The Hindu Business Line : IT now employs a million — Revenue per employee also on the rise

THE IT sector has crossed yet another milestone. The number of knowledge professionals employed in the software services and ITeS sectors has crossed the one-million mark and is expected to close the 2004-05 financial year with a headcount of 10,45,000 people.

But taking more people on board has not dented the bottomline of the IT companies. On the contrary, along with the rising number of employees, the revenue per employee too has increased during the period.

"IT is clearly a career of choice. The IT services segment is amongst the highest paying. Even the Business Process Outsourcing industry has attractive salary levels, with a stronger scope for professional growth compared to other sectors. Also the extent of training in technology, cultural skills, global negotiation skills and opportunity to pursue higher education while working makes the sector more attractive," the Nasscom (National Association of Software and Service Companies) Vice-President, Mr Sunil Mehta, told Business Line.

With this, the sector has reached the halfway mark in its pursuit to create two million direct jobs by 2008 as projected by the Nasscom-McKinsey report.

Moving up the value chain

Moreover, with Indian software companies now consciously endeavouring to move up the value chain, the average revenue per professional in IT services exports segment is on the rise.

According to Nasscom, the annual revenue per person in the industry is estimated to touch about $35,275 during 2004-05, against $34,390 in the previous year, reflecting a 2.5-per cent increase. In 2002-03, this figure stood at about $34,074.

Similarly, in the IT-enabled services space, the revenue per person shot up from about $13,778 in fiscal 2003 to about $14,320 the next year, and is further expected to reach $14,641 during the current financial year.

"The revenue per person is clearly on the rise on account of increased productivity and companies moving up the value chain," the Wipro Chairman, Mr Azim Premji, said.

Agrees Nasscom's Mr Mehta. "On a whole, the revenue per person is rising as companies move up the value chain from functions like application development and maintenance to those like systems integration, packaged software installation, or engineering services. This, in turn, has led to an increase in billing rates," he said.

Even in the case of BPO, there is an increasing trend of companies moving away from vanilla call-centre operations towards high-end functions such as transaction processing and financial research.

Rise in R&D

"Within IT services, the share of research and development services is increasing as well. Multinationals and Indian companies that are involved in R&D outsourcing or offshore product development are rising on an average," he added.

Another factor fuelling the trend is the shift to a "fixed price" model compared to a dollar-per-hour model, he added.

He noted that the growth in average revenue per person in the IT services export category was somewhat subdued as companies were seen to be hiring more towards the year-end.

Although this adds to manpower numbers, the utilisation rate is not very high, he explained.

"Once the hiring starts taking place uniformly through the year, we will see a further increase in the average revenue per employee figures," Mr Mehta added.

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