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Software exports up 57 pc in 1999-00 -- Nasscom bullish on industry growth

Our Bureau

NEW DELHI, July 3

THE Indian software and services industry registered a 53 per cent growth in 1999-2000 at Rs. 24,350 crores ($5.7 billions) as against the previous year's turnover of Rs. 15,890 crores ($3.9 billions), according to the National Association of Software an d Service Companies (Nasscom).

While software exports during the period stood at Rs. 17,150 crores compared to Rs. 10,940 crores in 1998-99, growing 57 per cent, the domestic market was Rs. 7,200 crores vis-a-vis Rs. 4,950 crores in 1998-99, Nasscom said in its annual industry survey.

``With the increase in velocity of business, mushrooming demand of Indian software experts and continued Government support, Indian software exports during 2000-01 is expected to grow unabated to gross Rs. 28,500 ($6.3 billions),'' said Mr. Dewang Mehta, President of Nasscom.

Overall, the Indian IT industry is expected to aggregate revenues of over Rs. 39,500 crores ($8.75 billions during 2000-01 with domestic market growing to Rs. 11,000 crores ($2.45 billions), the survey projected.

Highlighting some of the feats of the domestic software industry in 1999-2000, Mr. Mehta said more than 185 of the Fortune 500 companies _ i.e., almost two out of every five global giants _ outsourced their software requirements to India during the year .

The phenomenal rise in the market cap of the domestic software industry was another noteworthy aspect of the year with the market cap of listed Indian software companies peaking to $95 billions by the end of February from a mere $4 billions in January 19 99.

``Later, the meltdown on Nasdaq and Dow Jones affected the Indian stock exchanges. After a debacle, the software industry market cap has resumed a bullish path and has reached $55 billions by the end of June 2000,'' the survey said.

As per Nasscom, the Indian software industry has not only been growing but also been moving up the value chain. The industry has evolved from staffing to software development to integration and IT business consulting, it said.

However, the industry still needs to move faster on the value chain ladder and get more involved in strategic consulting, brand management for the customers, research and development (R&D) and providing more Web-based and e-commerce kind of interactive s ervices, the survey said.

The industry spending on R&D increased from 2.5 per cent of the total spending in 1997-98 to about 3.4 per cent during 1999-2000. In software exports, R&D outsourcing orders from overseas companies fetched about Rs. 950 crores, the survey revealed.

According to Nasscom, software exports accounted for 10.5 per cent of India's total exports during the year compared to its share of only 2.5 per cent of the total exports five years back.

About 37 software companies exported more than Rs. 100 crores worth of software and services while about 180 firms earned Rs. 10 crores each during the year. Prominent software exporters included TCS, Wipro, Infosys, Satyam, HCL, Silverline and NIIT.

The export destinations for Indian companies in the year were 95 countries, with North America (US and Canada) accounting for a lion's share of 62 per cent of the total exports.

Europe accounted for 23.5 per cent, followed by South-East Asia and Japan (3.5 per cent each) and West Asia, Australia and New Zealand (1.5 per cent each).

Regarding the Y2K problem, the survey said solutions for the millennium bug contributed about 12 per cent of the country's software exports in the fiscal, at $480 millions.

The Indian IT industry earned a cumulative total of $2.5 billions from 1996-99 from Y2K solutions. The success of Indian Y2K expertise is now helping the companies to get more and more orders in the areas of interactive architecture, legacy to Web and so ftware engineering from satisfied clients.

On the main roadblocks for the Indian software industry in achieving its targeted $87 billions by 2008, Nasscom said the major hindrances were procedural obstacles such as bonding at software technology parks, export-oriented units and export processing zones, lack of global parity in telecom tariff and inadequate telecom infrastructure.