Consulting mart key IT growth driver

Likely to be valued Rs 1,067.4 cr by '09, growing at 17.4% CAGR since '04.

Adding a new chapter to the Indian IT growth story is the domestic consulting market, which has been growing at a compounded annual growth rate (CAGR) of 17.4 per cent since 2004 and will become a Rs 1,067.4 crore industry by 2009.

And it is not only the banking and financial services (BFSI), telecommunications and manufacturing sectors, but sectors such as pharma, auto ancillary, retail and infrastructure, among others, are also spurring the growth, industry sources said.

Although the domestic consulting market is only 1-2 per cent of the global market, it has attracted all the international biggies like Accenture, IBM, Booz Allen, Bain, KPMG and Forrester by virtue of high potential it has.

"The market for IT outsourcing and consulting services is growing at 30 per cent a year," said Sid Pai, partner, TPI Inc, a global business consulting firm.

Pai heads Indian operations of the company. Encouraged by winning global deals and export benefits, not only large corporates but small and medium businesses (SMBs) are also adding weight to the industry's positive trend.

Aditya Sapru, partner and managing director, south Asia and Middle East, Frost & Sullivan, said, "Currently, 80 per cent of our clients here are global, but we see this ratio soon changing to 60:40 as Indian SMBs adopt a global outlook."

Take the case of Wipro that added 37 new customers under its consulting practice last year. Dr Anurag Srivastava, vice-president & business head, Wipro Consulting, Middle East, India and Asia Pacific, said, "Our consulting arm has been growing at 53 per cent CAGR for the last four years."

Srivastava stressed that the growth is being seen across all industry verticals, adding "currently, BFSI accounts for 20-25 per cent of our customers, manufacturing 40 per cent, e-governance 23 per cent and corporate 12 per cent".

The company's clientele includes Ashok Leyland, Cummins India, HDFC Bank, Shipping Corporation of India, Apollo Tyres, VSNL and Qualex, to name a few.

Growing at CAGR 18.2 per cent to be a Rs 23,860.7 crore industry by 2009, the IT services sector consists of IT consulting, system integration, end-to-end outsourcing, deployment, support and other services.

"The Indian market for consulting accounts for 5-6 per cent of the IT services market, in line with the global benchmark," said Rajdeep Sahrawat, vice-president, Nasscom.

"Over the next five years, domestic spending on outsourced IT services is projected to more than double from Rs 103 billion in 2004 to over Rs 238 billion in 2009," he added.