After growing at a CAGR of over 30 per cent for the last five years, the Indian IT industry is expected to witness a single-digit growth in the export of software and services in this fiscal (2009-10) due to the impact of global recession.
Industry body Nasscom which is expected to come out with a detailed estimate in June this year, said the economic slowdown as well as the lower technology spending in key geographies like the US and Europe is expected to affect the growth.
"Software exports of the Indian IT industry are projected to grow in single digits this fiscal (FY 2010) due to the economic slowdown and lower tech budgets in major markets like the US and Europe. We will come out with an estimate for this fiscal in June after we get the data on export revenues in the last fiscal (2008-09)," Nasscom president Som Mittal said on Tuesday.
Admitting that the Indian IT industry was passing through challenging times after years of high growth in double digits, Mittal said the global meltdown had created an opportunity for consolidating and moving up the value chain to address new markets and new verticals.
Though there are signs of recovery amid indications that the US economy was bottoming out, Mittal said no dramatic shift in the growth pace was expected in the next three-four quarters, as enterprises would have to first stay afloat and bid time for enhancing their tech budgets, especially in spending nondiscretionary funds.
"Till the second quarter of last fiscal, the industry was on track to achieve the $50 billion export target by 2008-09. The aspiration to reach $60 billion by fiscal 2010 is at risk since an unprecedented slowdown is expected in key markets overseas, especially the US and Europe, which account for about 80 percent of Indian software exports," Mittal pointed out.
The impact of global meltdown has forced Nasscom to extend the target year for achieving the $60 billion export revenue by three-four quarters to 2011 from 2010.
"On a wider base, export growth in single digit is not bad. The growth pace may not be as scorching as it was till last fiscal or in double digit in the last fiscal. We are not talking about contraction, but about single digit growth," Mittal added.
According to Nasscom, most of the growth will come from areas such as energy efficiency and climate change, clinical research outsourcing and mobile applications going forward.
"Most of the incremental growth in the future can't be captured through the current offerings. With cost no more the factor why people outsource works to India, we need to innovate to ensure that the types of services and sectors we are targeting are different," said Nasscom chairman Pramod Bhasin.