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India's IT services export to touch $40 billion by 2005: Gartner

Sumeet Chatterjee in New Delhi

The Indian information technology industry's export of software services is poised to touch $40 billion by 2005 despite a US economy slowdown, according to technology industry research major Gartner Inc.

"When companies globally are focusing on their core competencies to maintain their profit margins, they are increasingly focusing on outsourcing across the globe," said Bob Hayward, senior vice president (operations) of Gartner Asia Pacific.

"And given India's skill sets, the country is being seen as the logical outsourcing destination. Traditional businesses other than software companies are increasingly looking at outsourcing their requirements from India," he told reporters on Monday.

Hayward said that the economy slowdown in the US, India's prime software export destination, was 'very shallow and very sectoral' and it would not have an adverse impact on IT spending in India that grew to $12.2 billion in 2000-01, up from $8.67 billion in 1999-2000.

"There will be individual cases of failure in the Indian industry but overall the potential of IT services export may be as high as $40 billion in 2005," he said.

According to a Gartner study, the US economy would revive by the end of the current year, triggering large-scale demand for software products and services.

"The companies should be ready when things pick up rather than wait for things to pick up," Hayward said.

He said the slowdown in the technology industry would force 'smarter Indian companies' to look for software export destinations other than the US that accounts for nearly 70 per cent of the country's software and services export.

"This is absolutely the best time ever to expand business globally, notwithstanding the notion of gloom and doom in the industry. But the companies will have to become smarter, bring about a shift in strategy and move up the value chain."

The Gartner official said that the global e-services market had the potential of touching $150 billion by 2008 and India would account for a large chunk of the total revenue.

"Today the Indian economy is not facing some of the problems that other economies like Indonesia, Philippines, Singapore are facing and one of the reasons for this is the much bigger potential in the domestic demand for IT products and services," Hayward said.

According to Gartner's study, India's information and communications technology will account for 3 per cent of gross domestic product, up from 1.8 per cent in 2000-01. Internet subscribers will also grow to 21 million by 2005 from 2.65 million by end of 2000.

Gartner is organising a two-day summit on 'Exploiting IT for Business Transformation', starting Tuesday in New Delhi. The event will showcase some of Gartner's expert team of international analysts and consultants, who will discuss global trends in business and technology.

Indo-Asian News Service

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