February 10, 2015 / 7:03 AM / 4 years ago

Skill shortage seen a risk for Indian IT sector growth

MUMBAI (Reuters) - A shortage of qualified engineers to tap high-end business opportunities such as mobile applications and cloud computing poses a risk to the growth prospects of India’s showpiece IT outsourcing sector in the years ahead, a leading lobby group said.

Workers are seen at their workstations on the floor of an outsourcing centre in Bangalore, February 29, 2012. REUTERS/Vivek Prakash/Files

The National Association of Software and Service Companies (Nasscom) also said on Tuesday India’s nearly $150 billion IT services outsourcing sector is expected to see export revenue growing 12-14 percent in the financial year starting in April.

That compares with an estimated increase of about 12 percent in the fiscal year ending on March 31, it said. Nasscom’s export forecasts for the next fiscal year set the benchmark for the top companies and are closely tracked by market analysts.

Future growth in the sector will be fueled by growing demand of global corporations for new services such as digital technology, mobile applications and cloud computing, said officials at Nasscom.

But the export-driven outsourcing industry needs to focus on building a large pool of skilled workforce to tap opportunities in the emerging high-end services segment, said R. Chandrasekaran, chairman of Nasscom.

India’s top IT outsourcing service providers, including Tata Consultancy Services Ltd and Infosys Ltd, have thrived by offering infrastructure management and application development services to U.S. and European clients.

Faced with increased competition and pressure on prices for routine services, the companies are now looking to move up the value chain and boost growth by tapping high-margin businesses including artificial intelligence and automation.

“We have to look inwards as an industry and see how can we re-skill ourselves to tap some of those opportunities,” Chandrasekaran told reporters. “Skill set mismatch has to be mitigated by the industry.”

The outsourcing sector, which makes as much as three-quarters of its sales from the United States and Europe, employs roughly 3.5 million people, the bulk of them in India, and accounts for 9.5 percent of the country’s gross domestic product, the lobby group said.

The sector’s exports in the fiscal year 2015/16 are forecast to rise to as much as $112 billion, according to Nasscom. The sector is worth about $150 billion after adding the revenue generated from the domestic market.

Reporting by Sumeet Chatterjee in Mumbai; Editing by Clara Ferreira Marques and Muralikumar Anantharaman

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