Closing in on the target

SOFTWARE: The industry is well on course to meet the exports target of $60 billion by 2010.

It's no longer a billion-dollar question. The excellent performance of the Indian software and services industry in 2005-06 simply reinforces the confidence that the industry is on course to meet the target of $60 billion exports by 2010, as projected in the Nasscom McKinsey Report.

The total revenue of listed IT companies crossed the Rs 50,000 crore mark to touch Rs 51,576 crore (around $11.5 bn) in 2005-06 "� up 35.6 per cent.

TCS and Wipro crossed the Rs 10,000 crore revenue mark this year while Infosys Technologies revenue touched the Rs 9,000 crore level.

Satyam Computer got into the $1 billion league with a revenue of over Rs 4,600 crore. Almost all IT majors saw their revenue rise by over 30 per cent in 2005-06.

The growth in net profits was higher by 33.3 per cent with a combined net profit of Rs 10,450 crore (around $2.3 bn) for 57 companies studied here. The net profit of TCS, Wipro and Infosys Technologies crossed the Rs 2,000 crore level while Satyam Computer entered the Rs 1,000 crore profit league this year.

The top four companies posted a robust growth in profits with Satyam leading the pack with a net profit growth of 65.3 per cent. Wipro's profit was up 35.2 per cent, TCS' profit rose by 34 per cent and Infosys saw its profit go up by 27.1 per cent.

The industry performance in 2005-06 was primarily due to large client wins, mergers and acquisitions, movement of the industry towards a stable pricing model and global outsourcing. The growth is also reflected in the employment trends, which is estimated to go up to 4.3 million by 2010 from 1.29 million in 2005-06.

According to K R Choksey Research, the overall Indian software and services industry has witnessed a CAGR of over 21 per cent in last three years, which will continue going forward.

IT and BPO exports have grown by 33.33 per cent, touching $ 23.60 billion in 2005-06 and during 2006-07 the same is likely to grow at a relatively lower rate of 27-30 per cent to garner $ 29-31 billion as per Nasscom's projections.

The exports' growth in IT- and IT-enabled services (ITES) has been backed by a 38.40 per cent year-on-year growth. Engineering services and product exports grew from $ 3.14 billion in 2004-05 to $ 4 billion in 2005-06.

The growth in IT software and services exports is backed by a strong demand for traditional applications development and maintenance services as well as new service areas such as package The ITES/BPO sector registered revenues of $ 6.3 billion recording a growth of 37 per cent.

Revenues from the domestic market grew by 22.45 per cent to $ 6 billion in 2005-06. Thus against a forecast of 26-27 per cent growth, the IT-ITES Software industry registered an overall growth of 31 per cent year-on-year to touch $ 29.60 billion, slightly subdued compared to growth of 35.33 per cent in 2004-05.

The 2006 Nasscom survey has projected that the overall software and services sector would grow by 25-28 per cent, clocking revenues of $ 36-38 billion in the financial year 2006-07. IT-ITES exports are likely to grow by 27-30 percent in 2006-07, posting revenues up to $ 29-31 billion.

In spite of the increased pressure on cost and competition from new emerging geographies in the global outsourcing map, the ITES/BPO sector in India is on a sound track and is expected to achieve $ 8-8.5 billion in FY07 as against $ 6.3 billion in FY06.

According to Nasscom the net employment in the ITES-BPO segment has grown to take the total count to 4,15,000.

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Growth mode

Indian IT companies number over 3,000

Revenue of listed IT cos is around $12 billion

Top 5 players accounted for 46% of the total revenues last year

Share of MNC IT firms remains relatively unchanged at 30%

Employment to go up to 4.3 million by 2010