Financial Daily from THE HINDU group of publications
Friday, Jun 03, 2005
`Domestic IT spend may touch $6 b this fiscal'
Bangalore , June 2
THE domestic software and services market, excluding hardware, grew 23 per cent to $4.8 billion in 2004-05, over previous year's $3.9 billion.
The software and services sector market was worth $4.2 billion whereas the IT-enabled services and BPO market stood at $0.6 billion.
The growth in domestic IT spending is triggered by a spate of e-governance initiatives taken by both Central and State governments, said Mr Kiran Karnik, President, Nasscom.
For the current fiscal, the domestic software and service market was expected to grow by 25 per cent to touch $6 billion.
"The growth forecast for domestic market is relatively lower, highlighting the different stages of maturity in the markets. However, with progressive deregulation and rising competition, companies were increasing their focus on the domestic market, especially on emerging sectors such as retail, logistics, telecom and small and medium enterprises," Mr Karnik said.
But, he said there was significant untapped potential in the domestic market. A rapid adoption of IT and a relatively small base was likely to result in high growth rate in domestic BPO segment, Mr Karnik added.
The domestic market targeted to grow at 23.5 per cent over the 1999-2009 decade grew at only 18.9 per cent between 1999 and 2005. However, the domestic market is required to grow at 30.7 per cent annually over the next five years to touch $13-15 billion by fiscal 2009, Mr Karnik said.
Indian IT firms operating in China were expected to scale up their operations by doubling their employee base in that country by the end of the year.
At present, about 18 Indian IT firms operate in China and employ close to 2,000 people, Mr Karnik said. The Indian IT firms, which consider China as a gateway to the Japan, the second largest IT market next to the US, have invested close to $50 million in China.
The Nasscom Chairman, Mr S. Ramadorai, said the apex industry body was leading a delegation of its members to China in September-October in the wake of the Chinese Premier, Mr Wen Jiabao's call to Indian firms to set up operations there during his recent visit.
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