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IT growth may dip in '08-09: Nasscom

July 12, 2008 13:50 IST

The Indian IT industry, which has been clocking impressive growth rate in recent years, is likely to see a slow down in the next fiscal due to competition from China, the Philippines and Sri Lanka, industry body Nasscom has said.

The growth rate might come down by six per cent due to the competition besides economic uncertainty and lesser IT spends by the US, Nasscom President Som Mittal said.

"A recent survey by Nasscom revealed the industry grew by 28 to 29 per cent in the last few years but our forecast is that it will go down to 22 to 24 per cent," he said while releasing the survey earlier this week.

However, it would not have any impact on the long-term prospects of the sector, which is set to cross the $60 billion mark this year, the survey said.

The survey titled, 'FY08 Revenue performance and FY09 forecast for the Indian IT software and services sector,' said that Indian IT-BPO industry, including domestic companies, recorded an overall growth of 28 per cent, clocking revenues of $52 billion in 2007-08 up from $39.6 billion in 2006-07.

The software and services exports segment grew by 29 per cent to register revenues of $40.4 billion in 2007-08, up from $31.4 billion in 2006-07. The domestic segment grew by 26 per cent to register revenues of $11.6 billion in 20007-08.

The top 10 IT software and service exporters during 2007-08 were Tata Consultancy Services Ltd, Infosys Technologies Ltd., Wipro Technologies Ltd., Satyam Computer Services Ltd., HCL Technologies Ltd., Tech Mahindra Ltd., Patni Computer System Ltd., I-Flex Solutions Ltd,. Mphasis and EDS company and Larsen & Toubro Infotech Ltd.

Within the export segment, IT services exports grew by 28 per cent to clock revenues of $23.1 billion, while BPO exports were up by 30 per cent registering revenues of $10.9 billion. Engineeing services and products exports clocked revenues of $6.4 billion, growing at 29 per cent in 2007-08.

Mittal said 'the Indian IT-BPO industry's resilience is reflected in its FY07-08 performance, with a 28.2 per cent overall growth rate and next year's projected growth between 21-24 per cent. Given that we are well on our way to achieve the target of $60 billion in exports by FY09-10, the industry is now focusing on improving productvity, efficiency, as well as opening up new markets and services."

"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 a new industry drivers and enablers, and we will need to prepare ourselves for these. NASSCOM is developing a long-term vision for 2020, to chart out the roadmap for all stakeholders and help them tap into this opportunity."

Another Nasscom-A.T.Kearney study on 'Location Roadmap for IT-BPO growth: Assessment of 50 leading cities' has stated that around 85 per cent of the BPO business was concentrated in seven cities and identified 43 other cities for BPO growth.

It will collaborate with state governments to improve social and physical infrastructure in these cities.

However, big cities like Mumbai, Chennai, Bangalore, Hyderabad, Kolkatta, the National Capital Region (NCR) and Pune are still the perferred destinations for setting up an IT or a BPO company, the survey said.

These centres are closely followed by Ahmedabad, Kochi, Bhubaneswar, Chandigarh, Coimbatore, Indore, Jaipur, Lucknow, Madurai, Mangalore, Nagpur, Thiruvananthapuram, Vadodara, Tiruchirapalli and Visakhapatnam, it said.

'If the industry follows a balanced growth, these non-leading cities could provide three million direct jobs, 40 per cent of the projected employment by 2018,' it added.

At present, the leading locations account for over 85 per cent of the IT sector employment and over 90 per cent of the BPO jobs in the country, it said.

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