India’s services revenues seen at $225 bn by 2020 (Lead)

April 21st, 2009 - 6:23 pm ICT by IANS  

New Delhi, April 21 (IANS) India’s technology and services industry can earn $225 billion in revenues by 2020 despite the current global economic crisis, said a study released here Tuesday.
Of this, $175 billion is expected from exports and the remaining from domestic sources, said the study by global consultancy Mckinsey and IT industry body National Association of Software and Services Companies (Nasscom).

“This is absolutely feasible, the future of the industry remains secure in the medium to long term even in the phase of recent macro economic trends,” Noshir Kaka, director of McKinsey and Co, said.

The report, ‘Perspective 2020′, highlighted the need for diversifying India’s IT and business process outsourcing (BPO) industry to achieve higher growth.

India’s IT and services sector currently contributes about Rs.48 billion annually and has grown at a rate of 33 percent (computed annual growth rate) in the last 10 years.

The industry has contributed an incremental 6 percent growth to the country’s gross domestic product (GDP) in the period, while having a 45 percent positive impact on the urban employment rate.

“The untapped markets from Brazil, Russia India and China (BRIC) and the Gulf Cooperation Council (GCC) regions will contribute 80 percent to the incremental growth during the period till 2020,” Nasscom president Som Mittal said.

North America and Western Europe currently constitute the core markets for the Indian IT and services industry, contributing about 75 percent to the total revenue.

“Newer verticals like healthcare, public sector and media will present new opportunities to diversify and tap growth,” Ranjit Tinaikar, partner at McKinsey, said.

Currently the banking, financial services and insurance (BFSI) sector accounts for a major chunk of the revenues.

Small and medium businesses will also provide new growth opportunities, the report said.

The study also said if India and its technology industry focused on transforming its business environment, innovativeness and talent development, the revenues would be as high as $375 billion by 2020.

But the report also has its share of potential risks and warnings:

*India’s share in services exports can decline from 51 percent to 40 percent

*The industry could face an employee shortage of up to 3.5 million

*Infrastructure is still ill-equipped to handle an industry five times the current size

*Policies not in tune with the industry’s potentials of growth

*Competitive threat is expected from at least 25-30 countries.

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