India Intelligence Report

   33% Higher IT Exports at USD 23.6B


Fourth year in a row, Information Technology (IT) and Information Technology Enabled Services (ITES) grew at an astounding 33% netting USD 23.5 billion from exports and 31% domestic growth netting USD 29.6 billion.

The National Association of Software and Service Companies (Nasscom) had projected a 26.3% growth to USD 60 billion by 2010. However, with the growth rate much higher than earlier projection, that estimates should be higher. However, it is not known if this sort of growth can be sustained. Nasscom refused to up its estimate saying that the IT & ITES will grow at 28% next year.

In a refreshing note, the Federal Government is planning to set up two Software Technology Parks (STPs) in the north eastern states to support the ITES-Business Process Outsourcing (BPO) sector. This comes at a time when the European Union Intelligence Unit (EIU) said that the cost of outsourcing in India has grown significantly and the increased costs are eating into the cost savings. They projected Central and Eastern Europe and North Africa as alternate sites that could be used.

Since most of the ITES and BPO work has happened in major cities where the real estate has mushroomed beyond recognition, the costs have been increasing rapidly. However, the latest trend is to move the BPO companies away to secondary tertiary cities to get a cost advantage. The major disadvantage is infrastructure to support this move. Power, roads, telephone lines, etc are unreliable at best beyond the major cities.

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