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Testing Times for the Indian IT Industry

si Team
Thursday, August 6, 2009
si Team
The impact of global recession on the Indian IT industry has been revealed through the survey by Nasscom, the Indian IT industry body. The survey says that the industry is projected to deliver a single digit growth rate of 4-7 percent for its software and services export during the financial year 2009-10. India's IT and BPO exports, which grew at a rate of 30-32 percent in the last decade, halved to a growth rate of 16.3 percent in 2008-09 and are likely to fall further.

“The revenues from IT-BPO exports are expected to reach $48-50 billion in FY09-10,” says Pramod Bhasin, the Chairman of Nasscom. “The domestic revenue for the sector is estimated to grow by 15-18 percent to reach $13.54-13.95 billion,” he adds.
According to the Nasscom findings, export revenues for the Indian IT industry recorded growth of 16.3 percent and clocked revenues of $46.3 billion in FY08-09 up from $40.4 billion in FY07-08. While, the domestic segment grew by 21 percent to register revenues of $11.87 billion in FY08-09 from $9.79 billion in FY07-08.

Elaborating the effect of economic slowdown on the industry, Bhasin says, “While growth was synonymous with industry performance in the past decade, resilience and efficiency was the thrust in the year 2008-09.”

In an attempt to lessen the impact of the downturn, there were several measures that the industry resorted to. “A significant highlight of the year was the industry’s thrust to re-engineer itself to partner with its clients in testing times,” opines Som Mittal, President of Nasscom. According to him, increase in fixed price contract, shifting from onsite to offshore and end-to-end transformational deals helped the industry to get over 90 percent repeat business from its clients.

In fact, the last few weeks have witnessed some stabilization in the demand environment with improvements in the GDP growth rates and upsurge of stock indices, which indicate signs of recovery. However, global IT spending growth is expected to decline in 2009 and 2010. According to Nasscom, the environment continues to be challenging with global demand ecosystem being weak, also there is an absence of large deals and vendor consolidation that is resulting in pricing pressures.
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