Export led growth to propel IT sector

By agencies   |   Tuesday, 16 May 2006, 07:00 Hrs
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NEW DELHI: The Indian IT industry, being benefited from the continued trend of outsourcing by global corporations of their business process service to developing countries, is set to scale up to $26 billion by 2009-10, rating agency ICRA says.

According to a study by ICRA, the domestic IT sector is set to reach the $10 billion mark by 2006-07 from $7.2 billion in 2005-06, a growth of almost 39 percent.

The agency said demand growth in the ITES industry is likely to be export-led and the size of the export segment of the industry is likely to grow at a healthy rate over the medium term to around $21-22 billion by 2010.

It said the domestic market is expected to grow at a rate in the excess of 50 per cent a year over the medium term to around $5 billion by 2010 and the "demand share of the domestic segment is expected to remain modest".

Achievement of these high growth rates would be enabled by an abundance of low-cost significantly qualified labor in the country, possible geographical diversification,
Increased revenues functions and improvements in the domestic telecommunications and infrastructure, the ICRA study said.

The high growth projections would also be influenced by expectations that the government's policy would remain congenial and supportive and also by India's brand image in the IT market.

Over the long term, outsourcing by developed nations may lead to the creation of new jobs in occupations that require higher levels of skill, increase real wages, and yield significant economic gains.

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