India is expected to clock double-digit growth in the software and IT enabled services (ITeS) exports next year as the U.S. and other markets are recovering from the meltdown, a top official of the trade association NASSCOM said here Thursday.

“We are expecting IT exports to grow in double digits as the software markets of the U.S. and other countries are recovering well. These markets became sluggish due to the financial meltdown but now things have started improving,” NASSCOM Chairman Pramod Bhasin told reporters.

He was speaking on the sidelines of ‘e-Revolution 2009′, a flagship forum of this region jointly hosted by the governments of Haryana and Punjab and the Chandigarh administration in association with NASSCOM and Software Technology Parks of India (STPI).

“In 2009-10, the Indian market has grown by merely four to seven percent and the software exports from India have been around $48 to 50 billion. Whereas in 2008-09, it increased at 16 percent and was at $46.3 billion,” said Bhasin, who is also the chief executive officer of Genpact.

Emphasising on improving skill-sets the work force, Bhasin added, “At present the IT industry can employ only eight to 10 percent of the total graduates due to their lack of required skills. There is a need for an updated curriculum and industrial training to hone the entrepreneurial skills and talent of our youngsters.”

Talking about Chandigarh, he said the city “is at par with any other tier-I city, due to its strong social infrastructure, educational facilities and safe environment. This city can become the next Singapore because it has all the requisite elements to attract potential people and to emerge as an IT hub”.

“It can also surpass cities like Pune and Bangalore in terms of industrial growth and employment opportunities,” he added.

To ensure that their offices don’t get flu-ed out, IT firms in Pune are adopting preventive measures at the workplace including video conferencing and the option of working from home.
One of India’s IT hubs, Pune is home to over 200 IT companies, including the top names in the industry, and employs more than 2 lakh people. The city is among the most-affected by swine flu with their number increasing by the day.

In their effort to keep the flu at bay, most IT companies undertake daily checks on employees and those having temperature of 100–plus degrees Fahrenheit are sent back home. In fact, at Fujitsu Consulting even drivers who drop the employees home have to undergo a temperature check before entering the office complex.

Even employees whose family member at home is not well are sent back home as they are likely be a carrier of swine flu. When they return, they have to produce a medical certificate stating that they are healthy, a Fujitsu official said.

As IT firms are centrally air-conditioned, employees have also been given the option of working from home. Video conferencing has now replaced face-to-face meetings when employees enter the city from flu-hit areas. Infosys Technologies, on its part, has already issued travel advisories restricting travel in and out of Pune.

S.Mahalingam executive director and CFO of TCS said the company is seeing the first signs of a revival of the global economy. He, however, declined to say whether this was the end of the global recession.

Like the most IT companies, TCS has also been severely hit by the global recession. It has experienced a number of project cancellations since September 2008. “As the recession spread across the globe and sunk deeper, a number of customers were canceling their projects with us but lately we see an arrest in this,” said Mahalingam.

But customers remain cautious and are showing discretion in their spending, he said.

Mahalingam said TCS followed a policy of diversification in revenues that has helped in these rough times. Besides the company has also followed the same policy in terms of geography and has been focusing on emerging markets like the BRIC countries for growth.

“India has been a strong market for us besides the other BRIC countries and that has payed off,” said Mahalingam.

On the employee front, he said even though there is a freeze on hiring fresh staff, the company has honored the offer made to 24,500 people earlier.

TCS has seen a strong growth in retail, pharma, utilities verticals over the last few months.

With export revenues shrinking, Indian IT companies are looking at the domestic market now to compensate for the lost revenue, said Som Mittal, president of Nasscom. “There is still growth in the industry though at a lower rate, Mittal said on the sidelines of the IIFT National IT Symposium 2009.
Nasscom has projected a growth rate of 4-7% for India s software and services export industry during 2009-10.

The trade body expects India s export growth to touch US$ 48-50 billion in fiscal 2009-10, while the domestic IT-BPO market is expected to grow by 15-18% to Rs 650-670 billion.

However, on the positive side, we have to look at the incremental piece that we are penetrating. There is still growth in a tough environment and that is what needs to be concentrated on,” said, Raman Roy, CMD, Quattro BPO Solutions.

Despite the subdued trend this year, India’s IT outsourcing is expected to pick up during the second half of the next year.

As per Springboard Research s latest study, the Indian IT services market is expected to grow from $4.1 billion in 2007 to $8.1 billion in 2011, recording a CAGR of 18.6%.

The study notes that 65% of the IT decision-makers in enterprises expect an increase in their investment in IT outsourcing in the next two years, while 29% expect investment to remain constant.
The economic slowdown has impacted the IT budgets of most enterprises, with nearly a third of them slowing their IT-related investments.

“For CIOs, the economic slowdown is clearly an opportunity to manage their costs and they have shown an open-minded approach towards IT outsourcing, further accelerated by an emerging emphasis on improving business performance,” said Sudip Saha, senior research analyst for IT services at Springboard Research.

Bangalore: In move to reduce the burden on their clients due to recession, IT majors are cutting down on their billing rates by almost 35-40 percent. According to analysts, the billing rates have touched the lowest ever rates at $16 per hour and they predict that this will continue till first quarter of 2010.

Avinash Vashisth, Chairman and CEO, Tholons, an offshore advisory firm says, “Last month has seen unprecedented cut in billing rates even for existing customers.” According to Vashisth, large testing services, and of services of similar value, $16-20 is the prevalent rate. These rates are almost 30-35 percent lower than the rates being charged earlier this year and steeper than the 20 percent cut that British Telecom had demanded from Infosys and Tech Mahindra earlier this year on some old and new projects. Also higher-end projects like SAP have faced pricing cuts of around 25 percent, which is again more than what it was earlier this year.

According to The Economic Times, top IT firms are offering such rates in the form of introductory discounts for new clients, and for a year or two for existing clients. Another worrying factor for the IT firms is that despite the rate cuts, there has not been a corresponding rise in the volume of deal flow, in either highervalue or the lower end services.

Diptarup Chakraborti, Principal Analyst at Gartner, says that he does not see the situation improving before Q1 or Q2 next year. “Good old days are not coming this year for sure,” Chakraborti said. A Gartner study says prices of IT services in outsourcing are anticipated to shrink well up to 2010 due to an uncertain economic climate, IT budget constraints and general market consciousness.

The information technology (IT) industry will see a new period of rapid growth in investment, driven primarily by new smart computing technology.

According to Forrester Research’s IT 2009-2016 Long-Term Forecast, current IT vendors IBM, Oracle, and Microsoft are best positioned to win in next-gen technology, while GE and Semens will emerge as bigger factors.

Old technology will continue to be in demand, but purchases will grow at trend rate. Smart computing solutions will address critical business issues.Sales directly to business - not to IT.

Investment in new technology driven by strategic rationales, not cost/benefit calculations, with multimillion-dollar deals.

Highly vertical solutions will capture more of the growth, although not the largest share of sales.
Asset-intensive industries like government, healthcare, utilities, education, and professional services will be the biggest buyers.

Forrester describes smart computing as flexible, adaptable, responsive, and extended IT systems that incorporate awareness (location, status, condition) and analytics to make IT more intelligent to solve new business problems.