Indian IT crosses $50 billion

§         Industry grows 30% to $50.4 billion; INR growth 32% to Rs 226,879 crore 

§         Exports grow faster at 35%, contribute 68%

New Delhi August 1, 2007: The sunrise Indian IT industry recorded a growth of 32% in rupee terms, in fiscal 2006-07, to cross the $ 50 billion mark. (The industry growth in dollar terms was a shade lower at 30%). The revenue of Rs 226,879 crore was contributed by export earnings of Rs 153,744 crore and a domestic market of Rs 73,135 crore. Exports revenues grew at 35% and the domestic market at a consistent 27.2% (roughly the same for three years now).

This has been revealed by the CyberMedia group’s flagship publication Dataquest in its 20^th “DQ Top 20” annual survey of the Indian IT industry.

IT Services Exports cross trillion rupee mark

The IT services exports crossed trillion rupees mark to reach Rs103,647 crore, representing a growth of 37%. BPO Services grew 33.5% to touch Rs. 37,800 crore. Engineering services (Rs. 4,146 crore) and entertainment and gaming (Rs. 1810 crore) too emerged as strong exports areas.

Talking about the Indian IT industry crossing $50 billion mark, Mr. Pradeep Gupta,
publisher of Dataquest , says, "After a consistent 30%-plus growth for over three
years, this achievement marks a truly a proud moment for Indian IT's entrepreneurs, as well as the 1.6 million technology professionals who contributed directly to it."

The Top 20 players accounted for as much as 77% of the software services exports by growing at 44.2%, the highest in the first 7 years of the millennium. The top 3 players Tata Consultancy Services (TCS), Infosys and Wipro got into the big league by bagging several large deals and growing their consultancy business in the face of competition from the established players from North America and of late, Europe. British Telecom awarded a billion dollar contract to Tech Mahindra, a company that recorded a growth of 134% to jump into the Top 10 list.

The next 20 players comprising of companies like Hexaware, L&T Infotech and NIIT Technologies contributed to nearly 11.4% of the total revenues and the remaining 12% was contributed by several hundred smaller players.

Top 8 software firms, TCS, Infosys, Wipro, Satyam, HCL, Cognizant, Tech Mahindra and Patni, earned nearly 63% of their export earnings from North America, 29% from Europe and 5% from the Asia Pacific region.

The study by Dataquest notes that Application Development and Maintenance still contributed to nearly two-thirds of the total software export revenues, despite efforts to bring this down. Infrastructure services and Engineering Services contributed to 5% and 4% of the revenues. Others including package software implementation, systems integration, testing, consulting, product development for ISVs and embedded software contributed 32%.

Domestic IT services touch Rs. 21,000 crore

The domestic IT services market reached Rs. 20,948 crore by reporting 30% growth. Several large BPO ITES players started focusing on the relatively untapped domestic BPO market that recorded a growth of 48% to touch revenue of Rs. 5400 crore. Packaged software industry grew 19% to touch Rs. 8053 crore.

“The all round high-growth performance in the domestic market in areas beyond the usual banking and telecom sectors: manufacturing, education, government, retail makes 2006-07 very special,” says Prasanto K Roy, Chief Editor of Dataquest. 

Just as the exports sector diversified beyond the USA, the domestic market truly went beyond the top ten cities and reached deep into tier-three towns last year, adds Mr. Roy.

The Top 10 Indian software product companies recorded a growth of 62% to report revenues of Rs. 3777 crore. I-flex, TCS, Infosys. 3i Infotech and Subex Azure were the Top 5 revenue earners from this segment. Polaris with revenues of Rs.184 crore reported the highest growth at 148%.

Microsoft Windows remains on top (47%) even though Linux started gaining ground (21%) in the systems software market. Governments in a few states too chose to support Linux and a few mission critical projects adopt Linux as the standard.

Notebook computers emerged as a serious challenger to desktop computers with one in every five computers sold being a notebook computer. India sold 49 lakh desktop computers and over 11 lakh notebook computers. Notebook computers market grew 69% in value terms and 89% in terms of units shipped. Mobility of users, increased connectivity and more affordable prices made this possible.

Domestic market: Digital Cameras, MFDs record high growth

Laser Multi Functions Devices (MFDs) that usually carry varying combinations of a printer, scanner, phone, fax and copier grew 69% during the year while inkjet and dot matrix printer sales dropped. LCD (liquid crystal display) monitors sales increased 153% as sales of the traditional bulkier CRT (cathode ray monitors) monitors dropped.

The highest growth of 112% was recorded with the sale of digital cameras touching nearly half a million, says Dataquest.

The networking product sales grew 32% to Rs. 5543 crore with increased demand from the Banking Finance and Insurance; BPO and Telecom sector and the government initiative to set up State Wide Area Networks. Structured cabling (42%) and WLAN (44%) were the high growth areas in networking.

The data storage sector, comprising storage hardware, secondary storage and storage software, grew by 47% to reach Rs. 1561 crore (highest percentage growth amongst all product segments in the domestic market).

Training industry growth rate quadruples

By posting revenues of Rs. 2135 crore, the training sector gathered momentum as demand for training within corporations in India and overseas was met by the Indian players. Market leader NIIT reported a higher market share as a result of acquisition of a US $ 80 million American training firm.

The Dataquest annual reveals that premier management institutes like IIM-Calcutta and Ahmedabad started executive education programs in partnership with a leading IT training major for offering management education.

Internet subscribers touch 9 million, Users at 23 million 

According to Dataquest, the number of Internet users (over 15 years of age and above) in the country touched 23 million during the year with 9 million Internet connections, including 2.6 million broadband connections. BSNL and MTNL enjoyed almost two-thirds of the subscriber base. The industry is targeting 60 million Internet connections by 2010. Internet services revenues grew by a quarter to reach Rs. 2040 crore.

Note for Editors:

The US dollar averaged INR 45.05 for 2006-07 and INR 44.11 for 2005-06

For more information, please contact:
At Strategic Communications and PR
Sanjiv Kataria
+ 91 98100 48095
Sanjiv.kataria@gmail.com

At CyberMedia:
Shyamanuja Das 

Executive Editor, Dataquest,
Cyber House, B-35, Sec 32,
Gurgaon 122001 India
Ph: +91 124 4031234 +91 98102 97587
shyamanujad@cybermedia.co.in