The Indian IT BPO service industry can definitely be said to be at a critical inflexion point at this point of time. There has been a glorious past in terms of a decade of over 30 per cent CAGR culminating in an industry export volume of around $50 billion and employment of over 2 million, in addition to GDP share of over 5 per cent, with multiplier impact on the economy. Even in this current global recessionary environment, this industry is poised to grow upwards of 10 per cent. It is in this context that we need to ensure that industry gets appropriate environment and stimulus to flourish further and realize its full potential.

The current expectations of business leaders in this sector can be summed up across three themes – favorable tax environment, business demand boosters and supply enablers. Let us look at expectations around each of these themes.

Favorable Tax Environment:

1. The industry is seen to be an exemplar of entrepreneurial spirit, with the emergence of multiple small, medium and niche players to meet unique client needs. If today the industry is seen to be aiding inclusive growth with a presence in over 40 cities, it is no small measure due to STPI and Sec 10 measures that benefit small and medium players, who may not be able to tap the SEZ scheme. Here not only an extension beyond 2010, but also an indication of stability over next several years will go a long way to promote a positive climate of investment.

Business Demand Boosters:

2. Though currently the industry gets over 80 per cent of its revenue from exports, there is a huge five-fold growth that is forecast for the domestic IT and BPO sector, from current 10B levels to 50B by 2020. This will be a major enabler for inclusive growth and employment in semi-urban and smaller towns, particularly for tapping domestic BPO needs.

Given this context and the fact that Indian economy is expected to recover and grow much faster than the global one, it is critical to provide a climate of investment and growth through fiscal measures, which will also boost local demand for the IT and BPO services. The sectors that will provide great impetus here will go beyond traditional financial services to span telecom, health, public sector, education, infrastructure and government. Further consolidation of national e-governance initiatives will also help boost demand. We also need to factor in the tremendous resource development/skill creation that is enabled by domestic growth, thus, building the capability to serve global clients.

Supply Enablers:

3. The industry needs critical infrastructure inputs to realize its potential to grow from $50 billion to around $200 billion by 2020. This will imply creation of four folds more direct employment opportunities and approximately five times more multiplier employment, through growth of associated services sectors.  All we need is positive stimulus towards infrastructure consolidation.

For the BPO sector, development of physical infrastructure as well as bandwidth is absolutely essential to tap the resource potential in semi-urban and rural areas and generate more jobs. For both IT and BPO sectors, better roads, civic services, airports, power and telecom connectivity are critical to ensure tapping of global growth potential.