49.IT Enabled Services

India is referred to as the backoffice of the world owing mainly to the Information Technology-enabled Services (ITeS) sector. The ITeS sector is not only responsible for putting India on the global map but has also made significant contributions to the Indian economy. According to the National Association of Software and Service Companies (NASSCOM), the IT/ITeS industry's contribution to the country's gross domestic product (GDP) has grown from 1.2 per cent in FY 1997-98 to an estimated 5.5 per cent in FY 2007-08. The net value-added by this sector, to the economy, is estimated at 3.3-3.9 per cent for FY 2007-08.

The Indian IT-ITeS sector (including hardware) grew by 33 per cent in FY 2007-08 to reach US$ 64 billion in aggregate revenue. Of this, the ITeS/BPO sector contributed US$ 12.5 billion as against US$ 9.5 billion in FY 2006-07, an increase of 31 per cent. The Indian ITeS-BPO exports grew significantly from US$ 8.4 billion in FY 2007-08 to US$ 10.9 billion in FY 2007-08 while the revenues of domestic BPO grew to US$ 1.6 billion in FY 2007-08 from US$ 1.1 billion in FY 2006-07. The sector provided direct employment to 700,000 in FY 2007-08 up from 553,000 in FY 2006-07.

ITeS, which started with basic data entry tasks over a decade ago, is witnessing an expansion in its scope of services to include increasingly complex processes involving rule-based decision making and even research services requiring informed individual judgment. It now offers services such as knowledge process outsourcing (KPO), legal process outsourcing (LPO), games process outsourcing (GPO) and design outsourcing among others. Realising its potential, after IT Parks and IT SEZs, the government has cleared a proposal for creating much larger Information Technology Investment Regions (ITIRs) to give a fillip to the country's growing IT and ITeS sector.

The number of patent filings from Indian R&D centres has been growing over the years. More and more cutting-edge products are being developed in India. While outsourcing lower level technical jobs to India has been a practice of multinational technology firms, the increasing reliance on Indian R&D operations is a growing trend.