Shadow of ITeS contraction over small, medium units: CRISIL SME Tracker

The impact of the pandemic on high-value knowledge services, especially in the cloud and analytics sub-segment, is expected to be lower, which will cushion the overall decline
CRISIL Research expects India’s information technology-enabled services (ITeS) exports to contract for the first time in over a decade this fiscal year, shrinking 1-5 per cent year-on-year in constant currency dollar terms to about $36 billion.

Exports constitute more than 85 per cent of the industry’s revenue. And given the Covid-19-induced economic slowdown across the world — especially in the US and EU, which account for about 80 per cent of total export revenue — exports are at risk. 

The impact of the pandemic on high-value knowledge services, especially in the cloud and analytics sub-segment, is expected to be lower, which will cushion the overall decline. However, the traditional voice segment — where small and medium enterprises (SMEs) accounting for over 40 per cent of industry revenue are concentrated — is set to witness a severe volume contraction.


Smaller ITeS players mostly operate in niche segments, based on either services (customer interaction support, knowledge services, finance and accounting, etc) or sectors (health care, BFSI, etc). Very few SMEs have such diversified presence.

To their credit, SMEs are gradually adopting robotic process automation technologies such as chatbots to transition from pure voice-based service providers to non-voice-based ones. The trend is expected to gain traction in the medium term, as these players look to save on cost and boost productivity.

Successful implementation of new technologies, though, will require these SMEs to collaborate with vendors. Also, their growth in the medium term hinges on increased use of solutions based on automation, analytics and artificial intelligence and a focus on knowledge services. 

In fiscal year 2022, we expect cancelled/deferred projects to revive and volumes to pick up, lifting the industry up 6-8 per cent year-on-year.





Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel