By stock market value at the end of the current fiscal, India’s six biggest companies include three companies in the IT industry that was hardly an entity in the 1980s. Today, India’s IT industry is growing at a phenomenal rate. The premier industry body for IT in India, National Association of Software and Service Companies (NASSCOM) has estimated that IT exports for the year April 2005 to March 2006 had risen 33 per cent to $23.6 billion.

Last year, the industry (including other remote services known as BPO) was estimated to have generated revenues of $36 billion, nearly 5 per cent of GDP. A study by NASSCOM, the industry’s lobby, and McKinsey, a consultancy, last December forecast that by 2010 it would contribute 7 per cent of GDP and 17 per cent of the growth between 2004 and 2010, when its exports would be worth $60 billion a year. In addition to this, the study reckons that only one-ninth of the potential for IT outsourcing has so far been tapped.

As per the NASSCOM survey, the Indian IT-ITeS industry has recorded 33-per cent growth in exports, clocking revenues of US$23.6 billion in FY 2005-06, as compared with export revenues of US$17.7 billion in FY 2004-05. FY 2005-06 also saw the overall Indian IT-ITeS industry (including domestic market) growing by 31 per cent registering revenues of US$29.6 billion, up from US$22.5 billion in 2004-05. The IT companies are hiring people like there is no tomorrow. The top Indian IT-services firms – Tata Consultancy Services (TCS), Infosys and Wipro – are each recruiting more than 1,000 people a month.

By 2008, says NASSCOM, annual sales are likely to surpass $50 billion. “The Indian IT market is bound to grow a lot bigger than it is now. In fact, the size of the Indian IT market is only a small fraction of what it has the potential to become,” says Subrat Mohanty, CEO, Hurix Systems, one of the fastest growing companies featured in Deloitte Technology Fast 500 Asia-Pacific ranking. Infosys, a company which was set up by Narayana Murthy along with six chums in 1981, has grown more than eight-fold in five years. Joining the “Billion Dollar Club” in its 23rd year (in March 2004), today the company is one of India’s biggest exporters, employing 46,000 people and with a turnover estimated to top $2 billion in 2005. It took just 23 months for the company to add another billion of sales.

Listed on both the Bombay Stock Exchange and New York’s Nasdaq, where it is valued at $20 billion, Infosys is one of India’s biggest exporters and runs the biggest corporate training facility in the world, with 4,000 students at a time and three courses a year. In America and Europe, Infosys has 350 companies as clients. It has provided software to big names such as Adidas and has developed programs for US retailers that allow them to track what product lines are most popular. While the big gun Tata Consultancy Services (TCS) has grown by a 36 per cent to $3 billion, Wipro’s trumpeted of a 30-per cent increase in revenues that stood at $2.4 billion. Infosys was up by 35 per cent, at $2.2 billion.

Wipro and Infosys each employ more than 50,000 people, and are in the process of recruiting, 15,000 and 25,000, respectively. TCS has 63,000 and plans to hire 30,500 more. Apart from these, Satyam, HCL Technologies and Cognizant have recorded growth of $1 billion. Though an American firm, Cognizant has high stakes in India. It has 21,000 of its 27,000 staff. A powerful force in the IT industry, Satyam clocked sales of $67.4 million in its last fiscal year, boasts a headcount of around 20,000. Apart from the big IT players, there are green pastures for the 300 medium-sized companies and 3,000 small-sized companies. “SMB’s will contribute a major chunk to overall revenues of major IT players in the years to come. This stems from growing awareness amongst the SMB segment towards adopting technology to meet its short- and long-term business objectives,” says Hanuman Tripathi, MD, InfrasoftTech, a specialist banking & financial solutions company.

“The Small and Medium Enterprises (SMEs) globally will present a huge opportunity for the Outsourcing industry. There is a huge market in the SMEs whose potential has been untapped. The volumes are simply too large. And with acute crunch of talent, the SMEs will find it more difficult to retain talent than the larger organizations. This will provide opportunities for the Outsourcing industry,” says Mark Atkins, MD & CEO, Compass Connections. The Indian IT sector provides the full spectrum of IT and IT-enabled services to the world. The Indian IT companies provide services broadly in Application Management Services, Business & Technology Consulting, Application Outsourcing, Business Process Management (BPM), Project Management Services, Enterprise Security & Privacy Practice and Product Engineering.

“The IT market openings are emerging across four broad sectors – IT services, software products, IT-enabled services, and e-businesses, thus creating a number of opportunities for Indian companies,” says Hanuman Tripathi. Different IT services provided by the Indian companies are in the domains of BPO, KPO, On-site/Offshore development, etc. to various industry verticals like BFSI, Telecom, Automobile, Pharmaceutical, Airlines and other manufacturing verticals. “According to a recent study, India is all set to capture 6 per cent of the global share in IT services,” says Tripathi.

The geographical reach of Indian IT is also spreading. Apart from the original IT hubs – Bangalore, Gurgaon and Noida near Delhi, and Mumbai, Hyderabad, Chennai and Pune have also joined the list of major IT centres. Of late, Kolkata is also making successful attempts to join the bandwagon. The IT firms are also eying places as diverse as Bhubaneswar in Orissa in the east, Kochi in Kerala in the south and Ahmedabad in Gujarat in the west.

Pune is home to many important IT companies, including Kanbay. With an area of 2,20,000 sq. ft., the IT firm provides a highly-integrated suite of management consulting, technology integration and development and outsourcing solutions. Among its specific offerings include application development, application maintenance, testing, business intelligence, production support, ERP solutions, legacy migration, web enablement of various platforms and application hosting. “We represent a single-point, best-of-breed service provider that can offer innovative consulting, technology integration, application development, and outsourcing and maintenance solutions,” says Atul Phull, Head of Marketing, Kanbay India.

With a turnover of Rs.1,114 crore, the company focusses on the Financial Services, Consumer & Industrial Products, Communications & Media, and Life Sciences industries. Kanbay India has recently completed a $165-million acquisition in the United States. “We feel with the addition of that company and their resources, Kanbay is very well-positioned in the global IT services market,” says Atul Phull.

Established in 1995,”Mumbai-based InfrasoftTech’s has offered solutions to more than’100 banking & financial enterprises across the globe. “We carry expertise in critical domains like Retail Banking, Wholesale Banking, Investment Banking, Wealth Management & Risk and Compliance Frameworks. We provide state-of-the-art STP-enabled core operations & compliance products, custom- built solutions development and EAI services for banks and financial enterprises,” says Tripathi. The company, which is expecting a growth of 69 per cent for 2006-07, offers OMNIEnterprise suite of products which include Core Banking, catering to retail and corporate banking needs of banks, Anti-Money Laundering, eChannel Integrator, Islamic Banking, Wealth Management, Private Banking Solutions and Risk Management Frameworks.

Another IT services provider is the Chennai-based Helios & Matheson. A healthcare- focussed IT services company, the firm is expanding into Tier II cities to tap the talent pool and infrastructure. “Our revenues for FY’06 is Rs.221.36 crore. Our guidance for FY’07 is an income projected to be in the range of Rs.394.16 crore and Rs.394.72 crore. Our net profit after tax is projected to be in the range of Rs.55.57 crore and Rs.55.65 crore,” says S. Venkatakrishnan, General Manager, Helios & Matheson. “In FY’06, 37 per cent of our revenues were from the healthcare vertical. Going forward, the healthcare vertical is expected to contribute to 50 per cent of our revenues. By focussing on this space, we believe that we can, on a sustainable, long-term basis, generate superior returns compared to the overall industry, command leadership position in our area of operations, and produce strong cash flows,” adds Venkatakrishnan.

“Healthcare has been an underserved market as far as technology services are concerned. Of the total US$12 billion software services exports (out of the total Indian IT services industry size of US$16 billion), healthcare currently accounts for less than 5 per cent. We believe that we are well-placed to exploit the strong growth potential of the healthcare space.” Hurix Systems is an IT services company in the e-learning space. “Within this space, we address the needs of our clients in Corporate Learning, Educational Content and Publishing. The services we offer include custom content creation, creating games, simulations and interactivities, content migration, animations, pre-press services, consultancy, product development services and technological services relating to all these areas,” says Mohanty. An extraordinary success story, Hurix Systems has been growing at a rapid pace, doubling revenues and headcount every year for quite some time. “Hurix has been doubling turnover over the last five years. Our current turnover last year was US$4.5 million, and we expect it to hit US$ 9–10 million in the current fiscal. We expect growth of 80–100 per cent annually for the next three years.”

“Our growth stands testimony to our commitment to excellence. This commitment has consistently delivered on client delight, and has led to a large part of our business being from our existing clients,” says Mohanty. “When we engage a client, we bring to them the best in Quality, Processes, People, and Infrastructure. This is what we call the Hurix Advantage,” adds Mohanty. The company has three products. Red inQ is a user-friendly, and customizable platform that provides high-stake testing environments to corporate and educational institutes. Another product named E-Book is a web-based content authoring, structuring and publishing tool. The product simplifies the creation and administration of online content (articles, reports, pictures, ad banners, etc.) used in publications. eLcurve is an enterprise class Learning Management System offered by the company. By using the eLcurve framework, the customer can deploy a custom branded, standards compliant, multilingual Learning Management System with an affordable budget.

India’s IT sector is transforming itself once again. “The world is headed for India’s doorsteps for all sorts of services that demand high-quality technical manpower. Gone are the days when the only outsourced work heading our way was from organizations seeking the cost advantage in pure software development. Today, we have players from vastly diverse industries looking to India as a base because of the quality of the work that we are capable of. While most of these areas do use IT as a facilitator, IT is not the core issue for them. Skills in design, engineering and research are also much in demand,””Mohanty. Compass Connections is a UK-headquartered MNC providing complete Accounting Services and Business Solutions to Small & Medium Enterprises globally. It is one of the earliest companies in India to specialize in the Third-Party Financial & Accounting BPO Segment. With its spacious 10,000-sq. ft. facility in Mumbai (India) and growing at a rate of 50 per cent per annum, Compass is one of the longest established independent specialists in Indian outsourcing.

With offices in the US, India and the UK, Compass Connections offers a wide variety of solutions across diverse verticals like Property, Food & Beverage, Insurance, Accountancy and US Government Contractor businesses. “Our domain expertise lies in servicing SMEs. The needs of an SME are different than large corporations in terms of delivery, relationships, etc.,” says Mark Atkins.


Finally…
Rising revenues, strong profit growth, lucrative new contracts and a massive recruitment drive all these characterize the (IT) industry in India. However, the challenge will be in finding new opportunities, new fields where IT can be put to use. While India has been very strong on the IT services front, the next generation will perhaps break through into the “killer application” level, creating a product or a service that will make the world sit up, take notice and change the way it works