India's IT industry to post 26 percent growth in fiscal 2003
NEW DELHI: "We may take a three to four percent hit in software exports in the last fiscal mainly because of the appreciation of the rupee," said Kiran Karnik, president of the National Association of Software and Service Companies (Nasscom).
The Indian rupee has gained nearly five percent against the U.S. dollar and that will bring down the exports growth to 26 percent from an earlier projected 30 percent, Karnik told foreign media persons here.
After logging a year-on-year growth of over 50 percent on an average in the five years up to March 31, 2001, Indian software and services exports have slowed down significantly in the recent years.
In 2001-02, the software exports logged a growth of 29 percent to $7 billion as the clients in the U.S., India's prime software export destination, cut back orders.
Karnik said despite the fall in exports growth the IT industry was perceived as a "winner" and the total share of the sector as a percentage of the gross domestic product had risen from 0.72 percent in 1997-98 to nearly 2.5 percent in 2002-03.
"Clearly, the industry has shown tremendous resilience in the last few years and we are reaching the stage of sustainable growth now," he said.
The chief of India's premier IT industry lobby group said the industry was hopeful of achieving a target of $50 billion a year in software and allied services by 2008 despite recent downward trends.
"I think we should be very happy with our performance. Our long-term goal of achieving $50 billion by 2008 calls for a 30-32 percent year-on-year growth. So we are okay though we are a little behind that," Karnik said.
"And once the world economy begins to go upwards, we will have at least one good year between now and 2008 that will take us above the growth rate we have had in the last two years and that will be good enough to get us to the target."
On growing protests in the U.S. and other parts of the world against outsourcing jobs to India, Karnik said India would continue to be the preferred destination for global corporate houses to contract out services to cut cost.
"We are not worried but we are not complacent. We are trying to create an ambience of how these things work. Companies all over the world are well aware that if they have to survive they have to cut cost," he said.
eFunds Corporation of Scottsdale, Arizona, which had opened a call centre in February last year in Mumbai, has decided to move it back to the U.S. following an outcry in the media and government circles.
eFunds Corporation, which processes card systems for about 200,000 New Jersey residents, had outsourced operations to Mumbai in a cost-cutting bid.
Now it has closed down the centre after renegotiations with state officials and will open a new call centre by May 5 this year in Camden, New Jersey.
"Outsourcing is not coming to India only because it is a low cost destination. The reason they (overseas clients) stay and grow their businesses in India is because of high level of productivity and quality the companies here offer," Karnik said.