New Delhi, Feb. 4 Bouncing back from the global slump, India's IT and BPO exports are projected to grow 13- 15 per cent in FY11 to $56-57 billion, the growth rate three times that of the current financial year.
However, this projection means that the target set out by the IT industry in February 2009, of achieving $60-62 billion of export revenue by FY11, gets pushed back yet again. This financial year, IT and BPO export revenues are expected to grow 5.5 per cent to $49.7 billion, placing it almost at the $50 billion milestone that the industry has been aspiring for since 2000. In FY10, the domestic market is expected to clock Rs 66,200 crore in revenue, 12 per cent higher than the preceding year.
DOMESTIC BOOST
The next fiscal would be even better for the domestic market, which according to Nasscom, is at an inflection point. The public spending on IT, e-governance projects and increased automation by local companies, particularly healthcare, retail and BFSI, would speed up the growth rate to 15-17 per cent and revenue to Rs 76100- 77500 crore.
Notwithstanding recent setbacks and weak quarters, the tech industry is estimated to have added 90,000 jobs during FY10, taking the total workforce to 2.3 million professionals.
The four per cent rise in headcount versus the 5.5 per cent export revenue growth and 12 per cent domestic market growth underscores efficiencies leveraged by the industry during turbulent quarters.
Nasscom believes there may not be much of headroom left for increasing efficiencies further. So the industry is likely to hire 1,50,000 professionals in fiscal 2011.
"The growth is back and so are the IT spends. We see a positive outlook. In fact, the current financial year has been a defining year, and the industry did not waste the crisis but used it to its advantage in terms of increasing its cost efficiencies, utilisation rates, diversification into new verticals (like healthcare, utilities), new services lines (Remote Infrastructure Management), newer markets and pricing models" the Nasscom Chairman, Mr Pramod Bhasin said adding that Asia is leading the recovery, followed by the US while Europe is lagging.
GROWTH DRIVERS
The Nasscom President, Mr Som Mittal, said that although the BFSI segment would continue to be the mainstay of the Indian industry as it moves towards the FY11 target, RIM and BPO would be the among the key growth drivers. Offerings around cloud computing, SaaS, and platforms will gain momentum, he said.
Between December 2007 and December 2009, utilisation rates have moved up by almost six percentage points. For the same period, the attrition rates have dropped from 15 per cent to 11.8 per cent. The onsite mix (to overall revenue), and SG&A expenses are down by almost three per cent each.
According to Nasscom, the industry now accounts for 25 per cent of India's exports; 10.5 per cent of services revenues. There are over 900 captives in India accounting for $10.6 billion. Where domestic market is concerned, BPO continues to be the fastest growing segment (over 21 per cent), while IT services is likely to grow by 12 per cent in FY10.
Underpinning all this growth is the Government IT spend, which has thrown-up a $9 billion e-governance opportunity over a three year timeframe, Nasscom said.
Asked why the software and services exports in fiscal 2011 would be lower than the initial outlook, Mr Bhasin said, "The forecasts tend to be broad and closer we get, the better it is. Besides, the numbers have been impacted by recession that everyone is going through."
US PROTECTIONISM
Despite the bullish outlook, protectionism clearly continues to be an overhang on the industry, especially given the anti-outsourcing statements by the US President, Mr Barack Obama.
"As far as US unemployment is concerned, it is an issue as it impacts local politicians and even local companies.It is a big issue that can slow down decision making.But we are less worried about the political rhetoric converting into real action, given that the response from other countries could be swift," Mr Bhasin said.
Source : Business Line