The Hindu Business Line : IT-ITES exports rise 33 pc at $24 b

2006-07 projections
Overall software and services to grow by 25-28 per cent at $36-38 billion revenues
Export revenues seen at $29-31 billion
Employment to grow by another 2,50,000-3,00,000

MR KIRAN KARNIK

New Delhi , June 1

India's IT and IT-enabled services (ITES) exports registered a growth of 33 per cent to touch revenues of $23.6 billion during 2005-06 against $17.7 billion notched in the previous year. The growth rate is marginally higher than 32 per cent registered in 2004-05.

The IT and BPO exports are, however, projected to grow at relatively lower rate of 27-30 per cent during 2006-07 to garner $29-31 billion in revenues.

According to the National Association of Software and Services Companies (Nasscom), the projection for a lower growth rate for the current financial year is on account of the rising export base.

During 2005-06, of the total IT and ITES exports, IT software and services grew by over 32 per cent registering revenues of $17.3 billion on the back of a strong demand for traditional applications development and maintenance services as well as new service areas such as package implementation, while ITES/BPO sector grossed revenues of $6.3 billion recording a growth of 37 per cent.

Against a forecast of 26-27 per cent growth, the overall software and services (which includes exports and domestic market) grew by over 31 per cent at $29.6 billion in 2005-06. The domestic market revenues grew to $6 billion in 2005-06, from $4.8 billion in the previous year.

Huge opportunity

"The industry is on course to meet the projected target of $60-billion exports by 2009-10 as projected in the Nasscom-McKinsey report. This growth is also reflected in the employment trends both direct and indirect, which according to our estimates is to the tune of 4.3 million people," the Nasscom President, Mr Kiran Karnik, said at a conference here.

"With less than 10 per cent of the market currently addressed, a large market opportunity exists for the sector which will ensure sustained demand-led growth. Factors such as evolution of global delivery models, unbundling of large IT outsourcing deals with larger India-based delivery shares, and $100 billion in contract value due for renewal over the next two years are some of the positive indicators for the sector," Mr Karnik said adding that so far Indian companies had concentrated on top 500 global firms, but in future demand will be led by top 2,000 global companies.

Asked about the reasons for the lower growth rate projections during 2006-07, Mr Karnik said that the rate masked the fact that incremental revenue for the period is expected to be at an all-time high of $6-8 billion.

Mr Karnik said the employment in the sector would grow by another 2,50,000-3,00,000 in 2006-07, and added that for every job created in the sector, more than 2.5 to three jobs are created in the support services and allied sectors.

Mr Karnik said the sector would have to overcome several problems, including the quality and skills of graduates, rising salaries and weak infrastructure.

Quality talent needed

"We need to produce more and better quality talent. Other areas that need an immediate focus include strengthening of urban infrastructure in existing and emerging cities and emphasis on proactive regulatory reform to facilitate greater ease of doing business.

Also, there is a need to actively promote an uncompromised agenda towards global free trade with regard to issues like increase in H-1B visas," he said.

Nasscom also said that domestic IT offtake needs to pick up more and this would happen with increased competition and de-regulation across various sectors.

The Indian Government needs to up its IT spend, and also increase procurement through electronic platform," he said.

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