FACTBOX - India's booming software, BPO sectors

Fri, Dec 7 12:52 PM

REUTERS - As India emerges into a global and economic player, it has become an important hub for offshore software development, as well as a top destination for overseas companies to outsource business processes such as technical help desks, payroll management, and legal and design services.

Bangalore, touted as the Silicon Valley of India, is home to software giants Wipro Technologies and Infosys Technologies Ltd., and has a budding biotech sector.

Many expect a new wave of outsourcing, including gaming development and healthcare services, and Indian companies will be at the forefront of these emerging trends.

Following are some facts about India's software industry and outsourcing sector:

SOFTWARE INDUSTRY

-- The sector was pioneered by flagship Tata Consultancy Services Ltd. in the late 1960s.

-- The software sector saw a 33 percent rise in exports to $31.4 billion for the year to March 2007, according to the National Association of Software and Service Companies (Nasscom). It is expected to rise 24-27 percent to $49-$50 billion in the year to March 2008.

-- Tata Consultancy Services Ltd. is India's top software services firm, followed by Infosys Technologies Ltd. and Wipro Technologies. Foreign firms such as IBM and Accenture are also expanding in India.

-- Software and backoffice companies employ around 1.6 million, up from 1.3 million last year. Indirect employment is estimated at an additional 3 million.

-- Indian software services companies typically make more than 50 percent of their revenue from the United States.

OUTSOURCING SECTOR

-- About four-fifths of the world's 500 largest companies already farm out some work to India, which churns out about 2.5 million graduates every year, though only about 15 percent are suitable for employment in the sector.

-- Outsourcing to India can typically generate cost savings of between 35 and 50 percent for foreign companies.

-- India's back-office services industry, which earned $8.4 billion in exports in the year up to March, is expected to reach some $10.5 billion in 2007-08.

-- The United States accounts for more than two-thirds of the outsourcing market, followed by Europe with 25 percent.

-- An average Indian graduate earns rupees 15,000 ($366) a month, but wages are rising 10-15 percent a year.

-- As of March 2007, nearly 553,000 people were employed in more than 400 outsourcing or back-office firms in India.

-- Top outsourcing players include Genpact, WNS Global Services, IBM-Daksh, TCS BPO, Wipro BPO, Infosys BPO, Citigroup Global Services and MphasiS BPO.

RECENT TRENDS

-- Indian firms, which earlier forayed into the healthcare segment through medical transcription, are now looking at high-end outsourcing contracts.

-- India is also becoming one of the top destinations for gaming outsourcing as companies outsource development work.

-- Many Indian outsourcing companies are shifting some of their operations to China, the Philippines, Vietnam and Kenya in a bid to stay competitive.

-- Attrition rates in the sector have come down to 25 percent, according to statistics compiled by the National Human Resource Development Network.

-- Nasscom launched the National Skills Registry (NSR), a database of all industry employees, to prevent any recruitment fraud. As of July 2007, over 125,000 employees across 43 companies are registered. Sources: Reuters; NASSCOM (www.nasscom.in)

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