IT sector employee base tops 1 million

Indian software and services exports clocked revenues of $17.2 billion, registering a growth of 34.5 per cent during 2004-2005, according to the annual Nasscom survey.

The employee base in this sector has grown at a rate of of 23.6%, from 242,000 in FY 2001-02 to 697,000 in FY 2004-05 and the industry employee base crossed the 1 million mark in FY05, said the survey.

The figures of Nasscom's annual survey on the performance of the Indian IT-ITeS industry (excluding hardware) and the outlook for 2005-2006 were released in New Delhi on Thursday.

The overall Indian IT-ITeS industry (including domestic market) grew by 32 per cent during 2004-2005, registering revenues of $22 billion, up from $16.7 billion in 2003-2004, Nasscom said.

The Indian software and services exports industry forecast to register a strong growth of around 30 to 32 per cent in 2005-2006, clocking revenues of $22.5 billion, it said.

Nasscom, the chamber of commerce and voice of the IT software and services industry in India, on Thursday announced the findings of its annual survey on the performance of the Indian IT-ITeS industry (excluding hardware) and the outlook for FY 2005-06:

The Indian IT-ITeS industry's employee base crossed the one-million mark in 2004-2005, Nasscom said.

The total value of outsourcing to India ($17.2 billion in 2004-2005) is estimated to be 44 per cent of the worldwide total, it said.

Speaking on the occasion, S Ramadorai, Chairman, Nasscom said, "The Indian software and services industry has been able to maintain its growth momentum and consolidate its partnership with overseas customers, adding to their competitiveness. The industry also scaled record levels of employment in FY 04-05, with the employee base crossing the 1 million mark."

"The industry is in a strong position to leverage the global software opportunity and establish India as the premier IT destination in the world. To sustain our competitive advantage, the industry must engage closely with academia to create the right talent pool, collaborate with the hardware industry in microelectronics and embedded software, maximize employment opportunities and elevate service excellence through R&D and quality-benchmarked delivery," added Ramadorai.

Kiran Karnik, President, Nasscom, said, "The performance of the Indian software and services exports industry once again reinforces our confidence in attaining the projected target of $50 billion in FY 09. The year has witnessed greater adoption of the global delivery model, with Indian vendors establishing their presence in high-margin segments, along with a steady growth in traditional service lines in the ITES-BPO sector."

"It is heartening to note that companies are also increasing their focus on the domestic market. One of our significant objectives for the year would be to increase collaboration amongst Indian companies to share ideas, information and best practices in order to sustain and grow the domestic market. Extensive use of IT within the country can result in great economic benefit, efficient and transparent governance, and empowerment of the disadvantaged," he added.

Highlights of the Nasscom survey

• IT software and services employee base has grown at a CAGR of 23.6%, from 242, 000 in FY 2001-02 to 697,000 in FY 2004-05. Industry employee base crossed the 1 million mark in FY05
• ITeS-BPO employee base has grown at a CAGR of 52.6%, from 42,000 in 2001-02 to 348,000 in FY 2004-05. Indirect employment attributed to IT-ITeS was 2.5 million in FY 04-05
• Total value of outsourcing to India ($17.2 billion in 2004-05) is estimated to be 44% of the worldwide total.
• Offshore penetration of Fortune 500 increased by 33% in 2004 (from 300 in 2003 to 400 companies in 2004).
• Vast majority of SMEs registered a growth of about 20-22% in revenues.
• FY 2004-05 revenue from product development and R&D services was $3 billion, up from $2.3 billion in FY 2003-04.
• The top 4 players alone have over 660 clients in the $1 million + category, up from 441 in FY 2003-04.
• While the United States and the United Kingdom still remain the dominant markets, Indian companies are  gaining traction in newer geographies like Japan, Singapore and Germany.
• While India continues to lead in traditional segments, vendors are now also  gaining ground in newer services such as packaged software implementation, systems integration, network infrastructure management and IT consulting.
• Significant untapped potential, rapid adoption and small base likely to result in high growth (rate) in domestic BPO.
• Pricing trends in BPO likely to be susceptible to downward pressure, increasing the emphasis on operational excellence to sustain margins.
• Integration of IT-BPO contracts to become more common.