Indian IT Sector Set To Touch Rs 196,105 Cr In 06, Says IDC

Bangalore: | Updated: Jul 31 2003, 05:30am hrs
Indias Information technology (IT) industry, comprising both domestic and export markets, is expected to grow at a compounded annual growth rate (CAGR) of 27.9 per cent to touch business volumes of Rs 196,105 crore in 2006.

Of this, exports will account for Rs 140,180 crore while the domestic market will be worth Rs 55,925 crore, according to an IDC report.

However, the days of double digit growth are over for the IT services sector, IDC India chairman and managing director Pradeep Gupta said in his presentation at IDC Directions 2004.

The new reality is that growth in the coming years is limited to single digit and going forward, IT industry has to adjust to the new landscape, IDC said in a release.

The projections comprised both software and hardware sectors. The compounded annual growth rate (CAGR) for the entire sector in 2006 is estimated to be 27.9 per cent.

The report said the domestic sector was expected to display a significantly enhanced growth performance of 16 per cent in the current year. Domestic sector is expected to show growth with stability over the next four years displaying a CAGR of 21 per cent with total IT spend to reach Rs 55,925 crore in 2006. The total domestic IT spending was Rs 25,931 crore in 2002.

But the mainstay of the Indian IT sector continues to be exports of IT services and ITES (IT-enabled services) and hardware.

According to the projections, the share of exports in the total IT market is expected to increase to 71 per cent in 2006 from the current 65 per cent.

Within exports, ITeS has the highest growth rate followed by IT services and hardware respectively. Despite the depressing conditions worldwide, ITeS grew by 76 per cent to cross Rs 10,000 crore in 2002. IDC estimates that ITeS will grow at a CAGR of 52.4 per cent in 2002-06.

The IT services exports continued on its growth path though statistics were not impressive as last year. The IT services exports recorded marginally lower growth of 22 per cent to reach Rs 34,250 crore in 2002. The sector is expected to register a CAGR of 23 per cent to reach Rs 78,642 crore in 2006.

According to IDC, In the new landscape, opportunity will be little harder to find and share will be a little harder to preserve.

The new mandate for the IT industry is to focus on return on investment, industry-specific solutions, integrated applications, wireless, converged devices, security and continuity and outsourcing.

The main components of the growth areas for the Indian IT sector have been identified as personal computers, servers, traditional workstations, storage, peripherals, datacom, packaged software, IT services.