The Hindu Business Line : IT sector revenues seen rising 24-27%

Bangalore July 2 The country’s software and services revenues were projected to grow by 24-27 per cent to touch $50 billion in the current financial year, according to the National Association of Software and Services Companies (Nasscom).

The apex industry body, which revealed its annual survey on industry performance for 2006-07, also reiterated that Indian IT exports were on track to hit the $60-billion mark by 2010.

Sharing details of the survey, Nasscom President, Mr Kiran Karnik, said the Indian IT industry exceeded the estimates to grow at over 30 per cent, clocking revenues of $39.6 billion for 2006-07. Overall exports grew 33 per cent to $31.4 billion, up from $23.6 billion, while the domestic market grew 23 per cent to register revenues of $8.2 billion ($6.7 billion in the previous year).

While the IT services exports grew 35.5 per cent to $18 billion from $13.3 billion in previous year, the ITES-BPO exports rose 33.5 per cent to $8.4 billion from $6.3 billion. The engineering services exports grew to $4.9 billion from $4 billion.

“We are confident that the forecast (exports plus domestic market) of $50 billion in 2007-08 will be achieved, as will the target of $60 billion exports by 2009-10,” Mr Karnik said.

“The tremendous growth indicated that the fundamentals were strong. In fact, we are gaining market share globally,” said Mr Lakshmi Narayanan, Chairman, Nasscom. The addition of new service offerings and new products has resulted in increasing our capability and competitiveness, he said. “India continues to be preferred destination for global IT sourcing due to its capability and top-quality management among others,” he added.

Largest job creator

The IT industry continued to be the largest job creator in the country employing some 1.6 million people directly, of which over 1.2 million were employed in the export segment. The indirect employment generation would be in the multiple of 4x, translating into a figure of some six million, he said. The IT sector employee base grew to 6,90,000 from 5,13,000 in the previous year, while the BPO sector 5,53,000, up from 4,15,000. The domestic IT market employed some 3,78,000 up from 3,65,000 people in previous year. “The industry also significantly impacted the socio-economic development by contributing 5.2 per cent to the national GDP,” he said.

Strong demand

On the market opportunity, Mr Karnik said the indicators continued to be positive with an addressable market of over $300 billion. “The demand continues to be strong and that the headroom for growth for both IT and the BPO sector was huge,” he said.

Maintaining that the overall outlook remained positive, Mr Karnik said the concerns of the US economic recession were moderating. However, challenges such as the rapid appreciation of rupee against the dollar, the suitability of available talent and infrastructure development need to be addressed swiftly, he said. Despite being concerned about the rising rupee and the wage inflation, “we continue to remain cost competitive,” he said.

On charges of visa abuse, Mr Karnik maintained that the Indian companies were ethically managed and transparent. However, there could be some small companies, not from India, who could have misused H-1 visas in the past, he said.

TCS retains top slot

Tata Consultancy Services has retained its lead as the top IT exporter from India followed by Infosys Technologies and Wipro respectively, according to top 20 rankings for 2006-07 compiled by Nasscom. Satyam Computer Services and HCL Technologies were ranked fourth and fifth. Tech Mahindra overtook Patni Computer Systems to grab the sixth slot, while Patni slipped to the seventh position. i-flex solutions, L&T Infotech Ltd and Polaris Software made it to the list of top ten software exporters.

Other companies that made it to top 20 rankings for 2006-07 were Hexaware Technologies Ltd, Aricent, Mphasis BFL Ltd, Mastek Ltd, Siemens Information Systems Ltd, NIIT Technologies, Prithvi Information Solutions, Genpact, iGate Global Solutions and Birlasoft.

The list does not include companies such as Cognizant, Accenture, IBM, HP and Perot which are headquartered in the US, but have significant delivery capabilities in India and have not shared their India-centric revenue figures. Had these companies been ranked based on their India revenues, they would have also appeared in this ranking, Nasscom said.