IT Enabled Services

Services provided wherein IT is the enabling factor are termed as Information Technology enabled services (ITES). ITES is applicable to almost all the industries across all the functions in an industry. From the application aspect it is termed as Business Process Outsourcing (BPO).

The idea behind IT Enabled services or Business Process outsourcing is that companies focus on what they are good at, its core competence, where as outsource the other functions or the non core processes of the organizations to services provider with required expertise.

Example 1: An automobile manufacturing company will focus on its core competence i.e., automobile engineering, working on new features and new models whereas outsource the helpdesk system which can be handled by a ITES company having expertise in Helpdesk services.

Example 2: A financial services company will focus on its main activity of product marketing and financial services whereas the back office services such as form processing, form scanning, customer logs and helpdesk are outsourced to ITES providers having expertise in back office services.

Example 3: A telecom company will focus on new plans, media campaigns, new services whereas the sales have been outsourced to ITES company having expertise in telemarketing.

The list of such scenarios is big and daily new service models added to the list.

A relatively young industry, the Information Technology enabled Services sector in India is less than a decade old. The Indian IT enabled Services sector has emerged as a key driver of growth for the Indian IT Industry.

As per NASSCOM Strategic Review 2008

• Indian IT-BPO grew by 33 per cent in FY2008 to reach USD 64 billion in aggregate revenue, thus revalidating its strong fundamentals, despite concerns of a slowing US economy and supply constraints.
• Of this, the Software and Services segment accounted for USD 52 billion, growing by 28 per cent (currency-adjusted) over FY2007.
• IT-BPO exports (including hardware exports) reached USD 40.9 billion in FY2008 as against USD 31.8 billion in FY2007, a growth of 28 per cent.
• Software and services exports (includes exports of IT services, BPO, Engineering Services and R&D and Software products) reached USD 40.4 billion, contributing nearly 63 per cent to the overall IT-BPO revenue aggregate.
• While the US (61 per cent) and the UK (18 per cent) remained the largest IT-BPO export markets in FY2007, the industry footprint was steadily expanding to other geographies - with exports to Continental Europe in particular growing at a CAGR of more than 55 per cent over FY2004-2007.
• The industry’s vertical market exposure was well diversified across several mature and emerging sectors. Banking, Financial Services and Insurance (BFSI) remained the largest vertical market for Indian IT-BPO exports, followed by High-technology and Telecom. These sectors together accounted for nearly 60 per cent of the Indian IT-BPO exports in FY2007.
• Manufacturing, Retail, Media, Healthcare, Airlines and Transportation, and Utilities were the other key segments.
• Domestic IT market (including hardware) reached 23.1 billion in FY2008 as against USD 16.2 billion in FY2007, a growth of 43 per cent. Hardware remained the largest segment of the domestic market with a growth rate of 44 per cent in FY2008. Software and services spending supported by increasing adoption, grew by over 41 per cent during the year.
• As a proportion of national GDP, the Indian technology sector revenue has grown from 1.2 per cent in FY1998 to an estimated 5.5 per cent in FY2008. Net value-added by this sector, to the economy, was estimated at 3.3-3.9 per cent for FY2008.
• Direct employment in Indian IT-BPO crossed the 2 million mark, an increase of about 389,000 professionals over FY2007; indirect job creation is estimated at about 8-9 million.
• IT services (incl. engineering services, R&D, Software products) exports, BPO exports and Domestic IT industry provides direct employment to 860,000, 700,000 and 450,000 professionals respectively.

The Indian ITES industry is now moving up the value chain.

Medical Transcription --> Customer Support   -->   Sales   -->   Administration --> Finance & accounting   --> Research

The critical success factors in an ITES industry are as follows

• Manpower
• IT infrastructure
• Telecom Infrastructure
• Trainability of Manpower
• Good Service Delivery Model
• Information Security & confidentiality
• Marketing ability