India’s software, services exports forecast at US$40 billion

India’s business providing software and services to companies outside its borders will grow a healthy 26 to 29 percent this year, the country’s main trade association for that sector said Monday.

Revenue from exports of software, services and business process outsourcing (BPO) will reach about US$40 billion for the fiscal year that ends next March 31, according to data released Monday by the National Association of Software and Service Companies (NASSCOM).

Export revenue from these sectors grew 33 percent to $31.3 billion in the fiscal year to March 31, according to data released by the trade body.

The strong growth in software and services exports is coming from an improvement in India’s competitiveness, and the addition of new services, such as remote infrastructure management, by Indian service providers, Kiran Karnik, president of NASSCOM told reporters in Bangalore on Monday.

The revenue figure also includes exports to their parent companies and clients by Indian subsidiaries of multinational companies such as IBM Corp., Oracle Corp., and Accenture Ltd., that are expanding fast in India.

India’s overall IT industry grew by 30.7 percent in the year to March 31 to earn revenue of $39.6 billion, with the domestic market also growing by 22 percent to $8.2 billion, NASSCOM said. Many multinational companies including Hewlett-Packard Co. and IBM have bagged outsourcing contracts from Indian companies.

The Indian IT industry employed about 1.6 million staff as of March 31, besides about 6 million indirect staff employed in supporting the large offshore software development and BPO operations in India, Karnik said.

About 1.2 million people are employed in developing software and running back office processes and call centers for customers abroad. The U.S. continues to be the largest market for Indian exports, accounting for 66 percent of revenue, Karnik said.

India’s IT industry is facing high staff attrition and salary increases, but that will not slow down growth, Karnik said. In the short term, NASSCOM, of Delhi, is helping set up finishing schools that will make more Indian graduates employable by the IT and the BPO industry, he said. In the long-term, though, NASSCOM is counting on more investments by government and industry in the education sector, he added.

The IT industry in India is also grappling with the strengthening of the Indian rupee against the US dollar, which pushes down realization in rupees of revenue earned abroad by Indian companies.

In the year to March 31, exports of IT services grew by 35.5 percent to $18 billion, while exports of BPO services grew 33.5 percent to $8.4 billion. Revenue from exports of engineering services, a classification that deals with non-electronic design services, grew by 23 percent to $4.9 billion.

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