IT sector to meet $57 bn target by 2008

CIOL Bureau
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While the Nasscom-McKinsey report has revised and made some corrections to

its earlier forecasts of 1999, the IT sector is right on track and will achieve

the earlier projected targets, said McKinsey and Nasscom officials at the IT and

ITES Strategy Summit in Hyderabad today.

The industry has grown at a CAGR of 46 per cent in the last four years,

exceeding the 38 per cent target set in the previous report. This is in spite of

the slowdown experienced during the last two years. The high CAGR has reduced

the current required growth rate to 34 per cent. Last year the IT services

segment recorded approximately 29 per cent growth.

Both Nasscom and McKinsey officials reiterated that despite the slowdown, the

earlier targets of $57 billion in export revenues and $70-80 billion in overall

revenues were a distinct possibility.


ITES will be the driver of this growth, and the contribution of the IT

industry to the country’s GDP will increase from 1.4 per cent in 2001 to

approximately seven per cent by 2008. Significantly, it will contribute nearly

20 per cent of the incremental GDP growth between 2002 and 2008, says the


While India will continue to face competition from nations like China,
Philippines and even Ireland, it should be able to maintain its lead. In case of

China, the huge domestic market will ensure that local Chinese service providers

will try to first tap the business opportunities internally before targeting the


The report has also ‘demanded’ that the government ensure that issues

like Data Confidentially, Piracy and Privacy laws are in place. Union minister

for IT and communications Pramod Mahajan, who delivered the keynote address at

the summit, assured the industry that the recommendations of the Convergence

Committee are already ready and will be tabled before parliament in July. ‘The

Convergence Act is likely to be passed by August test by the end of 2002,’

said Mahajan.

The government will intervene with speed whenever required to ensure that the

needs and requisites of the IT industry are taken care of on a priority basis.

Chandrababu Naidu, chief minister of Andhra Pradesh, who was the chief guest at

the inaugural ceremony said that ‘his state will provide all and more

facilities required by the IT industry from time to time including the

implementation of local legislation like the Data Protection Act and the Privacy



Mahajan also spoke about making changes to labour laws to permit women to

work later hours. ‘Women form the back bone of the ITES segment,’ said

Mahajan. ‘We will ensure that they are provided with the right atmosphere and

motivation,’ he added.

The exorbitantly high price of real estate vis-à-vis other cities like

Singapore, Bangkok, Seoul and Sydney is a dampener and must be dealt with, said