Outsourced IT Services – Can IT Companies of India become a $300 billion Software Services Industry by 2020?

IT Companies of India and Nasscom’s Vision

NASSCOM envisions Indian IT sector to become a $300 billion industry by 2020. Which means 15% compounded annual growth rate of the IT sector for eight straight years. Currently the Indian IT companies mainly catering to the U.S and European market contributes $100 billion to the sector. This year(2013), Indian IT companies are expected to add another $50 Billion, thanks to the old contract being renewed this year.

Now, that’s a big leap that would make Indian IT industry worth $150 billion if things were to fall at place. So far so good, but the question still remains even after such monumental strides, is NASSCOM dream of a $300 billion worth Indian IT industry possible in an economy whose GDP is lingering near 5% mark? Will the IT companies of India continue their supremacy in offshore software development space? In this blog post I will put together some of the key drivers that will set the direction for the Indian IT companies ahead.

1. U.S Economy

Since companies across the U.S constitute major share of Indian offshore software projects, the growth of Indian IT sector is very much dependent upon how the U.S economy fares ahead in general and IT industry in particular. Certain clauses in the proposed U.S emigration bill doesn’t work in favour of both the U.S and Indian IT industry which can potentially impact the growth rate of both the parties. For India to march steadily towards its goal, the growth of U.S economy will play a vital role in steering the direction of IT industry in India.

2. New Markets Exploration

Not very long ago Indian IT companies built a reputation of world leaders in offshore software development space, but as the competition heats up, India needs to look ahead of times. There are a crop of newcomers emerging in the developing countries who are fighting for their share of supremacy in the U.S and European market. While the U.S and European countries have long been the mainstay of India’s dominant market, there are many other market that are being developed like Japan, Africa and Brazil and so on. To keep pace in a heated competition, India should look beyond the U.S and European markets to achieve continued growth momentum. As the world economy is still struggling, there are still opportunities as many emerging markets developing which strive to improve their bottom-line through IT adoption? This is where India can leverage the economics of learning curve and provide business solutions to those who are in need.

3. Continually Build on Existing Skills

Long regarded as the pioneer at offshore software development services space, India will now have to play dominant role in the product development space. Which means, India can no longer rely on its services strength but stay up on innovation front as well. The emergence of cloud, mobility, BI and social are the developing areas where Indian companies should tighten their grips and provide superior services. Further, NASCOMM initiative of incubating 10000 start ups if succeeds can bring more bang for buck in times ahead.

4. Tapping Domestic Markets

There’s still a lot of scope in India’s domestic market with Broad band and other areas still being untapped. If Indian technology companies can tap into these markets Indian IT industry stands to gain extra brownie points.