Indian IT Service Sector Moving up in the value chain
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This is a guest article contributed by ABBS, Acharya’s Bangalore Business School. Feel free to share and discuss your opinions about it.

Indian IT Service Sector has evolved since last two decades and has gone through many highs and lows on periodic basis due to cyclical global crisis primarily in the United States of America (the market which generates 85% of the IT sector revenue). Till late 90’s the industry was engaged in projects which were primarily maintenance projects and essentially catering to the lower end of the outsourcing value chain. On one hand the industry has been matured over a period of time and at the same time it has also reached its saturation point.

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This sector has been witnessing tremendous pressure on the margin and the profitability. The IT sector is also witnessing cost pressure due to exponential rise in the labor cost in one hand and tightening IT budget of fortune 500 companies. The sector has realized that the only way to survive and sustain would be to climb and cater to the higher end of the outsourcing value chain. From simply being a technology solution provider, the IT sector is now evolving, to position itself as the Business Solution provider and during this transition the vital requirements of the industry has been to acquire and build domain expertise on respective business verticals e.g. in order to clinch the outsourcing projects from, say Insurance sector the expected expertise from the IT-Service company to have the in depth domain knowledge of the insurance sector. In order to move up the value chain, IT sector has started building up a strong consulting wing which works in tandem with Business development team and prepare business proposition to the CXO community. The rise of KPO companies is also a sign that, to hold its ground firm, the IT service Sector has to evolve and move up the value chain.

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