The Telegraph
Since 1st March, 1999
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Nasscom rubbishes Gartner forecast

New Delhi, Sept. 7: The software industry today refuted the Gartner report that had projected a downfall in Business Process Outsourcing (BPO).

Reacting to recent media reports based on a Gartner India report, Nasscom, the apex industry association for software and service companies in India, today maintained that the Indian IT-enabled services (ITES) industry has a robust growth potential.

The association reiterated that the Indian ITES target of $ 21-24 billion by 2008 is achievable if India acquires 25 per cent of the $ 62 billion offshore BPO market in 2008 and 12 per cent of the market for other services such as animation, content development and design services.

Interestingly within a day of making its report being made public, Gartner India has denied its own finding. In a separate rebuttal, Gartner reiterated that India continues to be the destination of choice for BPO.

According to Nasscom executives, “The Indian ITES industry growth is based on very strong fundamentals and a proven value proposition to the customers. We already have exports of $ 1.5 billion in 2001.”

Indian companies are today looking to address the entire spectrum of ITES services over and above business process outsourcing. Such services include high growth areas such as animation, transcription and translation services, market research, GIS, animation, among others.

Nasscom officials further added, “We believe in the Indian ITES industry opportunity. However, the industry will need strong support from the government as this sector is heavily dependent on quality infrastructure. In addition, companies need to create capacity carefully and observe healthy pricing and recruitment practices.”

“The Gartner BPO report does not include animation, medical or other legal transcription services, GIS, market research, data search, research and development, network consultancy, translation services and other non business processes,” stated Gartner India in a separate rebuttal, on the definition of BPO by Gartner.

The Nasscom-McKinsey study has projected that the Indian ITES industry would achieve $ 21-24 billion by 2008. “India continues to be the destination of choice for BPO.” Gartner today maintained that India remained the destination of choice for BPO both for MNC’s setting up their insourced operations and for outsourcing to third party vendors. “India is still the undisputed leader for IT services with an approximate 80 per cent market share and also has a substantial share of the BPO offshore market.”

Sujay Chohan, country director, Gartner India, further clarified, “We believe the Indian BPO industry has a tremendous opportunity. However, he cautioned the industry not to get carried away by the hype, which eventually leads to over capacity and unhealthy competition, triggering a race to the bottom.”

The offshore BPO industry is still in its infancy and will not only need strong support from the government but also a self regulatory (industry) mechanism to ensure continued success.

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