New Delhi: India’s software and services exports will post double-digit export revenue growth in the next financial year as the flagship sector shakes off the global slump, a trade body forecast on Thursday.
The outsourcing industry’s fortunes are on the upswing after revenues slowed sharply due to the worldwide economic troubles, the National Association of Software and Services Companies (Nasscom) said.
“We have come through a very tough year for the world with flying colours,” Nasscom chairman Pramod Bhasin told a news conference in New Delhi.
“We look forward to a terrific future” with export revenues expected to grow by 13 to 15% to hit up to $57 billion in the next fiscal to March 2011 as more firms cut costs by outsourcing work to cheaper locations, he said.
The growth projected for next year is still far below the blistering 28% export revenue rise clocked in the financial year 2006-07.
It is also below Nasscom’s pre-financial crisis forecasts that export revenues would hit $60 billion next year.
Exports have been hit “obviously by the impact of recession everybody is going through”, Bhasin said. “The economic environment will take another two to three quarters to stabilize.”
But the outlook marked a sharp improvement on the current year to March in which revenues from exports of software and back-office outsourcing services are estimated to have grown by 5.5% to $50 billion.
Software companies, whose breakneck growth has been an important driver of the country’s economic modernization, were hit by the global slump as customers put many projects on hold.
The Nasscom outlook comes after India’s top software companies -- TCS, Infosys and Wipro - announced forecast-beating quarterly earnings.
“Spending is coming back, decisions are being made (on new orders),” Bhasin said, adding the industry had cut “reinvented itself” during the downturn by cutting costs and making itself more efficient.
The Asia-Pacific region was spearheading the recovery, followed by the United States but Europe was “lagging behind”, he said.
India’s outsourcers earn 90% of their revenue from exports mainly to the United States and Europe. The sector accounts for 25% of India’s overall exports.
The sector, which accounts for 5.9% of gross domestic product (GDP), has played a key role in fuelling India’s new middle-class affluence, employing nearly 2.3 million people directly and eight million indirectly.
US and other foreign firms, drawn by India’s vast, educated English-speaking workforce and labour costs that are much lower than in the West, have made a beeline for the country, farming out everything from answering banks’ client calls to processing insurance claims and equity analysis.
Revenues from the banking, financial services and insurance sectors will pick up in the coming fiscal year and Nasscom also expects energy and healthcare to feed revenues.
New business will also be generated by under-penetrated industries such as telecommunications, retail, media and energy.