According to a report by NASSCOM and the Boston Consulting Group (BCG), India’s software services and back office companies could earn as much as $50 billion or over Rs2 trillion in the next five years, if the companies “innovate” in the way they deliver software services and build products for its global customers.

The report addresses three aspects of the innovation agenda – the factors that form a powerful imperative for innovation; the approach for firms to spur innovation; and specific recommendations to expand the innovation ecosystem in India. The report recommends creating an “ecosystem” for innovation with the participation of government, industry, academic institutions and financial institutions, and also bold policy changes by the government to foster innovation among IT companies.

Sharing findings of the report, Kiran Karnik, president, NASSCOM, said, “India has established itself as a distinguished leader on the world stage in the IT-ITES arena – Indian firms have successfully dominated the first two phases of evolution characterised by export led growth driven by factor arbitrage and gaining domain experience and superior delivery capabilities. However, the industry is now entering the third phase where Indian firms needs to recognise and act on the importance of ‘Innovation’ for maintaining their competitive edge and fuelling further growth to challenge global players.”

He added, “Focusing on innovation besides differentiating Indian IT-ITES industry will also allow it to tap additional revenue streams worth US$ 50 billion by 2012.”