IT market logs 26% growth in '04

NEW DELHI: In 2004, India's IT market logged a 26 percent growth, to reach a total of Rs 95,277 crore, of which, around 40 percent was the local market for PCs, servers, and systems integration and other services. According to a Skoch report, while the market for software exports grew 32 percent during the year, and BPO sector 49 percent, the domestic PC market grew by 28 percent in value terms (44 percent in volume terms) and domestic services by 26 percent.






The rise in PC sales was mostly due to the lowering of prices, following the cut in excise and customs duties. This also resulted in the organized sector capturing more market share from the grey market. During the year, the grey market share fell to 38 percent.





The report recommends that IT should play an important part in all citizen services delivery schemes. According to the report, another market that has started getting the benefits of IT in its core business is banking. No major change took place in the major sources of demand for PCs. Software exporters share of demand rose by under one percentage point to nearly 5.5 percent, while corporate demand share fell by around a similar amount. Government demand remained at under 15 percent, despite the hike in e-governance spending while, SME market share also dipped.





Areas that still continue to cause some concern, as in previous years, relate to local brands and IT exports. IT services exports rose by 24 percent to cross $8.6 billion in 2004 and ITeS by over 49 percent to touch $5.1 billion. According to the report, due to the rising rupee and salary hikes in the sector, which continue to rise faster than sales volumes, margins continue to be under pressure.

Manpower shortage in the sector, including the domestic IT market, may touch a million in 2008.