The IT sector has remained tepid for the last two years and fall in discretionary spending is the key reason for the same. On the contrary, BPO industry is expanding at a swift pace compared to the IT services sector which is yet to revive from the financial crisis turmoil way back in 2008.

NASSCOM revised the growth guidance lower for IT software co...more

The IT sector has remained tepid for the last two years and fall in discretionary spending is the key reason for the same. On the contrary, BPO industry is expanding at a swift pace compared to the IT services sector which is yet to revive from the financial crisis turmoil way back in 2008.

NASSCOM revised the growth guidance lower for IT software companies to 9% - 11% for FY13 and 12-14% for FY14.

An increase in discretionary spending by clients especially in America and Europe will further revive the sector. Recent survey of US and European companies signals the prospects of business outlook improving in next one year which eventually will allow the companies to ramp up new projects and spend more on technology.

Back home, robust quarterly December results and cautiously optimistic management commentary indicates FY14 will be a good year.

BPO industry's growth was primarily boosted by surge in outsourcing from companies in US and Europe. These companies are now outsourcing complete processes rather than parts of processes they used to earlier. This sudden surge has now also made them more profitable.  hide