Prospects Brightening for MSMEs in ITeS, Shows CRISIL SME Tracker

Micro, small, and medium enterprises (MSMEs) in the Information Technology-enabled Services (ITeS) sector are poised for significant growth, with an expected increase of 7-9% in rupee terms to ₹4.2 trillion this financial year, according to the latest CRISIL SME Tracker. This positive outlook is driven by a robust order pipeline and a minimal impact from the global economic slowdown, which had a more significant effect on the sector in the previous financial year.

The growth in the ITeS industry will be supported by the resumption of deferred projects and new orders from key segments such as banking, financial services and insurance (BFSI), and manufacturing. MSMEs, which make up 30-40% of the ITeS industry, are predominantly involved in customer relationship management (CRM) services. CRM services represent three-fourths of the sector’s revenue and are expected to benefit from a shift towards non-voice, digital-driven revenues.

Other ITeS segments like transaction services are also set to grow, supported by the increasing adoption of digital payments. Meanwhile, knowledge services are evolving rapidly, with an emphasis on analytics-driven offerings that cater to emerging industry needs.

Despite this growth, employee expansion in the ITeS sector is expected to be modest, with an increase of just 0-1% projected for this financial year. Companies are reportedly taking a cautious approach by focusing on internal cost-efficiency programmes and skill development initiatives rather than engaging in large-scale hiring.

Looking ahead, the ITeS industry is expected to grow by 8-10% in the next financial year, driven by an increase in global outsourcing and offshoring for cost savings. Segments like healthcare and travel are also anticipated to experience double-digit revenue growth, further strengthening the industry’s future prospects.

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