Fast forward

Mumbai, July 4: The IT services market in the country is set to grow to $5.3 billion by 2009 as more and more small and medium-size enterprises sign IT services and BPO deals, Gartner Inc has forecast in a report. The growth in economy will also add to this.

“Small and medium-sized IT companies signing BPO deals is expected to drive the next phase of growth in the Indian IT services market,” said Ravindra Datar, principal analyst, Asia-Pacific for IT services and BPO at Gartner.

Gartner also reported that the Indian IT services market has recorded a 26.7 per cent growth for the Asia-Pacific region in 2004-05.

It has also forecast a compounded annual growth rate of 8.9 per cent between 2004 and 2009 for the Asia-Pacific IT services business, outpacing the global growth of 6.1 per cent.

Emerging markets like India and China will spearhead the growth in the region for the next few years, the report said. Professional services, led by development and integration, IT management and consulting, will be the region’s strongest performing business, it added.

“Improving the business confidence, a robust economy, availability of quality infrastructure at a lower cost and government initiatives are key factors driving the IT services business through a few large and many smaller deals,” Datar said. MNCs are fuelling the competition. They are also generating awareness about the strategic benefits of IT deployment, he added.

Large number of captive and third party offshore services facilities for IT and BPO businesses are being set up in the country.

“With business confidence improving across the region, cost is still a key factor in IT investment. However, the focus is shifting to business development in the improved economy,” said Rolf Jester, vice-president of research, Gartner.

While companies are willing to spend more, their increasing demands are squeezing margins, he added.

Gartner said though India has established itself as a leading destination for offshore IT and BPO services in the last 10 years, the domestic market has started picking up only recently.

The country has reported the strongest growth at 26.7 per cent in 2004-05.