Y.B. Dato’ Sri Mustapa Mohamed, Minister of International Trade and Industry, Malaysia.
Mr. Rohit Gandhi, Senior VP (APAC, India, Middle East, Africa), Mahindra Satyam.
Mr. Vinayek Chatterjee, Co-Founder, Feedback Ventures Private Limited.
Dr. B K Modi, Chairman, Spice Global Group.
|Y.B. Dato’ Sri Mustapa Mohamed,|
Minister of International Trade and Industry,
KL, Mar 26, 2013 – In his presentation on ‘Indian IT – propelling the next wave’, Rohit Gandhi gave local entrepreneurs two tips on doing business in India with respect to the Indian IT industry.
New business model for IT & BPO
The first tip is that the conventional model of offshore and low-cost outsourcing which makes Indian IT great is going on a sunset mode.
The great Indian IT industry of outsourcing & BPO was a US $ 47 billion industry; it was responsible for half of the world’s IT services by market share. By 2010, Indian IT & BPO industry had reached USD 58 billion of exports for Indian – it stood at CAGR exports at 35%, CAGR domestic at 22% - it was also equivalent to exports offset of closed to 65% of India’s cumulative net oil exports over the past decade.
Even though officially, 52% of India’s GDP still comes from IT & BPO industry, according to Gandhi’s presentation, up to 80% of incremental growth potential by year 2020 is not sustainable through existing model which relies purely on existing market that consists of 6 core verticals (Banking, Telcos and etc) from North America, Europe and Japan.
The problem is due to large scale demographic changes in these existing markets largely influenced by one singular factor; North America, Europe and Japan have population which ages faster than others. As a result, these market segments will tend to consume less in the future.
In contrasts to India which its working age population will increase to 67% by 2020 from 63% in 2008; largely driven by high birth rates and average life expectancy ratios, India is fast becoming a country where majority of its working age population will not find jobs in their prime time; given that the 52% of GDP is at risk of shrinkage.