IT-BPO revenues expected to cross $48 billion in FY07

The Indian IT-BPO sector, both in exports and domestic business, is expected to register a growth of 28% in 2006-07 and revenues are likely to exceed $47.8 billion, nearly a 10-fold increase over the aggregate revenue in 1998. The direct employment offered by the sector is likely to cross 1.6 million. In 1998, the aggregate IT-BPO revenue was $4.8 billion.

According to Nasscom Strategic Review 2007, IT services exports accounting for 55-57% of total exports, are growing at 36% and expected to reach $18.1 billion in 2006-07. Newer areas of application and infrastructure management testing are gaining traction with their share in the business-mix growing rapidly.

BPOs continue to grow in scale and scope with firms increasingly adopting a vertical focused approach. Total BPO exports are expected to exceed $8.3 billion in 2006-07 growing by 32% Y-o-Y. Increasing traction in offshore product development and engineering services is supplementing India’s efforts in its own IP creation.

This group is growing at 22-23% and is expected to report $4.9 billion in exports in 2006-07. The domestic market is also picking up. The total size of the domestic market is expected to cross $15.9 billion in 2006-07 a growth of 21% Y-o-Y. Although this segment has been led by MNCs in the past few years, Indian firms are gradually gaining ground.

Service and software sector remain the mainstay of the sector. In 2006-07, export growth is likely to beat forecasts and exceed 32%.

While the US and UK remain the dominant markets, contributing 67% and 15% of total exports, respectively, firms are also keenly exploring new geographies for business development and to strengthen their global delivery footprint. Banking, financial services, insurance and technology are the main verticals accounting for the 60% of the total healthcare and transportation follow — also growing rapidly.

Indian IT Industry, as a proportion of gross domestic product, has grown from 1.2% in 1998 to an estimated 5.4% in 2006-07.