Sruthi Krishnan

CHENNAI: Venture capital (VC) investments in the IT services and BPO sector will continue to decline in 2009, according to analysts.

Arun Natarajan, CEO, Venture Intelligence, provider of information and networking services to the private equity and VC ecosystem in India, said that apart from the decline of the share of IT services and BPO sector in the overall investment pie, there has been a decline in actual numbers too.

IT services had attracted 10 investments in 2007, which declined to five deals in 2008, and the BPO sector saw 17 deals in 2007, which dipped to six in 2008.

Year-on-year decline

“The IT services sector and the BPO sector has seen a year-on-year decline and it does not appear to change any time soon given the uncertainty in the United States,” he said.

Talking about areas that could perk VC interest in 2009, Sudhir Sethi, founder, chairman and managing director, IDG Ventures India, voted for products in the field of business intelligence and analytics, “as such products would lead to more revenue and cost optimisation for enterprises.”

Digital enterprise security and healthcare are other sectors which have a potential for investments, he said.

With the use of 3G handsets poised to increase in the next two years, Mr. Sethi said,

“A lot more applications in the handset arena would be very attractive.”

Apart from this, he listed aerospace, waste management, green and clean technology and energy management as fields that hold promise in 2009.