176 177
3 Overview of IT/ITES Industry in India (continued)
As can be seen from the table, the IT/ITES industry has grown nearly fivefold in the last ten years showcasing India’s continued
and sustainable development in the sector. India’s IT exports have witnessed tremendous growth in last ten years with a
compounded annual growth rate (“CAGR”) of 18%, while domestic revenues have increased by CAGR of 17% during the same
period. India’s IT/ITES sector revenues have grown from 1.2% of India’s GDP in FY97/98 to 9.5%
11
of India’s GDP in FY14/15.
11
NASSCOM
12
Banking, Financial Services and Insurance
Growth (%)
Revenue (US$ billion)
Growth in IT-BPM Revenue
Growth in Exports
India IT-BPM Revenue
Exports Revenue
140
60%
120
160
50%
100
40%
80
30%
60
20%
40
10%
20
0%
0
-10%
FY05/06 FY06/07
FY04/05
FY07/08 FY08/09 FY09/10 FY10/11 FY11/12 FY12/13
FY14/15
(E)
FY13/14
Source: NASSCOM
According to NASSCOM’s data, India’s share of the global sourcing market has also increased from 51% in 2009 to 55% in
2014. The total direct employment from the industry reached nearly 3.5 million as of March 2015
11
. It is estimated that for
every 1 direct employment, the industry generates indirect employment of 3-4 person translating to about 10-14 million indirect
employment. For FY15/16, software and services export revenues and domestic revenues are expected to grow by 12-14%
and 15-17% respectively.
The industry’s vertical mix is well balanced across several mature (like BFSI
12
, manufacturing, hi-tech/telecom) and emerging
sectors (like retail, healthcare and utilities). Though BFSI vertical accounted for more than 40%
11
of the total IT exports in
FY13/14, IT exports are also sustaining growth from new opportunities in sectors like hi-tech, manufacturing, retail, healthcare
and Telecom. eCommerce is the major driver for growth in domestic IT-BPM revenue fuelled by unprecedented levels of
global interest and funding.
Even though India has a 50-55%
11
market share of the global sourcing market, there is tremendous headroom for growth as
current offshoring market is still a small part of the outsourcing industry. Significant opportunities exist in core vertical and
geographic segments of Asia Pacific and US, and emerging geographies and vertical markets such as BFSI, retail, healthcare
and government respectively. Development of these new opportunities can triple the current addressable market, and can
lead Indian IT/ITES revenues to US$225 billion by 2020. The industry also has the potential to transform India by harnessing
technology for inclusive growth. According to NASSCOM, by focusing on research and development (“R&D”) and boosting
innovation, the IT/ITES industry is expected to contribute an additional 2% to India’s GDP by 2020.
The industry is expanding its scope of services to include complex processes such as knowledge, legal, games and design
process outsourcing, among others. According to AT Kearney, India remains the most preferred destination for companies
to offshore their IT and back-office operations on account of the cost advantage and availability of skilled people.
