Reflecting the downward trend in the Indian IT industry as a result of global tech meltdown, software exports from Bangalore, the Silicon Valley of India, has declined by 8 per cent during the fiscal year 2002-03 over the previous year.

Though year-on-year, exports by the Bangalore-based software companies, including multinationals grew by 25 per cent during the year under review, the growth fell far below the projected target of 40-45 per cent and lower than 33 per cent registered in the last fiscal 2001-02.

According to the Bangalore-based Software Technology Park of India, which provides satellite-linked datacom services and incubates IT firms, software exports stood at Rs 12,350 crore (Rs 123.50 billion) during 2002-03 against Rs 9,903 crore (Rs 99.03 billion) in 2001-02, and Rs 7,475 crore (Rs 74.75 billion) in 2000-01.

"Global economic slowdown and pressure on billing rates have led to a decline in the growth rate year-on-year. But Bangalore continues to lead software exports from India, with a lion's share of the total exports.

"Though Nasscom, the representative body of the Indian software firms, is yet to come out with its annual figures officially, we are confident that contribution from Bangalore will be 29 per cent of India's total software exports," claimed STPI-B director B V Naidu on Wednesday.

Interestingly, the information technology enabled services sector, led by the business process outsourcing segment registered a much faster growth than the traditional software services sector.

As the fastest growing segment of the IT industry, 69 ITES/BPO companies based in and around Bangalore posted a combined export revenue of Rs 988 crore (9.88 billion) in 2002-03, registering a massive growth rate of 275 per cent over the previous year (2001-02), when 28 such firms posted a turnover of only Rs 264 crore (Rs 2.64 billion).

"As part of the pan-Indian trend, 41 new BPO/ITES companies registered with the STPI-B during the year under review, and contributed around 8 per cent of the total software exports from Bangalore.

"The ITES/BPO sector currently employs about 18,000 people. The sector has invested Rs 512 crore (Rs 5.12 billion) during the year against Rs 414 crore (Rs 4.14 billion) in the previous year registering an increase of 23 per cent," Naidu stated.

With more global IT majors rushing to India for outsourcing their software requirements, thanks to the availability of abundant high skilled professionals at lower costs, 79 foreign companies set shop in and around Bangalore during fiscal 2002-03, with a cumulative investment of Rs 1,025 crore (Rs 10.25 billion), registering an increase of 15 per cent over the previous year (2001-02) at Rs 892 crore (Rs 8.92 billion).

"Bangalore attracts 3 foreign companies every fortnight as against one every week last year," Naidu disclosed.

On the other hand, major Indian IT firms invested Rs 523 crore (Rs 5.23 billion), a massive increase of 85 per cent over the previous year when only Rs 283 crore (Rs 2.83 billion) was invested.

The total number of IT companies serviced by STPI-B went up to 1154 during 2002-03, including 79 firms with 100 per cent foreign equity, showing an increase of 11 per cent over the previous fiscal 2001-02, when the number of companies were 1038.

"The growth in small and medium enterprises, however, continued to remain sluggish, with investment being lower at Rs 160 crore (Rs 1.60 billion) against Rs 208 crore (Rs 2.08 billion) invested in the previous year.

Of the total software exports of Rs 12,350 crore (Rs 123.50 billion), Indian IT majors, led by Infosys and Wipro, contributed Rs 5,113 crore (Rs 51.13 billion), while multinationals earned Rs 5,009 crore (Rs 50.09 billion), registering a growth of 14 per cent and 22 per cent respectively.

IT firms in the SME segment, however, posted a higher growth rate of 63 per cent by exporting software valued at Rs 2226 crore (Rs 22.26 billion) against Rs 1,361 crore (Rs 13.61 billion) in the previous year.

As in the previous years, North America continues to be the major export market for all the IT firms, accruing 69 per cent of the total exports from Bangalore, with Europe at 21 per cent, West Asia 5 per cent, Japan 3 per cent, and the rest of the world 2 per cent.

Similarly, segment wise, application software accounted for 39 per cent of the total exports, while systems software contributed 17 per cent, telecom sector 14 per cent, IC design 7 per cent, and the remaining 6 per cent.

Incidentally, the Electronic Hardware Technology Park companies also grew impressively during the year under review (2002-03), achieving an export of Rs 1,404 crore (Rs 14.04 billion), up by 67.50 per cent over the previous year (2001-02), when exports were Rs 838 crore (Rs 8.38 billion).

Segment wise, UPS (uninterrupted power supply) products, led by American Power Conversion, dominated the sector contributing 36 per cent of the total hardware exports, followed by medical equipment, led with 31 per cent, telecom 25 per cent, computer peripherals 6 per cent and printed circuit boards 2 per cent respectively.

Software exports from STPI's other centers in Karnataka at Mysore and Manipal also grew substantially, registering an increase of 66 per cent and 36 per cent respectively over the previous year.