IT to add 7% to GDP by '10: Nasscom-McKinsey

8.8 mn jobs likely, India may become biggest example of export-led growth.

The information technology industry is projected to contribute around 7 per cent to the country's gross domestic product by 2010, a joint report by Nasscom and McKinsey, released today, said. At present, the sector contributes about 3 per cent to the GDP.

The report, a 10-page document, estimated that the sector would create 8.8 million jobs, directly and indirectly, as against 700,000 people that the sector currently employed.

The export revenue from the sector is projected to more than treble to $60 billion by 2010, compared with $17 billion in 2005. The IT sector would also account for over 44 per cent of the export growth over the next five years, compared with 12 per cent at present, the report said.

"The IT industry will grow at a compounded annual growth rate (CAGR) of 28 per cent to reach $60 billion in export revenues by 2010. It will become one of the biggest examples of export-led growth in the world, rivalling the oil exports from the Gulf," said TCS Chief Executive Officer S Ramadorai.

While the offshore IT solutions business will grow at 25 per cent to touch $35 billion in export revenues, the BPO business will witness a CAGR of 37 per cent to account for $25 billion of the projected $60 billion.

The report, however, did not include the domestic market and product technology business, which would together account for another $20 billion in revenues by 2010, Ramadorai added.

The growth will be fuelled by emerging service lines and sectors like traditional IT outsourcing services - the backbone of the Indian IT industry - will grow at a much smaller pace.

"Research and development services and consulting services will grow at a CAGR of 60 and 35 per cent, traditional services will, however, grow at a moderate pace of 16 per cent," the report said.