Indian ITES Industry

ITES Industry

It started with the onset of globalization in India during the early 1990s. The Indian government initiated strategic economic reforms aimed at laying a strong foundation - a firm stage for liberalization and privatization. Part of this initiative included the process of promoting India as a major destination for the ITES sector. This has finally paid off.

India's strong economy has created a market favorable for improved business and foreign investment. Take a look at the growth of IT-enabled services in India. What is the competitive edge of India vis-a-vis other countries?

ITES

ITES refers to Information technology enabled services. BPO or Business process outsourcing is the arm of ITES, which facilitates delivery of services through the use of information technology. ITES services are diverse in nature. It's easier to understand by segregating it as customer interactive services and back office operations for remote customers.

India based service providers can deliver services in diverse areas such as finance, HR, administration, healthcare, telecommunication and manufacturing. Services ranging from customer care, call centers and claims processing to medical transcription, HR hiring, biotech research, Web sales/marketing and back-office operations such as accounting, data processing, and data mining harness the power of IT.

However, it necessitates transfer of ownership and management of the process from the customer (offshore) to India-based service provider in order to deliver service to remote areas through telecom and Internet medium. Sensing its advantages, host of fortune 500 and fortune 1000 businesses of all sizes have set up their own BPO units or have outsourced to Indian firms to reap the advantages of this all-encompassing business revolution.

Advantage India

What can induce global companies to outsource IT-enabled services, especially to India? The most obvious driving fact is the advantage of cost efficiency. Other factors that influence the decision:

• Flourishing IT education market
  
  
• Broad skill sets of Indian computer professionals
  
  
• Telecom and IT infrastructure on par with global standards
  
  
• Advantage of 12-hour time lag with US.
  
  
• Amicable demographic environment
  
  
• Encouraging business environment, simple rules and procedures
  
  
• Foreign investor friendly tax structure for ITES/BPO industry
  
  
• Proactive policies and incentives by the government
  
  
• Large English speaking work force
  
  
• Better productivity, 24x7 services
  
  
• Low wage levels of the Indian labor force
  

A market research conducted jointly by The National Association of Software and Service Companies (NASSCOM) and leading business Intelligence Company, McKinsey & Co. suggests the robust growth of IT, IT-enabled services in India is poised for greater heights. The report indicates that as a whole, by the year 2008, four million jobs will be created in India.

IT services and IT-enabled services: one million each
Support services industry: 2 million.

ITES segment-wise prospective employment opportunity break-up

Customer care: 370,000 to 390,000 jobs
HR: 1,40,000 to 160,000 jobs
Administration, accounting: Roughly 80,000-100,000 jobs.