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Follow UsBANGALORE: Software and services exports from India grew by 25 per cent year on year during the third quarter ending December 31, 2001. This in pure value terms is Rs 9,100 crore during the quarter, up from Rs 7,270 crore registered in the same quarter last year. This was announced by National Association of Software and Services Companies (Nasscom) as the results of its survey on the performance of the Indian software and service exports sector for the third quarter of the financial year 2001-02.
Nasscom Chairman Phiroz Vandrevala said, "While the growth Quarter-on-Quarter was a nominal 2 per cent, the industry witnessed a 31 per cent growth in the first three quarters of 2001-02. This is a commendable performance in the current market scenario." The Q3 results and future forecasts of the Indian IT software and services sector were based on a survey of over 800 companies, including Nasscom members and STPI units that have above Rs 1 crore turnover, and industry data. "The Indian IT software and services industry is the fastest growing sector in India and across the world," commented Vandrevala. This segment accounts for 16 per cent of the country's overall exports; for 5,00,000 jobs and about $1.6 billion in investments.
Nasscom Vice Chairman Arun Kumar said, "Today, companies across all geographies and verticals need to efficiently use and maximize benefits from their existing IT infrastructure. This is precisely the reason why identifying new areas of growth is the theme for Nasscom 2002. This will enable the industry to witness a sustainable growth rate over the next few years." IDC/Nasscom forecasts indicate that the global IT services market is expected to grow from $394.8 billion in 2000 to $700.4 billion by 2005. Some of the high growth, high value segments within IT services identified by Nasscom include; systems integration, processing services, IS outsourcing, packaged software support and installation, custom application development and maintenance and IT Training and Education.
The Nasscom survey further reveals that while India currently has a high stake in the custom application development and maintenance segment, it is tapping a market with the lowest share (5 per cent ) of the overall global IT services sector. Even so, Indian companies can strengthen their hold on this domain by leveraging on existing strengths such as skilled manpower and technical knowledge. The Nasscom study also points out that Indian companies are maintaining their dominance in areas such as maintenance, software testing, software support and customized development in order to ensure a source of assured annuity revenues. They are also increasingly focusing on some of the high-growth, high revenue share markets, where currently they have a modest presence.
Nasscom, President Kiran Karnik said, "Global trends indicate that more and more IT spending will go to offshore solutions providers. Trends in the last few months have shown that many more US companies have announced an increase in their outsourcing services to India. It is also important to note that the intent of global companies to outsource higher value service lines such as packaged software integration, systems integration and R&D/Engineering services is likely to increase over the next 24 months."
India's software exports have been increasingly veering towards the more profitable, high-value, offshore development model. While on site services far exceeded off shoring during 1999-00, accounting for a substantial portion of Indian's software revenues, the scenario has changed in 2000-01. Onsite services, which contributed Rs. 9,850 crore to India's export statistics during 1999-00, increased to Rs. 15,900 crore in 2000-01. Off-shore activity meanwhile notched up a higher growth rate during the same period, virtually doubling revenue contributions from Rs. 5,950 crore in 1999-00 to Rs. 10,950 crore in 2000-01. The contribution of off-shore to overall software export revenues is expected to exceed that of onsite services during 2001-02.
Some of the emerging business opportunities identified by Nasscom for Indian IT companies include:
- Embedded software development : The growth of Internet technologies and recent advances in embedded systems are driving the penetration of "smart" devices. A significant opportunity exists for the Indian IT industry-both hardware and software--for providing complete solutions in this area.
- Broadband Networking Solutions : Significant demand for software development would emerge as telecommunication carriers shift to IP-based optical networks. Specifically demand would be high for communication software.
- Multimedia Content Management : Technological developments, particularly Internet technologies, are bringing about major changes in the global content provision industry. Opportunities for the Indian IT industry exist in the areas of implementation services for content management solutions, deployment and support services on interactive TV platforms, application development for set-top boxes, database management and data-mining services.
- Bioinformatics : Significant opportunities exist for Indian software and IT enabled services in this space. The Indian IT industry can address opportunities in the areas of automated genome analysis, modeling of protein structures from primary sequences, creation and integration of relational databases from unstructured pharmaceutical and clinical data, and software development for molecular modeling, besides IT-enabled services for data capture.
- Health Insurance Portability and Accountability Act (HIPAA): HIPAA is intended at streamlining operations of the US Healthcare industry. Indian companies can follow a four pronged approach in addressing the market-target the health insurance sector for the larger share of HIPAA related business, address the large players in the healthcare industry with implementation services, explore opportunities for partnership with large healthcare software companies in the US and target the market of smaller and medium sized healthcare firms with a complete solution.