Nasscom on Indian software industry

The Indian software industry grossed annual revenues of Rs 15,890 crore during 1998-99, according to the annual industry survey released by the National Association of Software and Service Companies, or Nasscom, the industry''s apex body.

Nasscom president Dewang Mehta said that 1998-99 witnessed the highest ever growth in Indian software exports in the last decade. Exports grew over 68 per cent to Rs 10,940 crore in rupee terms, and 56 per cent in dollar terms over last year’s software exports of Rs 6,530 crore, or $1.75 billion. Nasscom expects software exports in 1999-2000 to grow at more than 50 per cent -- adding up to Rs 16,700 crore.

Indian software industry in 1998-99

	Rs. crore	$ billion
Software exports	10,940	2.65
Domestic market	4,950	1.25
Indian software industry (total)	15,890	3.90

Nasscom’s survey indicates that the industry''s total revenues (domestic as well as export sales) grew 58 per cent during 1998-99, from Rs 10,040 crore in 1997-98 to reach Rs 15,890 crore during 1998-9.

According to Mr Mehta, "the interesting highlight of 1998-99 was that more than 200 of Fortune 1000 companies outsourced their software requirements from India". This clearly establishes that more and more global companies are outsourcing their software requirements from India and are gaining a competitive advantage.

Another interesting Nasscom survey finding was the high market capitalisation of software industry in India. According to Mr Mehta, "Current market cap of the software industry in India is more than Rs 100,000 crore, which is almost 10 per cent of India’s GDP, estimated at 10,50,000 crore."

As per the Nasscom survey, the Indian software industry has not only been growing exponentially but has been moving up the value chain as well. The industry has evolved from staffing to software development to integration and IT business consulting.

Mr Mehta says, "The Indian software industry still requires to move faster on the value chain ladder and get more involved in strategic consulting, brand management for customers, research and development, and providing more web-based and e-commerce kind of interactive services to customers".

NASSCOM survey sidelights

Export destination	% of revenue
North America (USA and Canada)	61
Europe	23
South-East Asia	4
Japan	4
West Asia	1.5
Australia and New Zealand	2
Rest of the world	4.5

Top software exporters

	Company	Exports (1998-99) in Rs. crore
1	Tata Consultancy Services	1,518.50
2	Wipro Infotech Software & Services	632.50
3	Pentafour Software & Exports Limited	511.83
4	Infosys Technologies Limited	500.25
5	NIIT Limited	394.96
6	Satyam Computer Services Limited	376.62
7	Cognizant Technology Solutions	290.03
8	IBM Global Services India Pvt Limited	227.63
9	DSQ Software Limited	223.30
10	Tata Infotech Limited	220.81
11	Patni Computer Systems Limited	219.90
12	HCL Technologies India Pvt Ltd	207.40
13	Mahindra-British Telecom Ltd	172.19
14	L&T Information Technology Limited	144.49
15	International Computers (India) Limited	142.89
16	IMRGlobal Limited	139.73
17	Citicorp Information Technology Industries Limited	133.47
18	Mastek Limited	129.68
19	Complete Business Solutions (India) Ltd	108.83
20	Silverline Industries Limited	103.95

The new opportunities
The Indian software industry is now focussing on greater opportunities beyond Y2K. This includes upcoming segments of E-commerce, Euro and the wide ranging gamut of IT-enabled services or remote processing, which covers a wide gamut of services including call centres, medical transcription, data digitisation, legal databases, revenue accounting, data processing, back office operations, Web content development, Animation etc.

As per reports by international consultants, the IT-enabled services market is poised to grow from the present $10 billion to $200 billion worldwide.

I.T-enabled services generated total revenue of Rs 1,130 crore for the Indian industry. Out of which almost Rs 590 crore came from exports. Nasscom''s study indicates that by year 2008 more than 1 million additional jobs can easily be created in this sector, generating an annual revenue of Rs 81,000 crore.

The domestic market
Although software exports have done exceptionally well, the domestic software market could not catch up with the revenues of the software exports markets. Political uncertainties and slow economy and several other factors resulted in relatively slower growth of the domestic software market. Mr Mehta said, "the domestic software market continued with better performance than many other industry sectors".

The domestic software market aggregated revenues of Rs 4,950 crore in 1998-99, over its performance of Rs 3,510 crore in 1997-98.

In the domestic market, the ERP segment grew by 55 per cent in terms of new installations, but revenue increase in ERP was about 37 per cent. At the same time, the CAD/CAM market grew about 34 per cent. Software purchases by the SOHO market witnessed a high growth rate of 61 per cent.

The domestic software market grew by over 41 per cent, mainly due to increased government computerisation, some of the IT taskforce recommendations; increased Y2K spending, elimination of import duty on software; better enforcement of anti-piracy laws, and increased maturity in end-user organisations.

An important highlight of the year was the focus towards e-governance by state governments in India. As many as 14 of the 26 state governments have already announced their IT policies, and many have formed high-level task forces.

The total value of e-commerce transactions in India was estimated at Rs. 131 crore in 1998-99. Of this, about Rs. 12 crore were contributed by business-to-consumer transactions, and about Rs.119 crore were contributed by business-to-business transactions.

There were more than 2,80,000 internet subscribers in the country as on 31 March 1999. The actual number of users who have ready access to internet in India is more than 8,00,000. Internet subscribers are expected to increase to 1.5 million by the end of Year 2000.