IT services riding the digital wave

Document created by Balakrishnan Nirmala on Jun 23, 2016Last modified by Balakrishnan Nirmala on Jun 24, 2016
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What was evolution some time back has now become a revolution: Digital Business has moved to centre stage. IT services segment is not one to be left  behind in this digital movement. IT services has come a long way from providing cost arbitrage to managing IT from a business perspective and providing enterprise digital transformation. Not only has the overall understanding of business improved, services are now more closely aligned and customized to the needs of individual customers in every industry and focused on providing business outcomes. The effect of digitization and automation has pervaded all the key service areas, converting businesses from process and delivery driven to strategic and transformational solution providers.


The IT services segment is the mainstay, if one can use the term  'bread and butter ' for the IT-BPM sector, accounting for over half of its revenue. The  segment in India has grown over 2X in the last five years and is expected to touch revenues worth USD 75 billion in FY2016, with a growth rate of 9 per cent over FY2015. Of the total Indian IT services market in FY2016, contribution of the exports revenue is 81 per cent, while the remaining 19 per cent is attributed to domestic clients. The exports market grew at a faster pace compared to domestic market. The domestic market witnessed a growth of 3.9 per cent to reach USD 14 billion in FY2016 while the exports market grew at 10.3 per cent during the same period to reach USD 61 billion.


IT services exports segment has added over 76,000 employees in FY2016, at a growth rate of 6.2 per cent over previous year. Nearly half of the

additions made in the sector during the year was attributed to this segment. The IT services employee base accounts for 35 per cent of the total IT-BPM  employee base with over 70 per cent having technical specializations. With SMAC and other emerging technologies playing a crucial role in the growth of the industry, requirement for people with cloud and mobile technology capabilities, business intelligence and data analytical skills along with domain knowledge have gone up substantially.


New technology levers around digitalization, process transformation and automation have altered the value proposition of sub-segments like software testing, IS outsourcing  and CADM. While verticals like retail and healthcare are expected to  drive exports growth, the current 'Digital India' wave is expected  to impact domestic IT services substantially. Enterprises too are jumping on to the digitization bandwagon, clearly indicating a uniquely different segment in the coming  years.


To read in detail about how IT service providers are transforming into Smart Enterprises and their preparedness to be one step ahead of customer  expectations download our report  "IT-BPM Sector in India; Strategic Review 2016"