The country's third largest software exporter, Wipro Technologies, said it is looking for an acquisition in the BPO space, which is likely to be the next engine of growth for the IT industry.

"The economy has improved. The IT demand situation is certainly improving. The deal pipeline is good, the demand environment is building up," Wipro Technologies Joint CEO Suresh Vaswani told reporters on the sidelines of the India Economic Summit.

He added the company is looking at acquisitions in the BPO space.

"BPO has strong performance... BPO will drive growth for the IT industry. Acquisition is part of our strategy we keep looking at it, he said."

The company is also bullish about the current quarter.

"We have given a fairly strong guidance for this quarter which is substantially more than what we gave last quarter," Vaswani said, adding, all sectors are likely to grow, including the Banking, Financial Services and Insurance.

About the pricing pressure faced by the company, he said customers are not looking at price discounts but are looking at substantial change in cost structure.

"We are doing more fixed price projects which now form 40 per cent of the contracts we have. The fixed price models gives both our customers and us a win-win situation."