Despite uncertainties on demand clouding key financial sector clients and a probable US recession caused by their sub-prime mortgage losses, the country’s software and IT-driven exports is expected to grow by at least 20 per cent in 2008/09 - its pace slower but still robust.
Officials of the National Association of Software and Service Companies (NASSCOM) told reporters on Friday that the aim of achieving $60 billion in exports within two years was still achievable and that a US recession could even yield a resounding bounce-back if clients pump up outsourcing of work to cut costs and boost efficiency.
Software and service exports are estimated to have closed 2007/08 at $40 billion (about Rs. 160,000 crore), employing 16 lakh people directly. Including the domestic market, the industry’s size is around $64 billion and accounts for 20 lakh employees.
The NASSCOM consensus is that despite competition from East Europe, the Philippines, Russia and China that offer incentives and infrastructure to match, India remains a sustainable cost-effective location for doing knowledge-based work on computers and networks. New business process outsourcing (BPO) are emerging as work earlier done in the West get shifted out.
“There will be a temporary lull in some segments,” said the association’s new chairman, Ganesh Natarajan of Zensar Technologies, but noted that services related to infrastructure, engineering, knowledge processing and some other areas were untouched by concerns over the sub-prime crisis resulting from home loans that went wrong in the US as asset prices crashed.
In some ways, things are like 2001, when an Internet meltdown spawned pessimism on the IT industry, but even more than then, industry is confident of a bounce-back though it has niggling worries about training and keeping quality staff at manageable costs.
“Terms like BPO and outsourcing should go out of the window. It is all about globalisation,” said Pramod Bhasin, NASSCOM vice-chairman and chief executive of Genpact, which spearheaded the call centre revolution in the country when it started out as a remote back-office for General Electric in Gurgaon about a decade ago.
The banking and financial services industry (BFSI) industry sector is said to account for 40 per cent of BPO exports. “The show goes on for banking and financial institutions,” NASSCOM president Som Mittal said, adding growth in 2008/09 will “still be a very robust 20 per cent plus.”