Domestic IT mart to grow 21% in FY07

The Indian IT industry, including hardware, has grown ten-fold over the past decade - from $4.8 billion in 1997-98 to $47.8 billion in 2006-07 - and its contribution to the country's gross domestic product (GDP) is estimated to have risen from 1.2 per cent to 5.4 per cent.

Moreover, the domestic IT market is expected to exceed $15.9 billion in FY07, recording 21 per cent growth, according to the key findings of Nasscom's Strategic Review 2007.

Software and services (IT-BPO) exports are expected to exceed $31 billion in FY07, up 32.6 per cent over last year's figure of $23.6 billion. The detailed report will be formally released at the 15th annual summit "Nasscom 2007: India Leadership Forum", scheduled between February 7 to 9.

Indian service providers, the report states, have grown their share of contracts exceeding $50 million from 1 per cent in 2002 to 7 per cent in 2006, while over $10 billion worth of investment has been announced by MNCs, to flow in over the next few years.

The Nasscom findings also note the IT-BPO sector (including domestic and exports segments) is growing at an estimated 28 per cent in FY07. The software and services exports are expected to exceed $31 billion in FY07, reporting a 32.6 per cent growth.

Direct employment in this sector is predicted to exceed 1.6 million - up from 1.28 million last year. Kiran Karnik, president, Nasscom, said, "We are confident the industry will achieve its ambitious target of $60 billion in exports by 2010. Though challenges remain and are being addressed jointly by the industry, government and other stakeholders through both short and long-term solutions. Optimistic market signs indicate there is more headroom for growth."

The other sign is the maturing of the domestic IT industry "which, for the first time ever, has broken out of the hardware-linked growth pattern," he added.

The findings further indicate that offshore product development and engineering services will drive increased intellectual property creation. The segment is growing at 22-23 per cent and is expected to report $4.9 billion in exports in FY07.

B Ramalinga Raju, founder and chairman of Satyam Computer Services, and chairman, Nasscom, said, "The engineering services market is worth $750 billion globally, we feel by 2010 India can grab $40 billion of this market."

Though there is enough headroom for Indian IT companies to grow, access to talent pool remains to be a challenge along with infrastructure, issues relating to innovations and regulations.

Raju said, of the potential employees coming out of the college, only 15 per cent are skilled enough to cater to the global market.

Karnik reiterated that the Software Technology Parks of India (STPI) scheme has played an important role in the catalysing the growth of the Indian IT sector, hence, Nasscom supports the continuation of the same.

"The existing term of STPI scheme is nearing its end (2009), we feel that the government should take a closer look at continuing this scheme."