NASSCOM 2004, India's Number One global IT conference, ended on a note of hope and optimism last week. The event, which drew over 900 delegates over a three-day period debated and deliberated on a host of issues on the radar screen of the country’s IT sector, predominant among them, the high potential outsourcing segment.

From the CEO conclave, to the dedicated ITES-BPO track to the Country Forums—the buzzword doing the rounds and creating headlines was offshore outsourcing, a sector stated to be gaining maturity and consolidation. India’s most rapid momentum industry (one that has been logging in over 50 percent growth year on year, even during the challenging 2000-02 period), the outsourcing sector is expected to sustain this performance over the next five years. In fact, according to global business intelligence leaders at NASSCOM 2004 including Daniel T. Griswold of the Cato Institute, James Carafano, Heritage Foundation, and Rita Terdiman of Gartner, the outsourcing industry will continue to be the driver of the overall Indian IT market, creating millions of jobs for young and educated Indians and attracting investments from countless countries from the Western world.

While the IT gurus and think tanks present at NASSCOM 2004 were clear about the irreversibility of the outsourcing wave, declaring it beneficial for customers and the countries which were offshoring processes, they also believed that the nascent industry faced numerous challenges. The general opinion was that for outsourcing to live up to its promises, service provider hubs such as India needed to position themselves as creators of high value solutions rather than just low-cost offerings.

India had to go beyond labor arbitrage and entrench itself among global customers as a provider of top-of-the-line, highly skilled, high quality, specialized and domain specific outsourcing services, unparalleled by other competing nations.

Keynote speakers at the IT industry’s most prestigious Forum, including stalwarts such as Mr. N.R. Narayana Murthy, Chairman and Chief Mentor at Infosys, focused their attention on the negative sentiments being generated against outsourcing by the Western world and the ways to deal with this most politically and economically sensitive of issues. The advise of the industry captains was for India to handle the outsourcing debate at the Government level, with bilateral discussions serving as a platform for resolution of the problem. Industry leaders stated that maintaining a low-key, non aggressive approach would help the outsourcing cause much more than rhetoric. Declaring that a media hype and the pressures of the impending US presidential election were responsible in part for the outsourcing backlash, IT gurus stated that Indian companies needed to keep their heads down and continue with the good work.

Industry leaders also outlined what they considered winning strategies for Indian ITES/BPO companies, strategies that would ensure their long-term survival and maintain their edge in the market. Speakers talked about how Indian BPO players could build differentiators into their offerings, scale up in accordance with customer needs and basically deliver value to users.

The issue of internationalization of Indian players also formed part of the NASSCOM 2004 agenda, with speakers advising companies about how to widen their footprint and develop a global culture and attitude. Globalization also meant that countries needed to lower their trade barriers and abandon policies of protectionism, the speakers said. Free trade was the way to go in the emerging 21st century environment, they added.

Another issue that found the spotlight at NASSCOM 2004 was the concept of scaling and growth among Indian IT and BPO services companies. While SME companies needed to expand into Tier one players, the large companies had to strategize on how to make it to the Billion Dollar Club.