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ST Team
Wednesday, August 1, 2007
Genpact, WNS and Transworks: Top three third-party BPO units

As per the annual NASSCOM survey on IT industry performance Genpact, WNS and Transworks were declared as the top three third-party BPO units in India. The ranking list released recently also includes the companies that are headquartered outside India.

According to NASSCOM’s outgoing president Kiran Karnik, the ITES-BPO segment continued to grow at a storming pace, to record export revenues of $8.4 billion in FY07 (2006-07). It also expects segment revenues to grow at around 30 percent next year to mark exports of $10.5-11 billion in FY08 (2007-08).

“The domestic market has also contributed to the growth of the segment as a whole and we expect the current momentum to continue considering the large addressable market that it offers. Overseas M&A (mergers and acquisitions), along with increase in scale and depth of existing service lines, has complemented the growth of this segment,” Karnik said.

According to Nasscom, the ITeS-BPO employee base has grown to 553,000 in 2006-07 from 415,000 in 2005-06. The domestic market for ITES-BPO grew to $1.2 billion in FY 2006-07 from $0.9 billion in FY 2005-06, illustrating a significant increase in demand.

Indian IT industry revenues to score up in FY 2007-08

The annual survey on the performance of the Indian software and services sector (excluding hardware) and outlook for FY 2007-08 by the industry body NASSCOM has some good news. The Indian IT-ITES industry revenues will reach the $50 billion mark in FY 07-08. The IT-ITES sector recorded an overall growth of 30.7 percent during FY 06-07 as against a projected growth of 27 percent, clocking revenues of $39.6 billion. The software and services exports segment grew by 33 percent to register revenues of $31.4 billion while the domestic segment grew by 23 percent to register revenues of $8.2 billion in FY 06-07, up from $6.7 million.

IT services exports have grown by 35.5 percent to clock revenues of $18 billion; while ITES-BPO exports are up by 33.5 percent, registering revenues of $8.4 billion. Speaking on the industry’s performance, Lakshmi Narayanan, Chairman, NASSCOM and Vice Chairman, Cognizant Technology Solutions, said, “The growth has been made possible due to the outstanding performance of newer service lines namely engineering services and infrastructure management.” Kiran Karnik, President, NASSCOM stated that going ahead, gaming and entertainment will form the new thrust areas in the services segment.

However, a study conducted by Assocham on the IT and BPO sectors reveal that the annual growth of India’s IT and BPO industries may fall to 30 percent for the next four years. Compared to its counterparts around the world, both large and smaller companies in India have seen a faster growth globally at the expense of Western firms, says the study.

India’s management capabilities only second to U.S.

Here is good news for the managers and would be managers of MNCs in India. According to a survey by McKinsey, a strategy consultant, and the London School of Economics, management capabilities of multinational manufacturers in India are second only to equivalent companies operating in the U.S. The findings reflect the level of resources directed towards India by many global manufacturers, attracted by good economic prospects as well as their success in hiring highly skilled local workers.

However the high score for the management standing of multinationals is in stark contrast to India’s local status in terms of operational practices of all India-based manufacturers, including locally owned businesses. In the study of 4,000 medium sized manufacturing businesses across 12 countries, India comes bottom in terms of the management performance of all companies.

As per Stephen Dorgan, a McKinsey partner and one of the study’s authors, by implementing good management practices multinationals can rise above the weaknesses of the countries they are operating in. If you are one of the brightest and best in India, a company with a good global presence will attract you.

India’s historically weak economic performance and restrictive government rules that have been eased only in the past decade contribute to its poor position in the overall league table of management skills of all companies.

The survey included some multinational subsidiaries and independent businesses. The U.S. scored the highest for management capabilities of all manufacturers, followed closely by Sweden, Germany, and after a substantial gap, the U.K.

High IT salaries only for a few

The general perception of IT as the best paymasters remains a myth. The reality is that only a very small number get a six-figure monthly salary.

According to newspaper sources, the number of persons who draw salaries over Rs 2 lakhs per month or over Rs 24 lakhs per annum, at companies like TCS, Infosys, and Wipro show that this group accounts for only 0.5 percent of a company’s total headcount.

At TCS, out of 85,582 persons employed at end of FY07, only 221 employees get salaries over Rs 24 lakhs p.a, which accounts for 0.26 percent. While 531 Infosys employees out of 72,241 employees in FY07 draw Rs 24 lakh p.a., which accounts for 0.74 percent.

In TCS, only 11 persons get only Rs 50 lakhs p.a., which is 0.01 percent of total employees. Whereas, 32 persons draw a similar salary at Infosys, which accounts for 0.04 percent of total employees, and at Wipro 39 persons get above Rs 50 lakhs p.a., which accounts for 0.06 percent of total employees.

According to experts, apart from the best salaries, many high performers have performance variables and ESOPs that contribute to a larger overall pay packet. About 25 to 30 percent or 2.5-300,000 employees of the one million strong Indian IT industries get salaries over Rs 1 lakh per month or Rs 12 lakh per year. And about one to two percent of this number i.e., 10,000-20,000 people across the industry earn Rs 24 lakh and above as salary, excluding ESOPs and extra benefits.

Moreover, according to the sources, the average time taken for a fresher to break the one lakh rupees salary mark depends on the institute the person comes from and the base salary in the campus offer letter.

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