It Sector Tops Cagr Target By 8%

The slowdown over the past two years notwithstanding, the Indian information technology (IT) services and IT-enabled services industry is on track to meet the projections set out in the Nasscom-McKinsey report of 1999.

Nasscom-McKinsey's 2002 report says the industry has grown at a compounded annual growth rate (CAGR) of 46 per cent in the last four years, overshooting the 38 per cent target set in the 1999 report.

This has reduced the CAGR required between 2002 and 2008 to 34 per cent, the latest report said.

However, the Nasscom 1 (1999) report had estimated the IT industry size to be of $77 billion worth by 2008, the Nasscom 2 (2002) report estimates the size in the range of $70-80 billion.

The contribution of the industry to gross domestic product (GDP) will increase from 1.4 per cent in 2001 to 7 per cent by 2008. More importantly, it will contribute nearly 20 per cent of incremental GDP growth between now and 2008, the report highlighted.

The industry, which currently employs 0.8 million people, will employ over 2 million people directly and create indirect employment opportunities for an additional 2 million people by 2008. IT exports currently account for eight per cent of the foreign exchange inflows, and this will see a major jump and account for more than 30 per cent of forex inflows in 2008, the report said.

"The Indian IT-enabled services (ITES) is set to rapidly expand beyond call centres to high value-added arenas and exceed $20 billion in revenues by 2008, with at least five processes being worth more than $1 billion each by 2005, which include telesales, engineering and design, inbound call centres, benefits administration and credit/ debit card services," the report emphasised. Customer care, human resource and payment services will constitute about 70 per cent of the long term ITES potential, the report said.

The current report has eliminated the $10 billion e-commerce revenues by 2008, that it has projected in the earlier report. Instead, it expects the ITES exports to reach $21-24 billion by 2008, against $17 billion projected earlier.

The IT services exports were earlier expected to be $30 billion and are now revised to range between $28-30 billion. Product and technology services were earlier projected at $10 billion and are now revised to a range of $8-10 billion.

Domestic market contribution was earlier expected to be at $20 billion, which is expected to come down to $13-15 billion range.