IT revenue to aggregate $64 b
posted in Outsourcing News and Top Outsourcing deals, Outsourcing to India |Source: www.hindu.com
The resilience of the Indian information technology-business process outsourcing (IT-BPO) sector was tested in 2007 but the sector successfully countered issues of a slowing economy and financial sector crisis in the U.S., a sharp rupee appreciation against the U.S. dollar and supply-side constraints to register double-digit growth.
According to key findings of the Strategic Review 2008 announced by the National Association of Software and Service Companies (Nasscom), India’s software and services exports are expected to cross $40.8 billion and the domestic market is expected to touch $23.2 billion [making a total of $64 billion] in 2007-08.
The industry is on track to achieve its aspired target of $60 billion in software and services exports and $73-75 billion in overall software and services revenues by 2009-10.
IT exports
As per the report, IT exports (including hardware exports) at $40.8 billion will register a 28 per cent growth over 2006-07 figure of $31.9 billion while the domestic IT market estimated to reach $23.2 billion ($16.2 billion) will grow by 43 per cent. IT exports will contribute nearly 64 per cent to the overall revenue aggregate. BPO services, accounting for over 27 per cent of the export aggregate, is the fastest growing segment across software and services exports driven by scale as well as scope. Export revenues of this segment are expected to cross $10.9 billion, a growth of 30 per cent in 2007-08.
Direct employment in the sector is expected to reach nearly two million, an increase of about 375,000 professionals over 2006-07. Sectorally, IT services exports, BPO exports and domestic IT industry provide direct employment to 865,000, 704,000 and 427,000 professionals respectively.
Also, as a proportion of national gross domestic product (GDP), the Indian IT sector revenue has grown from 1.2 per cent in 1997-98 to an estimated 5.5 per cent in 2007-08.
While the U.S. and the U.K. remained the largest export markets (accounting for about 61 per cent and 18 per cent respectively) in 2006-07, the industry is steadily increasing exposure to other geographies. Exports to Continental Europe in particular have seen notable gains growing at a rate of more than 55 per cent annually over 2004-07.
Addressing the media, Lakshmi Narayanan, Chairman, Nasscom, and Vice-Chairman, Cognizant, said, “The robust growth of the Indian IT-BPO industry by over 33 per cent in the current fiscal year reinforces the confidence of global corporations in India. As we move towards 2010, trends indicate that the industry is firmly poised for broad-based growth across industries and service lines, thereby strengthening India’s leadership position as the primary sourcing location for software, IT, infrastructure and business process related services.”
The Chairman also said that Nasscom was hopeful that in the forthcoming Union Budget, the benefit extended to Special Economic Zones (SEZ) would be extended to small scale companies and BPO through an extension of the STPI (Software Technology Parks of India) scheme “which would help move business to Tier-2 and Tier-3 cities. Hopefully also, the outlay for education and reforms in the sector continue.”
Mr. Lakshmi Narayanan said software companies needed to diversify geographically, “so that they are servicing less recession-prone industries and are not dependent on economic cycles. The Indian IT sector largely, has a diversified portfolio to tackle recession.”
Som Mittal, President, Nasscom, said, “the Indian IT industry has been rapidly evolving; growth is on track to achieve, if not exceed the targets for 2010.”
