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An optimistic projection

Despite the global slowdown and the volatile financial environment, the National Association of Software and Service Companies (Nasscom) has projected a 16-17 per cent growth in exports by the IT-BPO sector in 2009-10. In the context of the financial meltdown and its negative impact, the IT industry seems to be in a position more comfortable than anticipated, by current standards. The latest projection is just 5-6 percentage points lower than the earlier estimate. Nasscom& #8217;s annual performance review, released last Wednesday, estimated that the exports by the BPO segment would record a 17.5 per cent rise. The increase is expected to be 16.5 per cent for the IT services and 14.4 per cent for software products and engineering services. Against an export target of over $50 billion, the IT-BPO sector hopes to record $47 billion this year. Keeping the global economic climate in mind, the premier trade body has envisaged a growth of 15 per cent CAGR (compounded annual growth rate) over the next two years, with the export revenue projected at $60-62 billion in 2011. Significantly, the past four years have seen a decline in the share of the United States in the industry’s export earnings from 68.2 per cent to 60 per cent, while the share of continental Europe has increased from 33.3 per cent to 51.4 per cent — a welcome shift in trend that makes the industry less vulnerable to problems in any one market.

At a time when the investor and customer confidence in the IT sector stands seriously eroded by the Satyam fraud, Nasscom has, understandably, sought to drive home the message that the unseemly episode is only an aberration. Its optimistic assessment that the industry would remain a “net hirer” in the coming year is heartening and should cheer up the employment market, especially those who will be graduating this summer. The industry employs 2.23 million people directly and provides indirect employment to another 8 million. It will do well to look vigorously for markets outside the U.S. and Europe, and also boost domestic demand, so that the unsavoury prospects of benching and retrenchment are mitigated. In the short-term, the objective should be to put the Satyam-induced trauma behind by initiating moves to ensure transparency and proper corporate governance, besides strengthening the regulatory mechanism.

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