BPO boosts IT exports to $5.2 bn

A 44.5 per cent jump in business process outsourcing (BPO) exports, to $5.2 billion, nearly two thirds of which came from captive units of multinational firms, helped "Indian" IT exports grow 34.5 per cent to $17.2 billion in the year to March 2005.

Kiran Karnik, Nasscom's president, told reporters here on Thursday , "Overall growth in IT exports beat our projections of between 30 per cent and 32 per cent."

Nasscom, the industry's main lobby, expects overall industry growth of between 30 per cent and 32 per cent this fiscal to take export revenues to $22.5 billion.

The industry will have to continue to grow at this over 30 per cent rate to reach its own target of $50 billion exports in fiscal 2009.

Software services grew 30.5 per cent over the previous year to $12 billion. Including the domestic IT, IT-enabled services (ITES) and BPO segments, the industry grew 32 per cent to $22 billion, it said.

Of the $12 billion IT services exports, between 30 per cent and 35 per cent came from captive units of foreign firms. America continued to be the largest market, accounting for 68 per cent of the export revenues.

Europe accounted for 24-25 per cent, more than half of which came from the UK. Asia Pacific contributed 5 per cent, with the rest from other regions of the world.

The total software and BPO services exported from India was some 44 per cent of all such business offshored, Sunil Mehta, Nasscom's vice president said.

The global IT services x last fiscal grew at an estimated four per cent to $648 billion. The offshorable component of this, with new areas such as product engineering and design services gaining momentum, was growing at a much faster 25 per cent to 27 per cent.

In fiscal 2005, it was some $39.6 billion, which NeoIT, an advisor on outsourcing, estimates to grow to $94 billion in 2008.

NeoIT estimates India's share in this at some $48 billion in 2008. This is close to the Nasscom-McKinsey target of $50-52 billion in fiscal 2009.

On Thursday, Karnik said, "If we stretch ourselves, if we get the government support we need, we should be on track to meet the target of $50 billion in IT and ITES-BPO exports."

To meet this target, Nasscom says, the domestic market will have to show compounded annual growth of 30.7 per cent till fiscal 2009. Exports will have to grow 31.2 per cent and the industry, 31.1 per cent.

In fiscal 2005, the domestic IT market grew 23 per cent to $4.8 billion, including IT services of $4.2 billion and ITES-BPO of $0.6 billion. This was also a year when the number of employees in the industry crossed a million.

IT services staff grew 18.5 per cent to 697,000 and ITES-BPO staff grew 37 per cent to 348,000 making a total of 1,045,000.

Nasscom says indirect employment attributed to IT-ITES is some 2.5 million, from catering to the fleets of vans that ferry call centre staff.