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International Journal of Business Management & Research (IJBMR) ISSN 2249-6920 Vol. 2 Issue 3 Sep 2012 74-80 © TJPRC Pvt. Ltd.,

A STUDY ON CHALLENGES & OPPORTUNITIES OF IT INDIA IN LONGTERM PERSPECTIVES 1 1

SAMIR PRADHAN & 2SATYA SIDHARTHA PANDA

OD Consultant & Corporate Trainer, HR Manger in Accenture (Bangalore &, Future Business tech), Bangalore City College, Bangalore, India 2

Hod- Management Department, Bangalore City College, Bangalore, India

ABSTRACT The best care is taken to highlight the real challenges & opportunities faced by IT co. in India.

The identity of Respondents kept secret. (HR managers and project Leaders, because of professional reasons). However any genuine researchist needs to carry forward the research will be given access through them. The Information Technology-Enabled Services (ITES) industry provides services that are delivered over telecom or data network to a range of external business areas. Examples of such business process outsourcing (BPO) include customer service, web-content development, back office management and network consultancy etc IT& ITeS in India - Brief Introduction.

KEYWORDS: IT &ITes, BPO, HR. INTRODUCTION The purpose of this article is to understand the continuous challenges & opportunities in IT business both domestically and abroad. Information Technology is a catalyst and can be utilized in any business including administration of the state. The Important thing is to understand the level and complexity of service delivery so that the business can be categorized and then challenges and opportunities can be explored.

LITERATURE REVIEW Indian ITeS and BPO Industry The Indian ITeS-BPO industry continues to report phenomenal growth. Further, riding on theboom, its contribution to the service sector and eventually to the country’s GDP is on the rise.The industry has come a long way, from just offering traditional outsourced data entry work, to provide high end knowledge services to global clients. Its contribution to the total global BackOffice work is around 2 per cent of the global spending on BPO. This represents tremendousgrowth opportunities for the industry players.

India has enjoyed its dominant position in the global BPO segment due to its low cost but qualified workforce, Indians’ fluency in the English language, governmental support and a stable legislative and economic framework. The 12 hour time zone difference with the primary originator of

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A Study on Challenges & Opportunities of it India in Long-Term Perspectives

most BPO jobs, the United States, is an added bonus, as day and night shifts can be carried on as routine.

The governmental drive to offer subsidies and tax relief benefits to the ITES industry has been an important factor in the enhanced competitiveness of India.

In 2008, ~1.0 million people were employed in this sector, and it generated annual revenues of ~$11 billion (1% of GDP). The client base is primarily in the United States (~60%) followed by the United Kingdom (~30%), with majority of the clients typically engaged in either the IT, financial services or telecom industries.

ITES-BPO INDUSTRY SIZE AND GROWTH TREND (KEY HIGHLIGHTS DURING FY2012) FY2012 is a landmark year – while the Indian IT-BPO industry weathered uncertainties in the global business environment, this is also the year when the industry is set to reach a significant milestone – aggregate revenue for FY2012 is expected to cross USD 100 billion. Aggregate IT software and services revenue (excluding hardware) is estimated at USD 88 billion.

1.

Milestone year for Indian IT-BPO industry-aggregate revenues cross the USD 100 billion mark, exports at USD 69 billion

2.

Within the global sourcing industry, India was able to increase its market share from 51 per cent in 2009, to 58 per cent in 2011, highlighting India’s continued competitiveness and the effectiveness of India-based providers delivering transformational benefits

3.

Export revenues (including Hardware) estimated to reach USD 69.1 billion in FY2012 growing by over 16 per cent; Domestic revenues (including Hardware) at about USD 31.7 billion, growing by over 9 per cent

Samir Pradhan & Satya Sidhartha Panda

4.

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Software and services revenues (excluding Hardware), comprising nearly 87 per cent of the total industry revenues, expected to post USD 87.6 billion in FY2012; estimated growth of about 14.9 per cent over FY2011

5.

Within Software and services exports, IT services accounts for 58 per cent, BPO is nearly 23 per cent and ER&D and Software Products account for 19 per cent

6.

The industry continues to be a net employment generator - expected to add 230,000 jobs in FY2012, thus providing direct employment to about 2.8 million, and indirectly employing 8.9 million people

7.

As a proportion of national GDP, the sector revenues have grown from 1.2 per cent in FY1998 to an estimated 7.5 per cent in FY2012

8.

The industry’s share of total Indian exports (merchandise plus services) increased from less than 4 per cent in FY1998 to about 25 per cent in FY2012

9.

While the global macroeconomic scenario remained uncertain, the industry exhibited resilience and adaptability in continually reinventing itself to retain its appeal to clients

10. Embracing emerging technologies, increased customer-centricity, deepening focus on new markets, adopting new business models are some successful growth strategies followed by the industry

CHALLENGES ShrinkingMargins Most have been unable to compete with larger companies that have graduated to more complex outsourcing. Investment bankers opine that it is not easy to find buyers for these small BPO firms. At least a dozen small and midsize outsourcing firms grappling with thinning margins, tight working capital and lack of opportunities for scaling up, have mandated banks to scout for buyers, said five investment bankers familiar with the development.

The bankers said the number of business process outsourcing (BPO) firms approaching them has increased by two-four times in the past four months. They declined to name the firms, citing confidentiality clauses. But the bankers said most of these were BPO firms offering basic services to companies within India, unable to compete with larger rivals that have graduated to more complex outsourcing jobs. “TriNet Solutions Pvtltd had core competence in telecom and financial services, but now they are struggling. Clients are asking for end-to-end solutions, a 2,000-seat BPO company in New Delhi that is in talks with potential buyers for a complete buyout.

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Real estate & Infrastructure The demand for the industry has also had to deal with skyrocketing real estate and infrastructure costs in Tier-1 cities. Due to these escalating costs, many experts argue that the trajectory of annual growth is unsustainable going forward; As a result, many Indian BPOs in Tier-1 cities have been looking at migrating operations to Tier-2 and Tier-3 cities. Indian BPOs’ competitive edge is being further eroded as wages rise by 10-15% p.a. as a result of skill shortage. In a further blow, countries like China, Mexico and Vietnam are becoming real threats, expanding outsourcing operations and often providing cheaper services.

Legal complexity in Global business Tata Consultancy Services (TCS), India's largest information technology firm and part of the US$84 billion Tata Group, is the latest in a line of Indian IT companies to come under the scrutiny of the U.S. legal system. A court in California recently granted class action status to a lawsuit filed against the Mumbai-headquartered US$8 billion-plus firm. The case against TCS was filed by two employees in 2006 and relates to tax refunds and payment of full wages. TCS has been accused of breaching employment contracts and violation of the California Labor Code. Indian employees of TCS who were working in California from 2002 to 2005 are eligible to join the lawsuit.

TCS is in a silent period until the end of the month when its earnings announcement will be made. In an official statement the company has said: "We have received the order of the U.S. District Court. This is an order only on one procedural matter and does not address the merits of this case. TCS continues to believe that when this matter concludes, the court will find that the plaintiff's claims are without any merit." If the case were to be decided against TCS, it could result in significant damage to the company -- not just in financial terms, but also with respect to its brand equity.

Another Indian firm facing legal struggles in America is L&T InfoTech, which belongs to the engineering and construction conglomerate Larsen & Toubro (L&T). An employee of the firm recently filed a case in a New Jersey court accusing the Indian company of violating immigration laws and fabricating documents. There is also an earlier charge of gender discrimination filed against the company in U.S. courts.

Last year, Infosys Technologies was the first big IT firm from India to come under the American legal radar. The case created shock waves back in the home country: Infosys, which is highly regarded by many for its transparency, ethics and corporate governance, was accused by an American employee of misusing H1B visas. The case is due to come up for a hearing in August this year.

1.

Global recession

2.

Currency fluctuation

3.

Managing the bench

4.

Coping with Competition

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In an attempt to differentiate themselves and stay ahead of the competition, the industry has begun to focus on more lucrative knowledge intensive outsourcing services, popularly known as knowledge process outsourcing (KPO). The services require high-end skills and intellectual attributes and range from R&D, business and technical analysis, animation and design and learning solution to market research, data analytics, IPR and legal research. India has a first mover advantage in this area and as a result, has captured lion’s share of this segment.

Given the strong dependence of the ITES industry players on the robustness of their’ client’s financial health, the industry was very badly affected by the global recession, with many in the red. Most client companies, especially in the US, chose to cut budgets across the board and generate governmental support by not promoting overseas enterprise at the cost of already suffering local jobs.

EFFECTIVE SUCCESSION PLANNING (YOUNG BLOOD) IT, ITes and telecom are new age businesses and young generation has shown lot of flexibility and acceptance towards these industries Many companies, especially in the IT space, prefer young people to fill senior positions as entities look for aggressive staff with innovative ideas to stay competitive, feel experts.

HR experts said the trend of younger people snapping up senior executive positions is fastevolving and experience requirements for certain jobs have been steadily going down over the years.

Companies are finally hungry for talented people with critical thinking and leadership skills .it is the mental maturity not the biological age they are looking for.What clicks are characteristics like aggression, achievement focus, goal orientation and tech savvy, especially critical in the dynamic and competitive environment of the IT/ ITes and telecom sectors

FINDINGS 1.

Even though various factors are responsible for ups & downs of IT business the very fact is that the importance of strategy & your niche marketing ( After taking over wipro management Mr kurien has done significant turnaround through right strategy)

2.

Mid sized IT companies doing well

3.

Small size and start ups most are clue less and ready to sell their business

4.

IT leaders have their own baggage (Big ships needs more space & time to match fast changing business scennario

FUTURE TREND Internet penetration will be working as a catalyst for technology spending. Some of the largestgrowth rates in Internet use are in non-BRIC emerging markets. For example,Vietnam, with more than 20 million Internet users, has experienced 10,000% growthfrom 2000 to 2008, and, with only 24% of its population connected today, there isroom still for growth. Turkey, with almost 30 million Internet

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A Study on Challenges & Opportunities of it India in Long-Term Perspectives

users, also registeredimpressive growth of more than 1,000% over the same period, yet it only has37% of its population online today. More people online creates demand for more infrastructure and related services.

IT business will spread though mobile network and huge base of mobile users

SUGGESTIONS 1.

Indian companies need to up their investment in intensifying multi-cultural orientation In order to access the emerging BRIC and European countries

2.

Focus on developing new language competencies (Call centers for serving Japanese clients moved from Bangalore to Vietnam because Vietnamese understand Japanese culture better).

3.

Information Technology is a catalyst and can be utilized in any business.So it is imperative for the companies to explore new region and client base .Massive opportunity is available domestically where judicial, Revenue, public distribution and education system needs it maximum because of their quantum of work and complexity in working environment at different region of India. All the documentation can be digitalized and further maintained & can be retrieved as when required.

4.

To do this IT co has to tie of with various Govt, semi govt/public sectors and can define their niche marketing which will give them sustainability and continues business. The days are not too far when we see a huge proportionate of state administration will be outsourced to IT enabled companies.

5.

Companies should not take their business granted for ever. They should be learning organisations and should be always ready for necessary correction in their course which may drift due to various factors.

6.

It co’s should constantly look forward for new avenue and new geographical area.

7.

In India the domestic opportunity is enormous. Retail, FMCG, food grain & Milk procurement (Amul India) needs huge support of IT.

8.

State govt & central govt administrative work can be tapped which would offer constant business (Nagaland govt outsource it to Accenture & In Bangalore lot of govt jobs are begged by IT, Marthahalli passport seva Kendra is being manageged by TCS )

9.

Innovate the IT business

Samir Pradhan & Satya Sidhartha Panda

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Bhasin, R , Seven keys to retaining good people

2.

Buoy, M T ,An Analysis of Employee turnover, the costs associated with the Phenomenon

3.

Neumann, W L ,Social Research Methods -- Qualitative & Quantitative Approaches.

4.

Stephon Taylor , A Handbook on Employee Retention

5.

Donald R. Cooper , Business Research Methods

6.

www.livemint.com Deepti Chaudhary

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