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Indian IT- ITes Sector Does Not Need Government Support: NIIT CEO
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In an exclusive conversation with EFYTimes.com, Arvind Thakur, CEO, NIIT Technologies spoke about Indian IT and BPO industry and NIIT's perspective about the global scenario.
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Monday, May 14, 2012:
IT and ITes industry is now independent and it does not need any support from the government, opines Arvind Thakur, chief executive officer, NIIT Technologies. Unlike many other industry players, Thakur is positive about the government support that the industry has received in the past. He thinks that the government should concentrate on improving the infrastructure, which will help the industry to grow further.
In an exclusive conversation with EFYTimes.com, Thakur spoke about Indian IT and BPO industry and NIIT's perspective about the global scenario.
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Out of the total recorded revenue, how much is for the BPO arm of NIIT?
It is about 7 per cent in the past quarter. And if you look at the yearly figures, it was about 4 per cent.
How do you see the BPO industry growing in India, given the fact that there are economic pressures from Continental Europe and US?
BPO segment in India has two components- the voice and the non-voice. I think what is scaling up well is the non-voice element of this particular segment. There is competition in the voice part, which is emerging from other destinations, primarily on account of language and accent concerns. For example, Philippines is emerging as an important destination for servicing the US and certain Eastern European and Central European countries as well. So I see the non-voice component of the BPO industry as the space, which can scale up dramatically in India.
What about NIIT?
The same goes for NIIT as well. We have been focusing a lot on the back-end operations. So, one of the reasons why we have seen improvement in the BPO business is because of the large engagement that we have secured for a client where we have to do some pretty creative work, which is creating advertisements. That's good solid back-end work, which is not really voice based. That's the kind of work we are putting together and that's helping us grow our BPO business.
What will be your policy for FY13 for the BPO arm?
Our BPO business, because it is 4-7 per cent, is not a mainline scalable activity. Our BPO activity is an activity, which helps us complete end-to-end offerings to our customers. So, most of the BPO business that we have acquired would do complete outsourcing or an integrated IT and BPO solution. So our policy for the BPO arm is to go in with an integrated solution and split the parts between the BPO infrastructure and application development activity.
Do we see some acquisitions happening in this space in FY13?
Our focus and policy for acquisitions is very industry specific. So, the approach that we have been taking is to acquire assets that help us build strong competence for the specific industry. Because as far as horizontals are concerned, we have the capabilities but if we have to position ourselves strongly in the industry, then you need to acquire IP assets, which is more appropriate to acquire rather than horizontal services.
Nasscom came up with report, which estimated IT and ITes industry to be about $100 billion. What do you think is the share of the BPO industry and how do you see the industry growing henceforth?
I will not be able to quote the Nasscom figures but I believe that the BPO part is something substantial. Nasscom has outlined a strategic direction for the industry where it is looking at new industry segments, new geographies and new services that will help the industry grow from its $100 billion size to $200 billion by 2020. That's a very ambitious program and that will require significant changes in the way we engage in the market place. The last decade has been a decade where primary value proposition has been around cost arbitrage. But the next decade will be a decade where cost will always be important but the primary value proposition would be the business value that the customer gets. So some changes need to be brought about in the service lines that you go to market with, as compared to the previous years.
Do you think the industry is moving in the right direction?
I think we need some changes. One basic change that needs to be brought about is to move away from a cost arbitrage mindset to a value proposition mindset. To do that, we need to invest in intellectual property and platforms and we need to configure solutions where by the customer sees business value rather than cost improvement. To my mind, at least the progressive companies have already started moving on that path.
Recently the budget was out and there was nothing for the IT and ITes industry. What do you think is stopping the government to take favourable steps for the growth of the industry despite such high growth figures?
I think the government has provided a lot of support in the past and the industry has matured. A $100 billion industry is not a small industry. It has demonstrated that it can stand on its own in the global market. So, by virtue of the fact that the industry is matured and is globally competitive and recognised, I think support from the government is not as important as the government providing the right infrastructure to support the business. What is extremely important for the industry is to have a good education policy, a good telecom policy and infrastructure. If the government focusses on these things, it will be good for the industry.
Diksha P Gupta, EFYTIMES News Network
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