BOMBAY, 13 May — India seems to have certainly come a long way since it got its independence 55 years back. From being recognized as an agrarian country, India has now leaped ahead of many other developed countries as the hub for information technology. It is now a world renowned fact that some of the best brains for software technology are indeed in India.
After the Sept. 11 attacks, there was a lot of apprehension that due to the global slowdown, India’s software exports would take a beating. But now it looks like India was able to ride the treacherous wave of the global technology slowdown in style.
As per the latest reports, India’s IT services and software exporters were seen picking up as overseas clients had now resorted to outsourcing to cut costs. The word is now officially out that the worst is probably over and 2001’s soft demand is yielding to steadier order flow for this fiscal. Yet, the bitter truth is that India would never probably return back to the boom which was there in the Indian IT industry two years back. Gone are the days when Bangalore based IT companies notched up whopping sales growth of more than 100 percent. Things are now realistic and there are more positives than negatives for the industry.
India’s National Association of Software and Service Companies (Nasscom) has forecast IT services and software exports to grow 30 percent in the year to March 2003, after managing 29 percent growth in 2002. India’s software exports contribute about 16.5 percent to the country’s total exports.
Software service exports totaled $7.5 billion last year, just missing the Nasscom’s 30-35 percent target, while the US — making up 60 percent of demand for India’s software exports — dipped into recession.
Nasscom has said that this downturn has helped bring new clients to India’s IT services sector. Budget squeezing retailers, and financial and insurance firms are taking over from grounded telecom clients in seeking cheaper outsourcing solutions. But before you blow the bugle to announce a victory, it is imperative to know that software giants like Infosys Technologies and Satyam Computer Services have forecasted flat first-quarter sales and profit for the current fiscal 2002-03.
Now for some number crunching, Indian software industry has clocked an export turnover of Rs.365.00 billion in financial year 2001-02, a growth of 29 percent, as compared to the previous year. The industry is poised to maintain its export growth momentum at around 30 percent in the current fiscal, 2002-03. The industry had recorded exports worth Rs.283.50 billion in 2000-01. According to findings of annual survey of software exports by Nasscom, despite global downturn in business environment after the Sept. 11 attacks in the United States, the IT-enabled service industry has grown by 71 percent last in 2001-02 while the IT service sector has clocked growth of around 22 percent in the same period.
The Nasscom survey shows that IT enabled services are expected to grow between 60-65 percent in 2002-03. At Rs.71.00 billion, the contribution of the IT-enabled services sector this year was about 20 percent of the total software exports from the country. This is expected to rise to about 24 percent in the next financial year, pegged at Rs.117.00 billion. The country exported IT services worth Rs.294.00 billion in the last fiscal as against Rs.242.50 billion in 2000-01. The survey projects that the export from the services sector would be pegged at Rs.358.00 billion in 2002-03. According to the Nasscom survey, offshore projects grew by nearly 70 percent while onsite grew by around 10 percent. Industry growth has been increasingly polarized with top five players accounting for 55 percent of the growth.
Nasscom has stated that the industry outlook is expected to recover in the third and fourth quarter of the financial year and the export turnover for the IT software and services sector is expected to be in the region of Rs.475.00 billion in FY03.
Another trend which is being seen is that jobs have once again started opening up for the software professionals. After having laid off lots of IT professionals last year to beat the recession, the news is out that the top notch IT companies are back to hiring. But this time round, it is not indiscriminate hiring, they are hiring only candidates with niche skills and some experience.
In terms of State-wise performance, software exports from Karnataka during fiscal 2002 was Rs.99.03 billion, growing 33 percent over Rs.74.75 billion made in the previous year. Bangalore continued to be the preferred destination with 110 new companies — 66 of them being 100 percent foreign equity companies — setting up their base during the last fiscal.
And running neck-to-neck with Karnataka is Tamil Nadu which has crossed a milestone in software exports by achieving $1.1 billion in exports during 2001-02, registering a whopping growth of 67.8 percent.
There are 558 software export companies in the state, apart from six firms in Pondicherry. TCS has become the top exporter from the state, followed by HCL Technologies, Pentasoft, Infosys and Wipro. Last year, Tamil Nadu was ranked third in the country. Now with this growth, it might move up to the second place beating other contenders like Delhi, Maharashtra and even Andhra Pradesh.
There is no doubt that the most revolutionary change in India has been the rise of computer software as a world-beater. India is not a miracle economy, but software is its miracle sector.