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2023: Indian IT outsourcing companies forced to operate for pennies due to IT market crisis
On December 19, 2023, it became known that Indian IT outsourcing companies are forced to agree to increasingly stringent conditions on the part of customers in order to get contracts concluded. This is due to the difficult macroeconomic situation, high inflation and uncertainties in the IT market.
The Indian IT sector with a turnover of about $245 billion was actively developing during the COVID-19 pandemic, when, against the background of restrictions, distance learning and remote work, the need for digital products and services was growing rapidly. However, a downturn followed as customers began cutting project spending amid inflationary pressures and recession fears. As a result, companies such as Tata Consultancy Services, Infosys and HCLTech face additional demands from customers. This can be, for example, billing the customer only if certain goals are achieved or guaranteeing minimal cost savings. In other words, Indian IT outsourcing companies are forced to work virtually for a penny.
 | Whenever economic problems arise and demand falls, the IT segment becomes the buyer's market. Customers are trying to make more demands, including price caps and result-driven deals, says former Infosys CFO V Balakrishnan. |  |
According to research firm Everest Group, over 80% of the more than 1,600 IT and business process management deals tracked in 2023 contained a cost-saving commitment clause in some form. For comparison: in 2019, this figure was approximately 65%. Experts say the tougher conditions being put forward when big IT deals are an attempt by customers to hedge against global economic uncertainty.[1]
2022: IT services exports reach $106 billion
Exports of Indian services reached $254.5 billion in 2022, and the CAGR (compound percentage CAGR) over the past two decades (by the end of 2022) was approximately 14%. Such data was released by EY analysts at the end of January 2023.
The bulk of exports are reported to be for services and services information technology (outsourcing business processes BPO). In 2021-2022 they provided $157 billion, or more than 60% of the total volume of the market under consideration. At the same time, about $106 billion brought IT services, and another $51 billion - BPO services. Direct employment of personnel in these segments is estimated at 5.1 million people, while indirect employment exceeds 12 million employees.
Global corporations use Indian labor resources through their opportunity centers in this country. As of September 2022, large companies have established more than 1,500 such centers in India. Interest in such structures is caused by the possibility to use them as personnel reserves that can support innovation and effectively provide services on a competitive basis. The success of this sector had a strong impact on the Indian economy. The centers provide services related to advanced solutions such as cloud computing, data analysis, artificial intelligence and machine learning, chip design and software development. In addition, employees perform certain administrative work.
The Indian workforce is expected to tackle the toughest challenges and manage the digital features of the world's big companies. This will help India grow from a tech back office to a "hybrid workforce" supporting the digital structure of global corporations.[2]
2019: Computer device exports just $181 million
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