In India's IT services outsourcing sector, local start-ups, often backed by US venture capital funds, are nipping at the heels of industry heavyweights such as Tata Consultancy Services Ltd and Infosys Ltd.
These nimble start-ups, most of them based in Bangalore, offer niche cutting-edge technology products, solutions and services that traditional outsourcing companies don't offer, or can't offer at competitive rates.
To be sure, Tata Consultancy (TCS), Infosys and Wipro Ltd still account for the bulk of the $100 billion-plus core IT industry's sales and employ hundreds of thousands of engineers. But as these focus on routine services like application development and IT infrastructure management, the start-ups are stealing a march in newer areas such as cloud computing and mobile technology.
The value of outsourcing contracts for digital technologies - social, mobility, analytics and cloud (SMAC) - is set to soar to $287 billion by 2016 from $164 billion last year, says Rajat Tandon, a senior director at the National Association for Software and Services Companies, an outsourcing sector lobby group.
Start-ups will lead the race in providing solutions based on these SMAC technologies, says the group, which predicts the number of start-ups in India will top 2,000 by 2015, from 450 in 2012.
"There's a gold rush. Start-ups are rushing in to serve markets that were never served before," said Sharad Sharma, co-founder of iSPIRT, a think-tank and start-up consultancy.
Text: Nivedita Bhattacharjee and Sumeet Chatterjee, Reuters
Image Courtesy: TCS