Wary Nasscom pares growth forecast, February 15, 2012

The Business Line

Smaller firms making big strides, says Rajendra Pawar The mood at this Nasscom's Leadership Forum, as a CEO puts it, reflects the mood of an industry that is wary of an uncertain global business environment. The pomp and exuberance are missing as the three-day Nasscom's flagship event begins here on Tuesday.

Apprehensive about what is in store for it in 2012-13, the IT-BPO industry association has forecast a growth rate of 11-14 per cent lesser than 16.3 per cent it pegged for 2011-12. The industry, which is set to cross the $100-billion mark for the year, however sees fledgling smaller and medium-size companies have reached a stage where they can contribute much more.

Addressing the inaugural of the conference, Mr Rajendra Pawar, Chairman of Nasscom, said the smaller firms that contributed only $5 billion to the overall kitty of $101 billion during 2011-12 are all set to play a bigger role.

The industry now hopes to see bigger contributions from the small and medium companies, which have been lying low, piggybacking on the growth of domestic IT industry. Though the SME sector contributed only $5 billion this year, Mr Pawar said their growth rate has been very high.

For the year 2011-12, Nasscom pegs IT exports at $69 billion against $59 billion last year. Domestic industry chipped in $32 billion ($29 billion).

Mr Pawar also said smaller firms were making big strides, particularly in the products segment. Share of IT-BPO to India's gross domestic product (GDP) has gone up to 7.5 per cent from 6.4 per cent in 2008.

Though the US and Europe are reeling under a severe economic crisis, IT services continue to grow. This segment grew by a Compounded Annual Growth Rate of 16 per cent in the last four years to grow to $40 billion from $22 billion in 2008.

The BPO industry, with a share of 36 per cent in the global BPO outsourcing market, continues to get higher incomes from customer interaction business at $6.7 billion ($4.3 billion). Research and development exports went up by a CAGR of 12 per cent to $10 billion ($7 billion in 2008), taking a 15 per cent pie in the overall IT-BPO exports.