Overall Performance

Revenue

The Indian Software & services industry has grown at a remarkable pace since 2001-02. The overall Indian Software & Services industry revenue is estimated to have grown from US$ 10.2 billion in 2001-02 to reach US $ 58.7 billion in 2008-09- translating to a CAGR of about 26.9 per cent. Despite the severe global recession, the industry grew at modest rate of 12.9 % in 2008-09. . IT-ITES industry’s growth trends are given in the table below.

IT – ITES Industry Revenue Trends

Source: Nasscom

As per NASSCOM, the industry is diversified across three major focus segments – IT Services, BPO and software products & Engineering services. While IT Services have been the mainstay of the industry, BPO and Engineering services sector has built upon the India value proposition and today there exist integrated service providers across the three focus areas as well as niche providers. The major three components of IT Services sector are custom application development, application management and support and training. Other significant components are IT consulting, systems integration, Infrastructure Services (IS) outsourcing, network consulting & integration and software testing.

Among the verticals serviced by India’s IT-ITES-BPO industry those that account for the largest share of revenue are banking, financial services and insurance(BFSI-41%), Hi-Tech/Telecom(20%), manufacturing(17%), retail(8%), with smaller contributions coming from media, publishing and entertainment, construction and utilities, healthcare and airlines and transportation. Important industry verticals being serviced by the BPO segment are insurance, retail banking, travel and hospitality, auto manufacturing, telecom and pharmaceuticals. Horizontals such as Customer Interaction and Support (CIS), Finance and Accounting (F&A) and Human Resource Management (HRM) are important areas in the BPO segment.

Exports

Exports continue to dominate the revenues earned by the Indian Software & Services Industry. The export intensity (the share of IT-ITeS Exports to total IT-ITeS Revenue) of Indian Software & Services Industry has grown from 74.5% in 2001-02 to 78.9% in 2008-09. Total Software & Services Exports are estimated to have grown from US $ 7.6 billion to US $ 46.3 billion in 2008-09, a CAGR of 28.6%.

The share of ITES-BPO exports has nearly doubled during this period. The total ITeS -BPO exports is estimated to have increased from US $ 1.5 billion in 2001-02 to US $ 12.7 billion in 2008-09, a CAGR of about 39.2 per cent. BPO now accounts for about 27 per cent of total exports. The Indian BPO sector has not only added scale in the last nine years, but has also matured significantly in terms of scope of service offerings, buyer segments served and service delivery models. Apart from achieving maturity in the horizontal segment, providers are increasingly developing vertical/domain specialization to capture greater value.

The fastest growing segment however is software products. It is growing at a CAGR of 48.5 per cent. Segment wise export revenue trends are given in the table below.

Segment wise export Revenue Trends in IT – ITES Industry

Source: Nasscom

Domestic Market

Though the IT-BPO sector is export driven, the domestic market is also significant. The revenue from the domestic Software & Services market is estimated to have grown from US $ 2.6 billion in 2001-02 to US $ 12.4 billion in 2008-09 a CAGR of about 22.2 per cent.

In the Domestic verticals of the Indian IT-ITeS Industry the IT Services segment continue to dominate domestic portfolio of the industry. Its share however has declined from 80.8% in 2001-02 to 66.9% in 2008-09.

ITeS-BPO segment in the domestic market has witnessed noticeable growth over the past few years. The share of ITeS-BPO industry in domestic market is estimated to have increased from 3.8% in 2001-02 to 15.3% in 2008-09.

Segment wise Domestic Revenue Trends in IT – ITES Industry

Source: Nasscom