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Global CEO Magazines:
Indian IT and ITeS industry : Emerging strategies in an era of appreciating rupee
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India has achieved remarkable success in the software industry. Software accounts 25% of the Indian export. The purpose of this article is to highlight the growth of the Indian software industry. More than two-thirds of the software industry’s sales are due to export sales. The resources, including technical skills and cost competency have contributed to the competitive position of the Indian software industry. However, appreciation of the rupee against the US dollar squeezes margin of software firms. Various other factors such as attrition rate, wage inflation, competition, etc., also affects the performance of software sector. This article compares the Indian software market scenario with that of the Chinese market. It also underlines the emerging challenges for the Indian software industry and identifies various strategic options available.

 
 
 

India has achieved remarkable success in the software industry. Software accounts 25% of the Indian export. The purpose of this article is to highlight the growth of the Indian software industry. More than two-thirds of the software industry's sales are due to export sales. The resources, including technical skills and cost competency have contributed to the competitive position of the Indian software industry. However, appreciation of the rupee against the US dollar squeezes margin of software firms. Various other factors such as attrition rate, wage inflation, competition, etc., also affects the performance of software sector.

This article compares the Indian software market scenario with that of the Chinese market. It also underlines the emerging challenges for the Indian software industry and identifies various strategic options available. India has achieved remarkable success in the software industry. In 1996, it accounted for a mere 5% of the Indian export but today this has jumped to 25%. India holds a 44% share of the global offshore outsourcing market for software. From being a mere $2 bn industry in 1994-95, the Indian Information Technology (IT) and Information Technology-enabled Services (ITeS) industry has grown phenomenally over the years. It has recorded a 30.7% growth last year (2006-07) clocking in revenues of $39.6 bn.

The rapidly expanding service sector is emerging as a major contributor to economic growth. IT and ITeS segments remain the key drivers for growth of this sector. During fiscal 2006-07, software service exports grew by 33% to rake in revenues of $31.4 bn against $23.6 bn in the year 2005-06, while the domestic segment grew by 23% with revenues of $8.2 bn against $6.7 bn in the year 2005-06. For the year 2007-08, export growth is projected at 26-29%, IT services is expected to be in the range of $28-29 bn while BPO revenues is expected to be in the $10.5-11 bn range.

 
 
 

Global CEO Magazine, Indian IT Idustry, Indian software industry, Business process outsourcing, BPO, Gross domestic products,GDP, National Association of Software and Service Companies, NASSCOM, Indian technology companies, State Bank of India, SBI, Enterprise Resource Planning.