Indian IT software and services grow by 31.4% in FY 05-06

Bangalore, June 01, 2006: NASSCOM, the chamber of commerce and “voice” of the IT software and services industry in India, today announced the findings of its annual survey on the performance of the Indian software and services industry (excluding hardware) and the outlook for FY 2006-07.

As per the NASSCOM survey, the Indian IT-ITES industry has recorded 33% growth in exports, clocking revenues of USD 23.6 billion in FY 2005-06, as compared with export revenues of USD 17.7 billion in FY 2004-05. FY 2005-06 also saw the overall Indian IT-ITES industry (including domestic market) growing by 31% registering revenues of USD 29.6 billion, up from USD 22.5 billion in 2004-05.

Of the total IT-ITES exports in FY 2005-06, IT software and services grew by 33%, registering revenues of USD 13.3 billion; while ITES-BPO segment clocked revenues of USD 6.2 billion, recording a growth of 37%. Engineering services and product exports grew from USD 3.14 billion in FY 04-05 to USD 4 billion in FY 05-06. Domestic market clocked revenues of USD 6 billion in FY 04-05 from USD 4.8 billion in FY 05-06.

NASSCOM has projected overall software and services will grow by 25-28% clocking revenues of USD 36-38 billion in FY07. IT-ITES exports are likely to grow by 27-30% in FY 06-07, posting revenues between USD 29-31 billion.

Mr. Kiran Karnik, President, NASSCOM, said, “The excellent performance of the Indian software and services industry once again reinforces our confidence that the industry is on course to meet the projected target of USD 60 billion exports by FY 10, as projected in the NASSCOM McKinsey Report. This growth is also reflected in the employment trends, both direct and indirect which according to our estimates is to the tune of 4.3 million.

“With less than 10% of the market currently addressed, a large market opportunity exists for the sector which will ensure sustained demand led growth. Factors like evolution of global delivery model, unbundling of large IT outsourcing deals with larger India based delivery shares, and the large contract values due for renewal over next two years are some of the positive indicators for the sector. In the last year India’s strength has emerged through large client wins, cross-border mergers and acquisitions, movement of the industry towards stable pricing model and a gradual positive shift in the outsourcing debate”.

“However, along with the opportunity, there are a challenges that call for focused efforts. These include concerns about the quality and skill sets of graduates, infrastructure, maintaining the attractiveness of India for IT investments and steps to boost the domestic market”, he added.