Indian IT-ITES sector set to exceed $36 billion

NASSCOM, the premier trade body and voice of the IT
software and service industry in India, recently announced the key findings of
its Strategic Review 2006, on the eve of its fifteenth annual event 'NASSCOM
2006: India Leadership Forum, which was held from Feb 15-17, in Mumbai.

Commenting on the key findings of the review S Ramadorai,
Chairman, NASSCOM and CEO and MD, TCS said, “The Indian IT-ITES sector
continues to chart double-digit growth and is expected to exceed USD 36 billion
in annual revenue in FY06. Out of this, software and services exports are
estimated to grow by 32%, to reach USD 23.4 billion in FY06. Indian IT-ITES is
well on track to achieve the targets that the industry aspires to achieve by the
end of the decade.”

Kiran Karnik, President, NASSCOM said, “2005 offered a
steady growth for the industry. Along with increased presence of Indian IT
companies across the globe, we saw new services lines emerging and the industry
reached the next level in services offered. Mergers and acquisitions by Indian
players was also a key trend. In spite of the growth seen so far, it is
estimated that less than 10% of the addressable market for globally sourced IT-ITES
has been captured till date, indicating significant headroom for growth.”

The review suggests steady growth for the sector. The
Indian IT-ITES is expected to exceed USD 36 billion in annual revenue in FY06,
an increase of nearly 28 percent in this current fiscal. It also states that
exports will account for nearly two-thirds of the total revenues, while IT-ITES
sector will account for 4.8 percent of GDP.

The report also states that the total IT software and
services employment will reach 1,287,000 in FY06. Currently, the BPO sector
employs 230,000 people. NASSCOM estimates there will be an addition of four lakh
staff each in IT services and BPO sector by March 31, 2006.

Complementing the continued growth in IT-ITES exports is a
growing domestic market, which is expected to grow by nearly 22% in FY 2006.
Strong demand over the past few years has placed India amongst the fastest
growing IT markets in the Asia Pacific region. Growth in the domestic market is
witnessing the early signs of service line depth that characterizes maturing
markets. That is why global product companies are looking to introduce localized
versions of their software products to drive usability and penetration.

2006 will also be the year when India will make the
transition from outsourcing to global sourcing.

DQC NEWS BUREAU