India's IT-BPO exports growth will drop to 4 percent

By SiliconIndia   |   Wednesday, 29 July 2009, 12:01 Hrs   |    19 Comments
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Bangalore: India's IT and BPO exports, which grew at a rate of 30-32 percent for many years in the last 10 years, halved to a growth rate of 16.3 percent in 2008-09 and are likely to fall further to 4-7 percent in 2009-10 due to the economic slowdown, according to NASSCOM.

"The industry in its first quarter results has demonstrated sustained focus with increased operating margins and enhanced utilization. The NASSCOM survey estimates that the IT-BPO export revenues will grow by 4-7 percent to reach $48-50 billion in FY09-10." said Pramod Bhasin, Chairman, NASSCOM. Export revenues for the Indian IT-BPO 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. According to the NASSCOM findings, the sector reached $58.8 billion in FY08-09 up from $52 billion in FY07-08. The domestic segment grew by 21 percent to register revenues of 570 billion in FY08-09 from 470 billion in FY07-08.

Within the export segment, IT services have grown by 14.7 percent to clock revenues of $26.5 billion; BPO exports are up by 16.5 percent registering revenues of $12.7 billion. Engineering services and product exports clocked revenues of $7.1 billion, growing at 11 percent in FY 08 -09. Bhasin said, "While growth was synonymous with industry performance in the past decade, resilience and efficiency was the thrust in the year 2008-09."

The domestic market witnessed more focus in FY 08-09, with large transformational deals in telecom and e-governance. Som Mittal, President, NASSCOM said, "A significant highlight of the year was the industry thrust to re-engineer itself to partner with its clients in testing times. Increase in fixed price contract, shift from onsite to offshore and end-to-end transformational deals helped the industry to get over 90 percent repeat business from its clients."

The last few weeks have witnessed some stabilization in the demand environment with improvements in GDP growth rates, stock indices upswing that could indicate early signs of recovery. However, worldwide IT spending growth is expected to decline in 2009 and 2010. The environment continues to be challenging with global demand ecosystem being weak; absence of large deals; vendor consolidation and pricing pressures.

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