GENEVA, SWITZERLAND: In spite of the global economic slowdown that has affected all verticals, the United Nations Conference on Trade and Development (UNCTAD) said in a recent report that India retained its dominance in IT services export with a market share of about 55 per cent.

When the economic cycle improves, a surge can be expected in services exports made possible by information and communication technologies (ICTs), UNCTAD predicts in its Information Economy Report 2009: Trends and Outlook in Turbulent Times. The survey also said Asian economies increasingly dominate exports of ICT goods.

While exports of ICT goods such as computers and consumer electronic devices have been hit hard by the global recession, IT and ICT-related services appear to have been more resilient, the report notes.

According to the report, between 1998 and 2007, the value of exports of ICT goods rose from US$813 billion to $1.73 trillion, representing 13 per cent of all merchandise trade. During the same period, the share of developing countries in such trade jumped from 38 per cent to 57 per cent. This increase was almost entirely attributable to developing Asia.

China emerged as the largest exporter of ICT goods, with its market share shooting up from 3 per cent in 1998 to 20 per cent in 2007, more than twice the share of the second largest exporter, the United States. However, in IT services, India remained the dominant exporter, with an estimated market share of about 55 per cent.

IT and ICT-enabled services - such as computer programming, software development, customer-service call-centre work and back-office services - are of growing importance in world trade and have been more resilient during the crisis.

Increased broadband connectivity in a rising number of countries has eased the reorganization of the production of many services and led to the expansion of export-oriented production of services in places offering attractive locations or lower wages. The expansion of offshore services has only just begun, the report said.

According to market analysts, the global market for the offshoring of IT and ICT-enabled services was estimated to be worth around US$90 billion in 2008, of which IT services accounted for 60 per cent.

UNCTAD said corporations see the offshoring of services as an important way of reducing costs and enhancing competitiveness. On the one hand, services exports may decline in the short term due to the general slowdown in economic activity. This applies especially to services offshored by the financial industry, as some banks and other financial institutions may disappear altogether.

But as the recession adds to the pressure on firms of all types to reduce costs, some will choose to offshore more and new services to lower-cost locations. In the medium to long term, as the global economy recovers, UNCTAD expects the offshoring of services to widen geographically and sectorally as well as across business functions.

Long-term growth prospects for the offshoring of IT and ICT-enabled services therefore are promising for early starters, such as India, as well as for many other emerging nations, said UNCTAD.

"Latecomer offshoring destinations in Africa, Asia, and Latin America and the Caribbean should continue to improve their locational advantages and identify niches in which they can compete most effectively," UNCTAD Secretary-General Supachai Panitchpakdi said recently.