Healthy domestic biz needed to fuel IT services sector growth

New Delhi, Mar 22 (UNI) A Nasscom-IDC study has pointed out that a friendly environment which facilitates domestic businesses is required to help the domestic IT services sector grow.

''The creation of an environment which facilitates domestic businesses including the reduction in the tax burden, coupled with the right funding options will lead to heightened interest in this small but high growth market segment,'' Nasscom President Kiran Karnik said.

Commenting on the findings of the study, Mr Karnik, said, ''The liberalisation of Indian economic policy, competition in key sectors and progressive moves towards further integrating India with the global economy will be key drivers of greater IT adoption in the country.'' The report, 'Study on the Domestic Services (IT-ITeS) Market Opportunity', highlighted spending on IT services versus outsourced/vendor's spends account.

It pointed out that the estimated in-house spending on IT services including training costs, salaries, and associated overheads still accounts for more than half of the corporate IT spend in India, whereas the outsourced/vendor addressed spends account for just 45 per cent of the total.

The study found that though IT services form 27 per cent of the total domestic IT spending, its share is significantly higher in segments like BFSI, telecom, automotive and the manufacturing segment, say about 77 per cent.

However, the mature user segments are increasing spending on IT services. ''Emerging segments like healthcare, the government and small and medium businesses are also deploying IT services as a means of productivity enhancement, competitive advantage and value addition,'' it said.

Mr Karnik said, increasing use of IT within the country will help to enhance the competitiveness of the Indian economy and of the companies and sectors that use IT.

Talking about the domestic ITeS-BPO market, the study said it is expected to cross Rs 6,600 crore in 2006.

''The ITeS-BPO space has been associated only with export, but there is huge opportunity waiting to be tapped as globalisation demands higher efficiencies and competitiveness from Indian businesses.'' In terms of opportunities of segments, the study found banks and telecom are high on both whereas insurance and the government are high on attractiveness but low on readiness to outsource. The right efforts on releasing the hidden potential in these segments will fuel growth beyond the projected period of 2004-07.

UNI SR SD BD1903