The software and services revenue in India is expected to grow between 21 and 24% during 2008-09 on account of improving efficiency and increasing productivity.
The National Association of Software and Services Companies (NASSCOM) revealed that the software and services revenue in India is expected to rise 21-24% and reach $62 to $64 Billion in 2008-09, as reported by BusinessLine.
According to NASSCOM, the software and services revenue in India increased nearly $52 Billion, an increase of about 28% in 2007-08 against the previous fiscal. In 2008-09, the revenue from the technology exports is likely to touch $50 Billion, whereas the domestic revenue is expected to reach around $13 Billion. Around 70% of IT expenditure will be on current projects and nearly 30% on new projects (discretionary spending).
A large operational base and delay in decision-making on new projects are the major reasons for slowdown in the Indian technology industry during 2008-09. Also, competitive and challenging business environment is adversely affecting decision-making on new projects.
Moreover, slowdown in the US economy is leading to a decline in demand from the US, which accounts for more than a half of the export revenues of the Indian technology industry. As a result, the software and services revenue in India will grow at slower pace during 2008-09 as compared to 2007-08.
However, despite an economic slowdown in the US, the IT expenditure is likely to improve during H2 2008, says NASSCOM. The software companies in the country are expecting huge growth in the IT spending during 2008 similar to previous year’s high growth due to boom in various sectors such as healthcare and manufacturing. Also, the Indian software companies are trying to expand in other markets such as the Middle East and Europe to increase the software exports.
According to a Research Analyst at RNCOS, “The global economic slowdown and delay in decision-making on new projects is leading to the sluggish growth in the Indian software and services sector. However, it is still growing much faster than many other developed and developing economies. This is primarily because of improving efficiency and productivity with establishment of new markets like the Middle East and Continental Europe as they provide ample growth opportunities in future.”
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