The National Association of Software and Services Companies (NASSCOM), the premier Indian trade body for Indian IT-BPO industry on Wednesday announced the annual survey report on the performance of Indian software and services sector (excluding hardware) for FY07-08.
It has also anticipated that in the next fiscal (FY 08-09) the cumulative growth rate in IT-BPO sector would decline and would grow only by 21-24% as against last year’s (FY 07-08) growth rate of 28%, as per the report released by NASSCOM on July 09, 2008.
NASSCOM has projected the changing scenario with increase operation in much larger revenue base of Indian firms and a possible slowdown in decision-making by customers on the backdrop of global economic recession.
The industry body said that the estimated slowdown in IT-BPO would translate to USD 62-64billion comprising USD 50-billion in export sector while nearby USD 13-billion in domestic revenue with the expected 21-24%.
It is also reported that this year (FY 07-08), IT-BPO industry has recorded an overall growth of 28% (currency adjusted), clocking revenues of USD 52 billion in FY07-08 up from USD 39.6 billion in FY06-07. In the overall growth rate, the export sector grew by 29% registering revenue of USD 40.4-billion in FY 07-08, while domestic sector grew by 26% (as per Indian currency) with a revenue of USD 11.6-billion in FY 07-08.
In the export segment that comprises IT services exports, engineering services and product exports and BPO exports, the industry gained USD 40.4-billion from last year’s USD 31.4-billion revenue. In IT services exports, IT industry registered 28% growth translating revenue of USD23.1-billion, while engineering services and products exports has gained revenue of USD 6.4 billion, a 29% growth in the same period. The BPO exports have earned the revenue of USD 10.9-billion by growing at 30%.
The domestic market has recorded the industrial growth rate at 26% clocking revenue of USD 11.6-billion in FY 07-08, as per NASCOM stats report.
Speaking in a press conference, NASSCOM President Som Mittal said that in the export segment, geographical diversification and maturity in services and operating efficiencies helped the IT services exports to jump 28 per cent to last revenue of $23.1 billion.
“The last year was difficult, with currency fluctuations and the sub-prime crisis shaking the industry, but the IT sector has shown resilience. Given that we are well on our way to achieve the target of $60 billion in exports by 2009-10, the industry is focusing on improving productivity, efficiency, as well as opening up new markets such as Continental Europe and Japan,” said Mittal by adding that the industry had seen a 33.7 per cent CAGR over the last eight years, and would therefore need a 21.9 per cent growth to hit the FY10 targets.
Explaining the depreciation in overall IT-BPO industry growth rate, Som said that the growth rate would naturally come down as the base becomes larger. “About 70% of IT spends are towards sustaining the existing infrastructure while 30% goes towards new projects. This discretionary spend is affected in a challenging economic environment, thus impacting growth rates,” he added.
Talking about the new strategies in this sector, Mittal said that industry now needed to plan for the next decade and look at a shift in its strategy. “The next decade offers opportunities and challenges which will require new business models and the industry dynamics will also see significant changes leading to many new industry drivers and enablers, and we will need to prepare ourselves for these,” he said.
For adopting new strategies, ‘ITeS firms need to go beyond the top seven cities and to tier-II and tier-III cities’ cited Mittal.
“Nasscom is developing a long term vision for 2020, to chart out the roadmap for all stakeholders and help them tap into this opportunity.” informed Mittal.
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