Concept NotePart -A

Development of Labour MarketInformation System (LMIS) for IT –IT

Enabled Services Sector

IT-ITES Sector Skills Council,NASSCOM

4E-Vandana Building (4th Floor)

11, Tolstoy Marg,New Delhi-110001.

T +91 11 41519230/60 F +91 11 41519240

Table of Contents1. Introduction.........................................................3

2. About Labour Market Information System (LMIS)........................82.1. Definition.......................................................9

2.2. Objectives of an LMIS............................................92.3. Components of a robust LMIS.....................................10

2.4. LMIS Stakeholders...............................................142.5. Major Challenges................................................14

2.6. Existing LMIS...................................................142.7. Next Steps......................................................16

2.8. Conclusion......................................................163. Overview of the IT Sector...........................................17

3.1. IT services sector..............................................173.2. IT/BPO services sector..........................................17

3.3. Engineering Services............................................183.4. Packaged Software...............................................18

3.5. Skill requirements in the IT and ITES industry..................19

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1. Introduction

Indian IT-ITeS industry has built its reputation in the global arena based onseveral differentiators-chief among them being manpower. Over the years,organizations across the world have come to recognize the value that India’svast and readily available pool of IT professionals brings to every engagement.Global organizations have found it extremely cost-effective to leverage thissignificant resource and gain bottom-line benefits by harnessing its power.

Going forward, however, the scenario is expected to be very different. Insteadof just cost arbitrage the world will look to India for specialized talent thatwill be highly priced. Ageing western economies are already facing severeskills shortage, and will, in the years ahead, require people with advancedtechnology skills and domain knowledge. In the near future it would also be anadded requirement to nurture mobility between occupations and across labourmarkets.

In terms of sheer numbers India is well positioned to provide this manpower,owing to its growing base of people in the working age group. At the same timea significant amount of work needs to be done to convert this raw resource intoemployable, and more importantly into skilled talent in sync with globaltransnational standards. It is only by making its people future ready that theIT-ITeS industry will be able to sustain its leadership and the global industryduring its next growth spiral.

If India is to emerge as the skills factory of the world, the hub that manpowerstarved nations look to in future, a huge effort will have to be made now, tobuild for the years ahead.

India itself will need people. With the global markets veering towardsrecovery, IT-ITeS organizations in India are back into hiring mode. In fact, by2020, the sector is expected to create direct employment of 10 million andindirect employment of about 40 million, touching diverse sections of society.

To remain relevant, inclusive and viable, NASSCOM acknowledges that the ‘SectorSkills Council’ initiative can be the game changer and the way to go.

To formalize the above vision NASSCOM in partnership with the National SkillDevelopment (NSDC) has sought and been formally approved as the IT-ITeS SectorSkills Council India, which is set up under the National Skill Development

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Mission to fulfill the growing need in India for skilled manpower, across sectorsand narrow the existing gap between the demand and supply of skills.

In this context the objective of National Skills development Corporation (NSDC)is to contribute significantly (about 30 per cent) to the overall target ofskilling / up-skilling 500 million people in India by 2022, mainly by fosteringprivate sector initiatives in skill development programmes and providingviability gap funding.

Sector Skills Councils are tasked with developing an enabling environment forskills development, including support for (i) clarification of sector-specificcompetencies/skills (ii) capacity development for skills developmentinstitutions/ such as curriculum and standards, faculty development, and soforth; (iii) trainee placement mechanisms, and (iv) monitoring and evaluation,supporting systematic collection and analysis of data about skills development,including employer feedback regarding the quality of trainees (V) qualityassurance of independent third-party providers etc.;. The National Skill Development Policy 2009 mandates that NSDC will facilitate inpartnership with industry sectors the: Setting up of Labor/ Work Force Market Information System (LMIS) to assist

in the planning and delivery of training, at the least Identification of skill development needs and preparing a catalogue of skill

types covered in IT-ITeS Occupational Standards Develop a sector skill development plan and maintain a skill inventory Developing skill competency standards and qualifications Standardization of affiliation and accreditation process Participation in affiliation, accreditation, standardization Plan and execute training of trainers Promotion of academies of excellence

Sector Skills Councils are national partnership organizations that bringtogether all the stakeholders – industry, labor/work force, and the academia,for the common purpose of workforce development of particular industry sectors.

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In the national context, India's transition to a knowledge-based economyrequires a new generation of educated and skilled manpower. The competitiveedge will be determined by the ability to create, share and use knowledgeeffectively. A knowledge economy requires India to develop knowledge workersand technologists who are flexible and analytical and can be the driving forcefor innovation and growth.

To achieve the same, we need a flexible education system that can help facilitate the development of a workforce in capabilities and technical skills across the pipeline.

The challenge of skilling/up-skilling millions by 2020 will require bothfundamental education reform across primary, secondary and higher education andsignificant enhancement of supplementary skill development. In the near term,IT-ITeS Sector Skill Council (SSC) will focus primarily on supplementary skilldevelopment and strive to facilitate seamless tracks within the educationsystem. The purpose of this proposal is to identify ways and means for thedevelopment of scalable quality capacity that is sustainable.

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Research w.r.t. market intelligence will offer a dipstick regarding employmentopportunities, related job rolls with profiles, and relevant skills andcompetencies required, supply–demand requirements present and future. It willalso:

- Provide analytics w.r.t. supply –demand requirement and deficienciesregarding the education and skill development ecosystem, aiming todynamically respond to business transformations both national andinternational;

- Identify and validate skill gaps and successful training models to bridgethe gaps;

- Provide direction with reference to employment trends and career paths, atall levels in this sector;

- Shape projects and programs aimed at enhancing India’s competitiveness inthe global IT-BPO human resource (HR) market;

- Maximize the impact of employment and skills policies and employer behaviorto support jobs growth and secure an internationally competitive base;

- Enable industry, government and the education sector to develop thestrategies needed to handle future human resource challenges;

IT-ITeS Sector Skills Council NASSCOM (SSC) aims to:- Fulfil industry sector talent needs for quality and quantity to enable a

sustainable pipeline that is industry ready - Research labour market information and intelligence to provide industry

with accurate real time inputs to assist in planning and delivery oftraining. Provide certification information and access to all stakeholdersin this ecosystem, thus reducing skill gaps and shortages

- Develop a delivery mechanism for industry relevant training w.r.t.occupations identified in career paths

- Set up standards to bring global best practices in industry

NASSCOM in it role as the ‘IT-ITeS Sector Skills Council’ envisions scalingquality capacity leading to enhanced employability across the pipeline. IT-ITeSSector Skills Council NASSCOM (SSC) is this industry’s skill development andstandard setting body. The SSC proposes to complement the existing educationsystem and address the skill gaps through the following broad activities:

1. Conducting research – Building up skill inventory database for the industrysector, skill-wise, region-wise, reviewing international trends in skilldevelopment and identifying skill gaps and technology to be taken up for teaching

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2. Improving the delivery mechanism –Partnering with educational institutions to traintrainers and upgrade skill sets of existing industry employees, and those in theindustry value chain, e.g., dealer and service networks. 3. Building quality assurance – Setting up a robust and stringent certification andaccreditation processes for this industry sector facing skill developmentinstitutes to ensure consistency and acceptability of the standards developed

In this context internal SSC ‘Skill Development Councils’/’Education & TalentDevelopment Councils’, in the Technology, Business Process Management (BPM),Infrastructure Management Services (IMS), Engineering R&D Services space etc.are backed by NASSCOM and its members.

NASSCOM via the IT-ITeS Sector Skill Council (SSC) will strive to facilitate astrong, well prepared and highly educated workforce. IT-ITeS Sector SkillCouncil will aim to be a catalyst for change, pushing for innovations thatwill provide:

- Work-force market intelligence;- Career awareness; - Skills definitions;- Professional development;

for the India IT-BPO industry, educators and governments and tried and testedmodels for other industry sectors to emulate. Provide ‘Work Force ManagementIntelligence’ (WFMI) research and reports on work-force market issues facing theIT-BPO industry to build a deeper understanding of India’s IT-BPO sector. IT-ITeS career awareness will provide programs and tools to explore the careerpossibilities, short, medium and long term in India’s IT-ITeS sector.

As an overview, IT-ITeS SSC will aim to address in mission mode the following:- Provide outstanding labour/workforce market intelligence which helps

business and people; - Identify and validate skill gaps, generic and domain (Industry-

Academia); - Collate and standardize existing programs to bridge skill gaps, across the

pipeline; - Develop necessary programs to bridge generic skill gaps for the teacher

and the taught; - Pilot, faculty development and skill transference programs (IT-ITeS), from

teacher to taught; - Analyze impact of student training with metrics towards increased

employability; 8

- Facilitate Scale w.r.t quality capacity across the pipeline (post the‘Pilot’);

- Promote 3rd party providers w.r.t. IT-ITeS skill development at entrylevel;

- Monitor change for quality and sustainability; - Validated IT-ITeS skill development models, are made available to other

skill sectors; - Engage and collaborate with other Sector Skill Councils to develop

employment skill standards and best market solutions which leveragegreater investment in skills;

IT-ITeS SSC in partnership with the Indian industry and the education sector, IT-ITeS SSC will strive to improve standards, education and employment within thesector and assist in facilitating the design of a National QualificationFramework (NQF) for India. Ultimately, the key purpose would be to scale qualitycapacity, (faculty and students to start with); to have a larger talent pool thatis industry ready; to have greater alignment between industry (vertical)occupational competencies and aptitude increasing employee satisfaction andperformance and finally to also reduce attrition, all with the active involvementof this industry.

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2. About Labour Market Information System (LMIS)

While India’s population growth has declined over the years, the work force isstill projected to grow by close to 2 percent or some 7 million or more a yearover the next few years. Majority of the economy and the population are stillrooted in traditional activities and structures. The labour market in India isprimarily spread across the agriculture sector, the urban informal (unorganized)sector, and organized sector. The percentage of the total labour force inagriculture has witnessed a decline over the last decade; however, it stillemploys the highest percentage of the total labour force. As the workers migratefrom the rural agricultural sector to the other sectors and technology comes intoplay, it is imperative to devise a strategy to effectively absorb this additionalworkforce to sustain India’s current growth rate.

To bridge the widening gaps at the required and available skill levels, it ispertinent to assess and evaluate the existing skill levels of the vast labourforce in the country. This will facilitate the identification of key skillrequirements across sectors, geographies, and so on. To achieve this objective,it is critical to conceptualize and develop a framework that encapsulatesinformation about the different facets that define the labour /work force market.It is imperative to integrate the information to provide a single window for allinformation on labour market to the different stakeholders.

Current Challenges in the labour market

The existing Indian labour market information system faces a number ofchallenges. IT-ITeS Labour /work force MIS is splintered and needs to be reworkedand rewired in all aspects. One of the challenges is the inappropriate jobmatching, which results in a number of problems negatively impacting economicgrowth. The productivity of both the employee and the employer is impactedbecause of the mismatch between business requirement and the prospectiveemployee’s skills set. In many instances the human resource is over qualified forthe job at hand ultimately leading to job dissatisfaction and attrition. Moreoverthe present manifestations of Indian LMIS platforms are not interactive nordynamically updatable, with functionalities that do not cater to the gamut ofmarket requirements. The only way to solve this problem is to provide a platform

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with the right architectural design w.r.t. functionalities, content and analyticsregarding the workforce and a framework that is capable of identifying andmatching the qualified human recourse to occupations. This would result in higheremployer and worker satisfaction and consequently in greater RoI.

There are other challenges that add to the weak labour market information system.Some of these challenges are:

Lack of information about job vacancies Lack of information about skills required by employers Employers demand w.r.t.the required skills set and number of employees for

specific occupation Mismatches between labor supply and demand Inadequate levels of labor market regulation

Labour intermediation services, such as a Labour/Work force Market Information System (LMIS), help overcome all these challenges.

2.1. Definition

Labour/Workforce Market Information System, commonly known as LMIS/WFMIS , is aplatform for manpower management that also has the ability to collect, process,analyze, and disseminate labour market information. LMIS acts as a one-stop dataand information source on the labour/workforce market. Wide variety of datareports can be generated from LMIS along with performing trend analysis and crossreferencing.

2.2. Objectives of an WFMIS / LMIS

WFMIS is ‘one single source’ of all information available on the workforce.Information therein must be relevant across the industry, trade, geography,timelines, must cover information on the necessary skills, education, and so onw.r.t. occupations in the industry sector. WFMIS must support informed decisionmaking, by providing research authenticated reliable workforce market informationto the stakeholders.

The WFMIS system is also updated on regular basis to ensure that data held is notobsolete and that such data meets the needs of the WFMIS user.

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The benefits are expected to include quick and easy access to a wide range ofworkforce market data and information.  Some of these data points include:

Educational and training offerings and sources Occupation related training course duration and costs Accredited institutions formal and non-formal regarding occupation

related course offerings Occupation related certifications across various IT-ITeS sub- selectors Sources of funding for education Population of the workforce present and future across IT-ITeS sub-

sectors Economic and job opportunities data and information national and global

The WFMIS acts as an active labour market policy instrument that collects, evaluates and provides labor market information to both the labor supply side andthe labor demand side.

The implementation of a WFMIS is aimed at the following strategic targets: Nationwide transparency Concerning supply and demand on the markets for workforce training Fast access to job offers and job requests; acceleration of the matching

process for both employers and job-searchers Use of all available possibilities to support workforce market functions

uncomplicated and red-tape-free ways of communicating offers and notices.

An LMIS can also have the following objectives: Develop action-oriented research and information tools Be a portal for cutting-edge and timely market data Contribute to raising awareness of workforce development issues Give high quality service to all customers, which may include but not

limited to, job seekers, claimants, and businesses, government and otherrelevant organizations.

Provide timely and accurate information on the workforce market Serve businesses by recruiting and referring the best qualified applicants

to jobs, and provide resources to diverse job seekers in support of theiremployment needs.

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Develop and distribute quality workforce and economic information topromote informed decision making.

WFMIS/ LMIS can be developed this sector-specific workforce market. This WFMIS canthen feed into the master WFMIS at the national level. The information from the sector specific WFMIS will be integrated into a single overarching national WFMIS, which is considered as ‘Master WFMIS /LMIS’.

Given below is a WFMIS/LMIS framework recommended by the National Skills Development Corporation (NSDC):

* WFMIS is not limited to the illustration given below.

Source: NSDC’s LMIS Concept Note

2.3. Components of a robust WFMIS / LMIS

A robust WFMIS focuses on the following items:

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Skills assessment Skills development policy Curriculum design Competency standards Skills delivery to the correct employers

Even though there can be multiple components of LMIS, the key components thatmake up a robust WFMIS are:

Electronic Labour Exchange (ELE) Skill Bank Labour Market Intelligence Information

Each of these components are described in detail.

The Electronic Labour / Workforce Exchange (ELE): ELE is the core component ofLMIS. It facilitates online and offline services that cater to job seekers andthe employers. The services offered by ELE serve both to the employers and thejob seekers. When a job seeker needs to find a suitable job opening for his orher skill set, the job seeker simply checks ELE in LMIS and finds a suitable jobopening. The job openings are mapped with the occupational standards that aredefined for a specific job role. The job openings are directly mapped to thedefined job roles, which helps the job seekers easily locate the

Services for Job-seekers:WFMIS/ LMIS can offer a number of services that can be classified as online services for the job-seekers. Some of these services are: Resume services; Career counseling Job search Career counseling Presentations Institutional referrals

 Services for Employers: LMIS can offer a number of services that can be classified as online services for the employers. Some of these services are: Job posting

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Database access Candidate search Requirement updates

 

Skills Bank: The skill bank plays a vital role in LMIS. The skill bank can provide the following information:

Worker information: The skill bank contains information of works and theircurrent state. For example, a work can be classified as qualified or non-qualified. The worker can then be labeled as employed or unemployed.

Employer access: The skill bank is available to the employers for worker profile evaluation. The employer can choose to filter out the skill they are targeting.

Supply-Demand Reporting: The skill bank can be created in such a manner that it provides information about the supply and demand. The skill bank can also cater to the following:

o Determining the supply o Labour demando Reporting on shortageo Lack of specific skill seto Occupational projections.

Workforce Market Intelligence Information: WFMIS also plays a vital role in

providing the information on the labour market scenarios. It can be defined to

provide the following information:

Local economy data: current and historical data

Population: Historical and current population data based on geographies

Labour market: Current and historical data on the labour market of

specific sectors, such as IT-ITeS sector

Training opportunities: Available formal and non-formal training

opportunities

Advertised jobs: Job posting through third-parties and companies

Research reports: Reports on labour market scenarios in state and

country.

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Job Searcher Available Trainings Labour Market

WFMIS will help both employers and employees provide details on specific demand, as well as where the access to the skilled workforce exists.

Importance of WFMIS

WFMIS after coming into existence helps to reduce the information deficit on thelabour market. With the appropriate information and reporting on the labourmarket, the complete scenario on the labour market is known within specificsectors.

Source of Information: If people do not have information about jobopenings, they may stay unemployed.

Selection of correct profession: If people do not have information aboutprofessions, they may choose a profession where there is no demand forworkers. If more persons make the right job choice and companies get theright workers, productivity increases.

Source for jobs: If more persons find jobs, their income increases andtherefore, the general wellbeing of the society increases.

Without the existence of an WFMIS/LMIS, the flow of information is not smooth andthe links are missing between the stakeholders like job searcher and theemployers, which in this case is the labour market. Such scenario is shown in thegraphic below:

The figure shows that there is a strong disconnect between the workforce /labourmarket and the job searcher.

WFMIS becomes important when one wants to see an optimal workforce market thathas an information flow between different stake holders. An example belowdemonstrates the flow of information between different stakeholders, mainly jobsearchers, labour market, and available trainings with the institutions. With the

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Job Searcher Available Trainings Labour Market

Information Flow

WFMIS / LMIS implementation, the information flow from the labour market iscorrectly channelized to the job searcher.

Workforce intermediation services like the WFMIS become the key driver for theflow of information in the labour market. However, it is important to note thatWFMIS itself cannot generate any form of employment. For example, WFMIS/LMIS doesnot provide any solution to address any type of economic problem. If there is ashortage of jobs due to recession or market down fall, WFMIS will not be able toprovide any kind of solutions to these problems. The solution may depend uponwage rigidity or reforming the workforce market regulations.

2.4. LMIS StakeholdersWFMIS, as stated earlier, is a one single source of information that providesqualitative and quantitative information on the labour market. The information isgenerated from different labour market producers and plugged-into WFMIS forproper distribution. The information producers are the stakeholders thatconstantly provide information to keep WFMIS updated and from generated outdatedinformation and reports. The stakeholders of WFMIS can be either the source ofinformation or the recipient of information. For example, a job searcher is arecipient of information. An employer can acts as both the source and recipientof information. It is important to note that each stakeholder plays a vital role in the WFMISexistence. In brief, the main stakeholders of the WFMIS are:

Government – State and central government. WFMIS will help the governmentsrespond to quick changes in the labour markets that are largely impacted bythe economy of a country. With the recently updated data, governments canutilize the data to set a plan of action.

Policy makers and planners – WFMIS will help policy makers and planners todefine and modify policies based on the labour market conditions.

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Employers – WFMIS will help the employers to locate the correct talentagainst their requirements.

Job Seekers / Employed or unemployed – WFMIS will help the job seeker tolocate the correct job profile and understand the job requirements definedfor a specific job role.

Educational and Training Institutions – WFMIS will help the traininginstitutes to align their courses based on the requirements set by theemployers.

Industry Associations and NGO’s – WFMIS will make the industry associationsand NGOs aware of the market conditions so that they can provide necessarysupport to the remaining stakeholders.

Guidance and Career Counselors – WFMIS will create a link between the jobseeker and the guidance and career counselors to help the job seeker tolocate an appropriate job. The guidance and career counselors can also helpthe job seekers to understand specific job profiles and help them define acorrect career path.

3rd Party Training Provider- WFMIS will create a link between the trainingnecessary for multiple occupations/jobs, the requisite certifications andemployment oriented assessments and the jobs themselves.

2.5. Major Challenges

WFMIS with all the benefit offerings brings a few key challenges. Thesechallenges mainly arise due to the large population, large demographic area, anddifferent parties being involved in generating labour market information.

In India, there are a number of organizations that are part of the labour market.Most of these organizations work in isolation and therefore, it is a majorchallenge to collate the information in one place. It is essential for labourmarket information to be collected in a coordinated manner so that the marketinformation is timely and accurate.

At present, the workforce market information is decentralized with differentparties being involved. With the centralized workforce market informationcollection, the accurate results and reports can be generated through WFMIS.

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Another key challenge is timely availability of the labour market informationreports. If the reports are published with uniformity and at time, then WFMIS canbe used to publish these reports.

Information collection is mainly from the organised sector, which comprises of atotal of 6% of the workforce. There is no accurate data available from theunorganised sector.

2.6. Existing LMIS

A number of countries have already setup WFMIS/LMIS. Most countries have chosento setup a single WFMIS/LMIS whereas large countries like United States ofAmerica has multiple statew-wide WFMIS/LMIS. The table below lists the countriesand broad-level features of WFMIS/ LMIS they own.

Some of the existing LMIS are:

S.No.

Website URL Country Council / Owner

1. https://lmis.camc.ca/lmis/index.jsp

Canada

Canadian Aviation MaintenanceCouncil

2. http://www.labourmarketinformation.cahttp://www.hrsdc.gc.ca

Service Canada and Human Resources and Skills Development Center Canada (HRSDC), Government of Canada

3. http://www.nomisweb.co.uk/ United Kingdom Office of National Statistics

4. http://www.deepwr.gov.au/lmip Australia Department of Education, Employment, and Workforce Relations

5. www.nyc.gov/wib United States –New York

New York City Labor MarketInformation Service

6. http://www.labormarketinfo.edd.ca.gov/Content.asp?pageid=1009

United States –California

Employment Development Department

7. http://www.labourmarketservices.gov.bc.ca/labour_market_information.htm

British Columbia

Ministry of Advanced Education and Labour Market Development (ALMD)

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l8. http://www.mlss.gov.zm/

index.htmlZambia Ministry of Labour and Social

Security (MLSS)

9. http://www.lmis.gov.jm/home.aspx

Jamaica Ministry of Labour and Social Security

10. http://ec.europa.eu/eures/main.jsp?acro=lmi&lang=en&parentId=0&countryId=AT

Europe European Commission

11. http://www.lmisghana.org.gh/index.php?option=com_content&view=frontpage&Itemid=1

Ghana

Source: LMIS Concept Paper by NSDC

2.7. Risk Management

Because there are a number of stakeholders involved and there are externalfactors that influence WFMIS/ LMIS, there are high chances that the WFMIS projectfails to meet its defined objective. While designing the LMIS, a few key risksshould be envisaged and accordingly, risk plan must be prepared.

Some of the risks are:

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Each individual SSC will develop their own WFMIS, which will integrate tothe master WFMIS operating at the national level. The risk here is that isthe SSC-level WFMIS designs are not consistent or the technology used byeach SSC is not well integrated, then there will be a possibility that theeach SSC-specific WFMIS will work in isolation and not integrate with themaster WFMIS.

Another key risk is that the stakeholders do not agree to follow the WFMISinitiative. In this case, the information may not get populated on time ormay not get populated at all.

An incorrect architecture of WFMIS does not clearly state the roles andresponsibilities of individual stakeholders.

A security risk may be imposed if the WFMIS architecture does not cater toproper authentication and registration process. More security risks can beimposed if there are not access policies defined for WFMIS.

2.8. Next Steps

Setting up a WFMIS can change the labour market scenario for a specific sector.However, it would not be incorrect to state that there is no perfect definitionof an WFMIS/LMIS and therefore, it will be difficult to create a perfectWFMIS/LMIS. A WFMIS will always be need driven from a specific sector andtherefore, the architecture will always be different for two different sectors.

The first key step is to conceptualize WFMIS and then bring it to anexistence.

Furthermore, then the continuous updation and maintenance of WFMIS willfollow. IT-ITeS SSC is currently looking at creating a LMIS that will caterto the IT-ITeS sector.

IT-ITeS WFMIS will then link to the main portal, which eventually links upall WFMISs as well.

The intent is to have a one-stop WFMIS that will provide information acrossgeographies, sectors, states, training organizations, and so on.

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2.9. ConclusionTo conclude, WFMIS/LMIS:

Acts as a key labor market policy instrument. Bridge the gap between the workforce demand and supply. The WFMIS cannot be

used to generate jobs. It only helps in facilitating the flow ofworkforce/labour market information.

Has a structure that is largely dependent on a country’s need and labourmarket requirements.

Has many stakeholders to contribute. Needs to be dynamically updated with the new labour market information.

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3.Overview of the IT Sector

The major segments of the IT Industry are IT Services, BPO, and EngineeringServices, and Packaged Software. Much of the activity is centered on serviceofferings in Banking, Financial Services, and Insurance (BFSI), Hi-Tech andTelecom, Manufacturing, and Retail. There has been an inorganic growth observedin the IT sector of India during the last decade. This growth has been observedboth in the revenues as well as the number of people employed in the sector.India’s acceptance as a preferred off-shoring destination in the world isevidenced by the fact that it was ranked at the top (first place) in AT Kearney’sGlobal Services Location Index.

3.1 IT services sectorThe IT Services segment is the largest contributor to the IT industry, accountingfor more than half of industry revenues. IT services involve a full range ofengagement types that include consulting, system integration, IT outsourcing, andmanaged services.

Following are the core activities of IT services sector: IT Consulting Systems Integration Custom Application Development (CAD) Software Deployment and Support Network Consulting and Integration Software Testing IT Education and Training Services Oriented Architecture (SOA) Application Management Information System Outsourcing Hardware deployment and support IT education and training Web Services

3.2 IT/BPO services sectorBPO includes processes that may be IT-enabled, do not necessitate on-shorepresence and are hence, offshore-able. Customer interaction, and Finance and

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Accounting services account for a significant portion of BPO revenues. Mostleading IT companies have BPO divisions/subsidiaries. The growing area in thissegment is what is called as Knowledge Process Outsourcing (KPO). Some of the KPOservices already outsourced to India include data analytics, content management,research and information services, animation, biotech and pharmaceuticalresearch, medical and health services. A substantial amount of growth is expectedto be in the areas of Legal Process Outsourcing (LPO), Engineering ServicesOutsourcing, and Financial and Market Research. Domestic GDP growth andincreasing domestic IT spends will also fuel growth of the BPO sector in thedomestic context.

Following are the core activities of BPO sector: Customer Interaction & Support (CIS) Customer Care Finance & Accounting (F&A) Research and Analytics Human Resource Management (HRM) Procurement Services / Supply Chain Management Knowledge Services (KPO / Knowledge Process Outsourcing) Legal Services (LPO / Legal Process Outsourcing)

3.3 Engineering ServicesSeveral product-based multinational companies are known to be outsourcing part oftheir product development requirements from their captive offshore centres inIndia. Range of services outsourced include engineering and designing solutionsacross diverse industry verticals like research and development,telecommunications, automotive, aerospace, construction, and industrial design.The next decade will play a crucial role in bringing about disruptive growth forthe Indian Software Products segment, and the annual revenue aggregate of thissegment is forecasted to grow substantially high.

The growth is likely to be in the areas of Business Intelligence (BI), EnterpriseResource Management (ERM), Storage, Security, BFSI, telecom, healthcare, Retail,search engine marketing, mobile applications, social networking, communicationservices, online education, and online gaming.

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Following are the core activities of Engineering Services sector: Research and Development (R&D) services Hardware and software technologies Development of software running on embedded systems Computer-aided design (CAD)

3.4 Packaged SoftwarePackaged software are programs or code sets of any type, commercially availablethrough sale, lease, rental, or as a service. Packaged software revenuestypically include fees for initial and continued right-to-use packaged softwarelicenses.

Following are the core activities of Software sector: Software Products Offshore Product Development

3.5 Skill requirements in the IT and ITES industryThe Indian IT and ITeS industry currently employs about 2.7 million1 persons incomparison to 0.8 million in 2004. In the context of growth forecasted for theindustry, availability of skilled human resource supported by appropriate skillbuilding initiatives will be the key to this growth.

Major trends impacting skill requirements for the IT Industry Continuous demand for skilled workforce Demand for skilled workforce in IT consulting Demand for skilled workforce in specific industries like BFSI, Healthcare, and

Education Inability to Innovate Increased share of other business verticals Increased opportunities in the Indian market from other markets like Europe Evolution of newer pricing models Evolution of new technologies like Cloud Computing

Major trends impacting skill requirements for the ITES Industry

1 Source: National Skill Development Corporation Report25

Increasing share of business from KPOs High-end research and analytics, online market research, and legal advisory Increasing demand of end-to-end service offerings in the domestic market Increasing confidence of clients on Indian outsourcing vendors

This unprecedented growth in the IT-ITeS sector can be much more with marketsopening up further and supported by large investments in innovation, skillbuilding, IP creation, and development of IT infrastructure in tier-2 and tier-3cities. At the same time, risks such as protectionism, security, poorinfrastructure, and skill development can dampen the growth. For this growth tomaterialize, India needs to develop its talent pool and serve as a hub for end-to-end services, and innovation in business models and technology offerings.Expansion of IT and ITeS Industry to tier-2 and tier-3 cities is also criticaltowards this end towards achieving cost competitiveness and inclusive growth.

As enunciated by NASSCOM’s ‘Perspective 2020’, the success story of the industrywould rely on the following: Catalyzing growth beyond today’s core markets Establishing India as a trusted global hub for professional services Harnessing ICT (Information and Communication Technology) for inclusive growth Developing a high caliber talent pool Building a pre-eminent innovation hub in India

Based on the trends witnessed in productivity and the likely growth potential ofthe IT and ITES industry, it is expected that the industry would employ about 7.5million2 persons directly by 2022. A large portion of this employment is expectedto occur in the ITES (BPO/KPO) exports sector, followed by IT exports and then inthe domestic market. The incremental human resource requirement in the IT andITeS sector is expected to be about 10 million persons till 2022.

To become globally competitive it is imperative for the IT-ITeS companies toadopt international standards and best practices. This alone can help themoptimize their quality, services and costs. The frameworks to follow should bethe ones that make the organization data-driven, instill process discipline andhelp achieve sustained excellence. Some important steps that companies need totake are: 2 Source: National Skill Development Corporation Report

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The design and deployment of the right processes during the formative stagesof the organization

The creation of a robust and streamlined training plan, a foolproof butscalable recruitment process and efficient HR activities to create amotivating work environment and a performance management system

Continuous efforts in improving service and quality levels while loweringcosts and creating a highly performance driven culture.

Emphasizing on continuously improving talent, developing effective teams, andsuccessfully managing the people assets of the organization

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