Nasscom scales down IT-BPO exports growth estimates

On the back of a slowing global economy and pain in the banking, financial services and insurance (BFSI) sector, software body Nasscom today said IT-BPO exports are expected to grow at only around 16-17 per cent this financial year against the earlier estimate of 25-30 per cent. The exports are likely to clock $47 billion in FY09.

IT-BPO exports comprise over 90 per cent of the total Indian IT revenue. The US and the UK account for over 80 per cent of the revenues of most Indian IT services firms. Moreover, the BFSI sector accounts for almost 40 per cent of the revenues of this sector.

Since the US and the UK are among the most-affected regions due to the global slowdown, and the BFSI sector is yet to gain composure following the collapse of major banks, it was widely expected that Nasscom would revise its targets downwards from the earlier $50 billion software exports estimate for FY09.

Nasscom has also revisited its estimates on the total revenues over the next two years. The apex body said Indian IT-BPO industry is likely to see sustainable growth over the next two years and clock revenues of $60-62 billion by 2010-11. Earlier, the growth was pegged at $60 billion by 2010.

Taking into account the current volatile environment, Nasscom has taken a two-year review and expects the Indian IT industry to grow at 15 per cent compound annual growth rate (CAGR) to achieve the exports revenues of $60-62 billion by FY11.

The aggregate revenues (hardware and domestic sales included) of the IT sector are expected to touch $60 billion by FY09. The domestic IT-BPO market in India will cross Rs 111,000 crore by FY09, exhibiting 20 per cent growth rate. The BPO exports are estimated to grow at 17.5 per cent in the current financial year and touch $12.8 billion.

Regions, including Europe and Asia-Pacific, have grown more than the US, reaffirming geographical diversification as an encouraging trend for the industry, it said. The Indian industry has made global footprint in over 400 delivery centres across 52 countries and this strategy of geographical diversification will also help the industry take forward its competitive edge.

In the next 20-24 months, the industry should focus by organisations on productivity, benchmarking, and enhanced operational efficiencies. From a customer’s point of view, the focus will remain on consolidation, integration and regulation — all of which will drive newer business opportunities for the industry.

“Though there are pricing pressures in both onsite and offshore realisation, there are levers to offset them like greater value delivery and more sourcing to reduce costs,” said Pramod Bhasin, vice-chairman of Nasscom and president and CEO, Genpact. The industry body also feels that improved utilisation of resources and infrastructure, especially telecom capacities, can reduce costs.

“Due to India’s strong fundamentals and as a derivative of the value we add to our global customers, the Indian industry will continue to grow inspite of the global slowdown.”