Ireland-based Accenture and UK-based Deloitte, two big names in IT services, have reported robust revenue growth exceeding $50 billion in FY21. Accenture, in its report, has announced its revenue to be $50.5 billion, which saw an increase of 14% in US dollars compared with the fiscal year 2020. Similarly, Deloitte reached $50.2 billion in revenue with an increase of 5.5 per cent.
The tremendous revenue figures reported by both Accenture and Deloitte indicate how well the consulting and outsourcing business is thriving despite the COVID-19 crisis. Take, for instance, the outsourcing revenues out of the total revenue for Accenture were $23.2 billion, which is more than 45 per cent of the total revenue earned.
India’s Outsourcing Market’s Situation
Taking India into consideration, compared to the IT-BPM business, India’s global sourcing market continues to grow faster. India is the world’s most popular sourcing destination, with a market share of around 55 per cent of the US$ 200-250 billion global services sourcing industry in 2019-20. So, will it be an exaggeration to claim that the demand environment for Indian IT companies – which accounted for 8% of India’s GDP last year – looks strong and promising?
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India’s IT sector market is expected to reach $100 billion by 2025. Moreover, COVID -19 has compelled businesses worldwide to make modifications to adapt to the “Work from Home” setup with minimal interruption to their business models. This prompted enterprises to switch from a captive to an outsourced model, which is projected to help Indian IT firms. As a result, Indian IT majors, including TCS, Wipro, Infosys, are on a hiring spree with over 160% year-on-year growth in hiring the talent pool for June 2021.
Microsoft, Cisco, American Express, NatWest group, and Google have already outsourced their IT services to India simply because the country is ready with the required resources to meet the software demands of the world. Also, the government actively promotes business efforts to lure international investors and popularise IoT ecosystems and IT hardware development, which gives India an edge as an outsourcing destination. In addition to the reasons mentioned above, let’s understand the latest trends that are going to shape the outsourcing market in the coming years:
- Businesses willing to increase their outsourcing budget: Companies seeking IT services are in dire need to adopt quality over quantity. Enterprises in the IT sector have indicated increasing the budget over time, as per the latest report from NASSCOM and McKinsey titled “Future of Technology Services – Navigating the New Normal.”
- Talent Shortage: With the recent digital transformation wave, new technologies have entered the market within no time. Latest technologies in AI, ML, data science, and cybersecurity have forced companies to look for a skilled talent pool. However, there is a shortage of tech expertise in their respective countries; companies are looking to outsource their IT services.
- COVID-19 has fuelled digital spending: Apart from the fierce competition and growing technology, the pandemic has forced companies to digitalise their operations. For instance, Microsoft’s CEO Satya Nadela mentioned that two years of digital transformation has happened in just two months.
- Companies are moving towards the agile model: Businesses in the year 2021 and after that will opt for an agile development approach. With low overhead cost, timely delivery, better communication and a good talent pool, outsourcing remains a lucrative approach for enterprises in the long run.
Since the early 2000s, the Indian Information Communication Technology industry has maintained consistent annual growth rates. Information Technology-enabled Services (ITeS), IT hardware manufacture, Software as a Service (SaaS) distribution, etc., are all branches of the local ICT business. India is a significant player in the Asia-Pacific area, despite the fact that most people equate global IT hardware production with China. Prominent international companies, including IBM, Dell, and Hewlett Packard, chose India as their R&D location years ago.
The pandemic has not only disrupted the IT outsourcing business, but it transformed how people thought about outsourcing and how they hired individuals for the task. However, as most firms scale and accelerate their digital transformation projects, Indian IT companies win new business. As a result, the Indian IT outsourcing business is expected to grow in revenue.