Indian Software and Services Exports clock revenues of USD 12.5 billion, registering growth of 30.5% in FY 2003-04 Total software and services revenues are USD 15.9 billion in 2003-04 Domestic market growth rate unchanged but outlook is positive due to lower tariffs on hardware, increased volume growth and heightened recognition of benefits of IT usage Launch of NASSCOM 4E framework for Trusted Sourcing Indian Software and Services exports industry likely to register strong growth of around 30-32% in FY05 USD New Delhi, June 03, 2004: NASSCOM, the chamber of commerce of the IT software and services industry in India, today announced the findings of its annual survey on the performance of the Indian software Indian Software and Service exports and services exports industry and the outlook for FY 2004-05. As per 18 16.3 the NASSCOM survey, the Indian 16 software and services exports 12.5 14 11.2 12 industry has recorded growth of 9.6 8.9 10 30.5% growth clocking revenues of 7.1 8 5.1 USD 12.5 billion in FY 2003-04 over 6 3.6 export revenues of USD 9.6 billion 4 2.5 2 in 2002-03. Of the total software 0 and services exports in FY 2003-04, 2002-03 2003-04 2004-05E IT Services, Products and 7.1 8.9 11.2 IT Products and Services 2.5 3.6 5.1 ITES-BPO Technology Services grew by 25%, 9.6 12.5 16.3 Total Export Revenues registering revenues of USD 8.9 billion while ITES-BPO segment IT Products and Services ITES-BPO Total Export Revenues clocked revenues of USD 3.6 billion recording a growth of 46%. According to NASSCOM findings, Indian software and services industry (including domestic market) grew by 28.2% in FY 2003-04 registering revenues of USD 15.9 billion up from USD 12.4 billion in 2002-03. Indian Software & Service Industry 25 20.5 20 15.9 The NASSCOM survey says that the Indian software and services industry is projected to cross the US $20 billion mark in 2004-05, with software and services exports growing at 30-32% to reach revenues of over USD 16.3 billion. USD 15 12.4 16.3 12.5 9.6 10 5 0 2.8 3.4 4.2 2002-03 2003-04 2004-05 Software & Services Exports 9.6 12.5 16.3 Domestic market 2.8 3.4 4.2 Speaking on the occasion, Mr. Jerry Rao, Chairman, NASSCOM Software & Services Exports Domestic market Total Software & Service Industry said, “Despite the challenges such as slow growth of IT spending globally, jobless recovery in major markets, appreciation of the rupee, the Indian Total Software & Service Industry 1 12.4 15.9 20.5 software and services industry has been able to maintain its growth momentum and consolidate its partnership with overseas customers, adding to their competitiveness. An encouraging trend during the year is a healthy growth of the IT services sector, which has gone up from USD 7.1 billion in FY03 to USD 8.9 billion in FY04 registering a growth of 25%. The year also witnessed increased maturity of the Indian ITES-BPO sector, which grew by 46%, adding approximately 70,000 jobs” “The need of the hour for the industry is to alleviate service excellence which includes knowledge capital, information security and service delivery to further strengthen India’s position as a leading software and services destination,” added Mr. Rao. Mr. Kiran Karnik, President, NASSCOM, said, “The performance of the Indian software and services exports industry once again demonstrates the tremendous value that the industry is providing to its customers in terms of quality, productivity and reliability. The healthy performance by the industry had a strong contribution from all the stakeholders – large Indian services companies, the MNCs, Products as well as SME companies. The year also saw 112 new start-ups, up from 47 in FY 2002-03. With the fundamentals and the value proposition of India as the IT destination being robust, we are optimistic of maintaining the growth trajectory.” Key highlights of the NASSCOM survey ICT majors heralding new trend – expanding revenues and enlarging global footprints with two IT software and services companies entering the Billion Dollar Club taking the total number of billion-dollar companies to three – TCS, Infosys and Wipro The industry has expanded its radar to new service lines such as package software implementation, systems integration, R&D engineering and network management as new horizon for robust growth Americas continue to be the primary market with exports to this geography constituting around 70% of total software exports, followed by UK with 15%. The industry today exports software and services to 112 countries around the world. Indian companies are aggressively exploring new markets in geographies like Japan, Germany and France Indian companies are expanding their customer base by tapping not only Fortune 500 companies but Global 2000 companies Vast majority of SMEs registered a growth of over 20% in revenues. Most SMEs report strong utilization rates and stable pricing. Increase in the number of start-ups with approximately 2 new start-ups being added every week Captive units continue to account for 65% of the ITES-BPO industry with 1 new captive center being added every week in 2003-04 Greater presence beyond metros – Vizag, Jaipur, Kochi, Pune, Ahmedabad, Chandigarh Strong focus on data protection, security, audit compliance Elaborating on the future outlook, Mr. Kiran Karnik said, “The Indian IT industry is among the top 10 industries in India. The industry is witnessing a transition phase and evolving in terms of delivery models, service offerings, industry composition, market reach etc. The year 2004-05 is expected to witness increase in the number of million dollar customers and mid-to-large sized deals flowing into the country. At the same time, the industry players are also building global delivery capabilities, recruitment in international markets and engaging in M&A activity”. Commenting on NASSCOM’s new security initiative, Mr. Jerry Rao said, “We have launched a 4E framework for Trusted Sourcing. This framework encapsulated a blended model of engagement, education, enactment and enforcement for ensuring highest standard of information security in the outsourcing industry in India. NASSCOM is setting 2 up a high-powered Global and National Advisory Board to constantly evolve best practices, both from a regulatory and compliance perspective” About NASSCOM NASSCOM is India’s National Association of Software and Services Companies, the premier trade body and the chamber of commerce of the IT software and services industry in India. NASSCOM is a truly global trade body with around 850 members, of which nearly 150 are global companies from the US, UK, EU, Japan and China. NASSCOM’s member companies are in the business of software development, software services, and IT-enabled/BPO services. For further information please contact: Shweta Munjal NASSCOM Tel: +91-11-23015416-19 Email: shweta@nasscom.org Charu Kohli Genesis Public Relations Tel: +91-11-23015416-19 Email: ckohli@genesispr.com 3