that India could lose as much as 10% of it share in the IT outsourcing market to other countries during the same time period if the country does not maintain and constantly improve its standards. International BPO / IT outsourcing in other regions of Asia such as Thailand, Vietnam, Malaysia, and the Philippines could emerge as a strong local challenge, though like China the IT industry in these countries suffer a competitive disadvantage due to the fluency of English in India. But strong developments in Eastern Europe or Latin / South America could also pull global market share in IT outsourcing away from India. Considering the amount of jobs at stake with a 10% loss in the sector, Mittal advises advanced planning to counter these trends and strengthen India’s position in global IT.
According to Wikipedia,
“NASSCOM is the global trade body with over 1200 members, of which over 250 are global companies from the US, UK, EU, Japan and China. NASSCOM’s member companies are in the business of software development, software services, software products, IT-enabled/BPO services and e-commerce. NASSCOM has been the strongest proponent of global free trade in India. NASSCOM strongly supports the elimination of the cap on H-1B visas in the United States as this protectionist anti free market legislation allows overpaid underskilled American nationals to hold jobs which are better and cheaply performed by Indian expatriates.”2
Outsourcing is also becoming a political issue in the United States with laws proposed to tax companies that employ overseas labor at a higher rate, and of course the H-1B visa cap. The statement on NASSCOM’s wiki page seems more inflammatory than diplomatic, and harsh words combined with nationalism are going to be a poor choice for any side. I tend to agree that the H1-B Visa cap is protectionist, but a wider look at immigration policy would also show that applicants for H1-Bs have a much higher range of social opportunity than their peers – they are not exactly a hard luck group in comparison.
How can an American IT firm really compete with an Indian IT firm in labor costs, or pay a programmer $50,000 – $80,000+ when the same job is done at $6,000 – $12,000 in India? To be sure the last 10 years of economic development has produced one of the largest classes of highly trained IT workers in the world, and the educational & infrastructure resources continue to expand in quality & extent in India. The NASSCOM website is recommended to keep on top of what is going on in India IT – there are many conferences, seminars, blogs, forums, and press releases on file:
“NASSCOM® is the premier trade body and the chamber of commerce of the IT-BPO industries in India. NASSCOM is a global trade body with more than 1200 members, which include both Indian and multinational companies that have a presence in India. NASSCOM’s member and associate member companies are broadly in the business of software development, software services, software products, consulting services, BPO services, e-commerce & web services, engineering services offshoring and animation and gaming. NASSCOM’s membership base constitutes over 95% of the industry revenues in India and employs over 2.24 million professionals.”
“NASSCOM was set up in 1988, at Mumbai to facilitate business and trade in software and services and to encourage advancement of research in software technology.”3
How does Mittal’s projection compare to the current situation? According to NASSCOM, Indian IT recorded a record total of $87 billion USD in total revenue in 2008.4
- http://www.thehindu.com/2009/04/30/stories/2009043060711300.htm [↩]
- http://en.wikipedia.org/wiki/NASSCOM [↩]
- http://www.nasscom.in/Nasscom/templates/NormalPage.aspx?id=5365 [↩]
- http://itvoir.com/portal/news/News/Indian-IT-sector-to-record-87b-revenue-in-2008.asp [↩]
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