Software industry to grow at 22%: Nasscom

By Shailendra Bhatnagar

NEW DELHI: India's software exports are expected to climb to $9.6 billion in the year to March 2003 while total software industry revenue is likely to rise to $12.3 billion this year, the apex industry body said on Thursday. National Association of Software and Service Companies (NASSCOM) officials told a news conference that growth would be led by higher spending by global clients on outsourcing software and fresh business from new countries and sectors.

"India's software exports will grow from $7.7 billion to $9.6 billion in the current year and the total software market is seen growing to $12.3 billion from $10.1 billion," Nasscom President Kiran Karnik said while unveiling the findings of the association's annual survey which covered some 2,800 firms.

"While globally IT budgets are expected to be flat or marginally up, the share of software services in IT budgets is expected to increase. We are cautiously optimistic." India is one of the world's leading software services exporters and the United States accounts for 60 percent of its total software exports. Although business was hit by the September 11 attacks, India's cost competitive software sector has retained its shine in the world market.

Karnik said India's military stand-off with nuclear-armed Pakistan over the disputed region of Kashmir had caused "no great impact" on the nation's software exports which are expected to touch at least $57 billion by 2008. "While a lot of customer visits got postponed, all it meant was postponement and not a cancellation. The revenue for the year as a whole will not be impacted," Karnik said.

Software firms have seen a slowdown in client visits and new orders following travel warnings from countries such as the United States due to the tensions between the South Asian rivals. Nasscom's survey said India's IT-enabled services (ITES) segment, which surged 67 percent in the past year to clock sales worth $1.5 billion, would continue to be the growth driver for the entire sector.

ITES include call centres, medical transcription services and back-office operations such as accounting, claims processing and payroll -- all services that can be delivered through phones, computers and the Internet. Scores of multinationals keen to capitalise on India's huge workforce of well-trained and low-cost English-speaking software programmers have outsourced such work to Indian companies. "The ITES sector is turning out to be the second pillar of the Indian IT export revolution," Karnik said. ($1 = 48.77 rupees)

(C) Reuters Ltd.