Indian Software, Services Exports Could Hit $75 Billion

India holds over 50% of the global market in offshore services.

If the annual rate of 30% growth continues for India's software and services exports continues it could hit $75 billion by 2010. The National Association of Software and Services Companies, or Nasscom, said it was sticking to its official forecast of achieving $60 billion in exports by 2010. But "if we continue to grow at these levels, that number can be much higher" and "we have the potential to go up to $75 billion" by 2010, Nasscom chairman Ramalinga Raju said.

The latest Nasscom comments came as the group unveiled a report by global consultancy McKinsey which said "operational excellence" was crucial to India achieving its potential in software and services offshoring. The report entitled, "Operational Excellence: The Next Frontier in Offshoring," found that 80% of customers are satisfied with the performance of their offshore units. But the report said improvements in service were needed to ensure continued high-level export growth and to cut costs.

"Customers are highly satisfied with remote centers and as a result are ramping up operations in India (but) it is also clear that their expectations are rising," said Raju. While clients focus initially on cost and quality, "their priorities shift rapidly" to more sophisticated needs "like innovation and productivity," the report said. The industry needs to focus on improving "upstream services" such as "solution design" as well as on training, the report said.

India holds over 50% of the global market in offshore services but "we have to keep raising the (performance) bar," said Nasscom president Kiran Karnik.

India has become the world's back office, as Western firms set up call centers, number-crunching and software development outlets. Companies routinely cut costs by shifting their work to India to tap its pool of English-speaking, computer-savvy graduates at lower salaries than counterparts abroad. While wage costs in the outsourcing sector were rising by 15% to 18% annually, this did not pose a big problem for India remaining competitive as the increases were from a low base, McKinsey said.

The Indian information technology industry has grown its overall revenues 10-fold in the past decade to $47.8 billion in 2006-07 from just $4.8 billion 1997-98, Nasscom has said.

Copyright Agence France-Presse, 2007

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