Growth strategies for mid-tier Indian IT companies

Abstract

The Indian IT market has shown tremendous growth in the past decade going from about $3 billion in 1998 to $70 billion in 2010 growing at a CAGR of 33% over the past decade and is set to become $225 billion industry by 2020. While the exports sector will comprise of $175 billion, the domestic sector too will see a robust growth and is expected to rise to $50 billion dollar by 2020 as per NASSCOM Perspective 2020 report. However, polarization between offshore providers in India is growing. The growth rate of Tier-1 Indian vendors (over $1 billion) is higher than the industry average. As shown in the figure below, their share of the pie has increased from 26% in 2005-06 to $31.5% in 2009-10. Moreover, the mid-tier firms (revenues between $100 million and $1 billion) are having a much harder time coming out of the recession than the larger IT players who are back on their growth track.