India’s IT and business process outsourcing (BPO) services industry could be bringing in US$60 billion by the year 2010, growing at over 25 per cent a year, according to a recently released report.

However, the industry could face a shortage of half a million workers unless remedial measures in public education and corporate training are taken quickly, the report said.

India’s software and services exports were US$17.2 billion in the fiscal year ending March 31 this year, up by 34.5 per cent from the previous year, according to the National Association of Software and Service Companies (NASSCOM) of Delhi. NASSCOM and management consulting firm McKinsey & Co. released the findings jointly.

A large number of multinational technology and user companies are stepping up outsourcing to India.

Microsoft Corp. announced in December that it was increasing staff in India from 4,000 to 7,000 over the next three to four years, while Dell Inc. said in April of last year that it was increasing staff in the country to 10,000 by the end of this year. Aviva PLC, a British insurance company, said its suppliers were increasing staff doing work for Aviva in India from 4,300 to 7,800 over the next two years.

The total addressable market for global offshoring is approximately US$300 billion, of which US$110 billion will be offshored by 2010, according to the NASSCOM-McKinsey report.

By 2010, the Indian IT and BPO services industry could directly employ approximately 2.3 million people, besides providing indirect employment to another 6.5 million workers, according to the report.

However, staff shortage could be a major bottleneck for the industry, the report said.

The skills and quality of the workforce needs to be improved as only 25 per cent of technical graduates are suitable for employment in the offshore IT industry in India, while only 10 per cent to 15 per cent of general college graduates are suitable for employment by the BPO industry, according to Jayant Sinha, partner at McKinsey & Co.

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