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IT-ITES market set to grow 22%

The domestic IT-ITES market, valued at $10.2 billion in 2004-05, may touch $12.4 billion, writes Prerna K Mishra.

india Updated: Feb 17, 2006 03:22 IST

It may sound like a humble beginning when it comes to matching the Rs 100,000 crore information technology and BPO exports from the country, but the Indian domestic market is busy trying to make up for the lost time.

The domestic IT-ITES market, that was valued at $10.2 billion in fiscal 2004-05, is expected to grow at 22 per cent in the current fiscal to touch $12.4 billion.

And all this while, when global majors have been busy tapping the Indian talent pool, the domestic BPO market has gradually been jumping onto the outsource bandwagon.

The annual revenue aggregate of the segment is estimated to have grown from approximately Rs 430 crore in FY01-02 to nearly Rs 2,400 crore in 2004-05. It is expected to cross Rs 3,800 crore in 2005-06, a CAGR of 60 per cent, according to Nasscom data.

Research agency IDC is yet to release the final report on the domestic IT market but a peek review indicates that the market for services, which is the most promising chunk of them all, is expected to grow from Rs 12,847 crore in 2005 to Rs 23,791 crore in 2009.

And industry sources still feel that the estimated 18 per cent compounded annual growth rate projected by IDC for the segment in the 2004-09 period is little on the conservative side.

While the report will be unveiled in the next few weeks, the draft indicates the domestic software market will grow from Rs 3,643 crore to Rs 7,473 crore between 2005 and 2009.

Though with mild variations, Nasscom’s data on the domestic services sector also posts a positive picture.

Says Nasscom vice president Sunil Mehta: "Estimates for the current year indicate a growth of 21 per cent with the services segment aggregate for the domestic market projected to cross $4.2 billion."

The growth in the domestic IT adoption is also reflected in the increased offtake of packaged software with segment revenues growing from less than Rs 2,100 crore in FY03-04 to approx Rs 3100 crore in FY04-05.

While the offtake of services and BPO activities in the domestic sector spell good news for IT majors, especially the smaller players, it has some ripple effect in employment terms too.

The number of people working for the domestic IT-ITES sector has gone up from 318,000 in FY04 to an estimated 365,000 in 2006.

But even with that degree of growth, the potential projected by the domestic market is largely untapped.

First Published: Feb 17, 2006 01:35 IST