IT sector's revenue to touch USD 47.8 bn: NASSCOM

Bangalore, Jan 23: Registering a ten fold increase in the past decade, the Indian IT industry would achieve a revenue of 47.8 billion US Dollars during the current fiscal, the National Association for Software and Services Companies (NASSCOM) said today.

Announcing the key findings of the Strategic Review 2007, NASSCOM said the IT industry's contribution to the GDP was estimated to be 5.4 per cent this fiscal as againt 1.2 per cent in 1997-98.

The report would be formally released at NASSCOM's 15th annual summit 'NASSCOM 2007: India Leadership Forum', to be held in Mumbai from February seven.

Commenting on the key findings, NASSCOM Chairman and Satyam Computer Services Founder and Chairman B Ramalinga Raju said ''the last decade is testimony to the growing impact that the Indian IT industry is having on the global and local economies. The industry is perfectly poised to tap new opportunities in the offshoring and domestic segments for greater wealth and IP creation for the country.'' NASSCOM President Kiran Karnik said ''Indian IT industry's consistent growth in both exports and domestic segments and its ongoing expansion into new potentially high growth opportunities reaffirms the continued confidence and global competitiveness of the Indian IT sector. We are confident that the industry will achieve its ambitious target of 60 billion Dollars in exports in 2010.''

Mr Karnik said the challenges faced by the industry were 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, through large unaddressed areas and the possible unbundling of IT-BPO mega-deals with increasing shares of global delivery,'' he added.

The other positive sign was the maturing of the domestic IT industry. For the first time ever, the domestic industry had broken out of the hardware linked growth pattern and Indian firms were playing an increasing role within this segment, he said.

The review said service and software exports remain the mainstay of the IT-ITeS sector, contributing 31.3 billion Dollars and beating forecast to register a 32.6 per cent growth.

Increasing traction in offshore product development and engineering services was supplementing India's efforts in IP creation. This segment was growing at 22-23 per cent and was expected to report 4.9 billion Dollars in exports in 2006-07.

MNC investments announced in 2006-07 reach an unprecedented scale of over ten billion Dollars, to be invested over the next few years.

The total size of the domestic market was expected to cross 15.9 billion Dollars in 2006-07, a growth of 21 per cent over 2005-06.

Traditionally, this segment had been led by MNCs. However, Indian firms were gradually gaining ground. Over time, this segment could become a larger SME play, as the mid-sized firms increase their levels of IT adoption, NASSCOM said.

It said that for India to fully capitalise on the opportunity and sustain an unassailable lead in the global IT-ITeS space, stakeholders need to continue working towards timely and coherent execution of initiatives to address supply-side concerns. The areas of concern included augmentation of talent supply, creation of world class infrastructure, strengthening information security, enhancing operational excellence, regulatory support and catalyzing domestic market development, besides fostering an ecosystem for innovation.

On service-line expansion, NASSCOM said the service providers were taking on larger and more complex deals, and the average size of contracts awarded to Indian firms was going up. Indian Service Providers have grown their share of contracts of values in excess of 50 million Dollars from one per cent in 2002 to seven in 2006. Even though larger players continue to lead growth, gradually increasing their share in the industry aggregate, several high-performing SMEs also stand out in their growth.

On employment trends and its initiatives in talent hunt, NASSCOM said the total IT software and services employment would reach 1.6 million in the 2007 fiscal. The industry in collaboration with the Government and other stakeholders had initiated several initiatives to further enhance the availability and access to suitable talent for IT-ITeS in India.

The NAC (NASSCOM Assessment of Competence) had been nationally rolled out in November 2006, after a successful pilot. This was being taken to a number of States in 2007. A comprehensive skill assessment and certification programme for entry-level talent and executives (low-middle level management) was under way.

NASSCOM was also planning an image enhancement programme to build greater awareness about the career opportunities in this segment. It had been working with the academia across the country under its IT workforce development initiative to encourage and facilitate greater industry interaction. NASSCOM had signed MoUs with the UGC and AICTE to take forward these initiatives.

NASSCOM had suggested the concept of experimenting with adapting the Special Economic Zone concept (deregulation and removal of restrictions) for education, and creating Special Education Zones.

The long term steps that were needed include much higher Government investment in education, major education reform and better compensation and research grants for teachers/researchers.

NASSCOM had proposed the setting up of a chain of finishing schools for IT professionals to make them more employable with a simple 3-4 months of honing of technical skills and imparting soft skill training, helping bridge the manpower supply-demand gap by at least 30-40 per cent. It had been proposed that such finishing schools be set up by the IITs and National Institutes of Technology.

UNI