Indian Outsourcing Industry Set to Jump 33% to $31.3 billion

Indian software and services exports are expected to jump nearly 33% to $31.3 billion during the fiscal year ending Mar 2007, according to the the Strategic Review 2007 report by NASSCOM, IT software and service industry trade body in India. 

Other Highlights:

  • The Indian IT industry has grown its revenues ten fold in the past decade, from $4.8 billion in FY 1997-98 to $47.8 billion in FY 2006-07.  
  • Its contribution to GDP is estimated to have grown from 1.2% to 5.4% in the same period. 
  • BFSI, Telecom and Hi-Tech verticals continue to account for approximately 60% of the market for Indian IT. 
  • The Indian IT industry is estimated to top $60 billion exports in 2010.
  • Total IT Software and services employment to reach 1.6 million in FY07.
  • The total size of the Indian domestic market is expected to cross $ 15.9 billion in FY 2006-07, a growth of 21% over FY 2005-06

Indian IT Industry by Sector

USD billion

FY 2004

FY 2005 FY 2006 FY 2007E
IT Services

10.4

13.5

17.8

23.7

-Exports

7.3

10.0

13.3

18.1

-Domestic

3.1

3.5

4.5

5.6

ITES-BPO

3.4

5.2

7.2

9.5

-Exports

3.1

4.6

6.3

8.3

-Domestic

0.3

0.6

0.9

1.2

Engineering Services and R&D, Software Products

2.9

3.9

5.3

6.5

-Exports

2.5

3.1

4.0

4.9

-Domestic

0.4

0.8

1.3

1.6

Total Software and Services Revenues

Of which, exports

16.7

22.6

30.3

39.7

12.9

17.7

23.6

31.3

Hardware

5.0

5.9

7.0

8.2

Total IT Industry (including Hardware)

21.6

28.4

37.4

47.8

Source: NASSCOM STRATEGIC REVIEW 2007
 
The Indian IT-ITES sector (including the domestic and exports segments) is expected to exceed $47.8 billion in annual revenue in FY07, an increase of nearly 28% in the current fiscal
  • Contribution to GDP estimated to be 5.4% up from 4.8% last year.
  • Service and software exports are contributing $31.3 billion and beating forecast to register a 32.6% growth
  • Offshore product development and engineering services segment is growing at 22-23% and is expected to report $4.9 billion in exports, in FY 2006-07.
  • MNC investments reached over $10 billion announced in FY 2006-07, to be invested over the next few years.

Indian Service Providers have grown their share of contracts of values in excess of $50 million dollars from 1% in 2002 to 7% in 2006.

Employment: Indian Software and Services sector

Sector

FY 2004

FY 2005 FY 2006 FY 2007E
IT Services

215000

297000

398000

562000

ITES-BPO

216000

316000

415000

545000

Engineering Services and R&D, Software Products

81000

93000

115000

144000

Domestic Market (including user organizations)

318000

352000

365000

378000

Total*

830,000

1,058,000

1,293,000

1,630,000

Global Markets: While US and UK remain the dominant markets for IT-ITES exports, revenues from newer markets are growing rapidly.

  FY03 FY04 FY05 FY06
Americas 69.10% 69.40% 68.30% 67.18%
Europe 22.20% 22.60% 23.10% 25.13%
Rest of the World 8.70% 8.00% 8.60% 7.69%

The Strategic Review 2007 reviews the industry’s performance in 2007, estimates the growth expected in the current fiscal (FY07), details the service line trends observed across the various industry segments over the past year, presents an assessment of India’s competitiveness as a sourcing destination, analyzes the sustainability of each individual factor contributing to India’s leadership position and provides a view of the outlook projected for the global and Indian IT-ITES industries. It outlines the opportunities, challenges and agenda for key stakeholders to further extend India’s leadership in this space.

The report will be formally released at its fifteenth annual summit “NASSCOM 2007: India Leadership Forum”, scheduled from February 7-9, 2007 in Mumbai.   

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