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Indian software exports might fall short of expectations: DKW

NetScribes/Abhijit Basu

The Indian software industry might fall short of the projected growth rates for FY2002, says US-based global investment bank and equity research outfit Dresdner Kleinwort Wasserstein.

"Although Nasscom projects a 40-45 per cent growth for the current year, we believe growth is unlikely to be more than 28-30 per cent. It could actually be between 24-28 per cent unless the US economy picks up considerably," says DKW analyst Ramanan V in the report on the Indian IT sector dated April 25, 2001.

Earlier this month, Nasscom has revised India's software export target to about $8.5 billion, down from $ 9.5 billion because of US IT and economic slowdown. This indicated a projected growth of about 40-45 per cent for the current fiscal. "Most large companies grew their billing rates last year by 14-23 per cent over the previous year. Assuming average price growth for the sector as a whole rose 12 per cent last year, a 51 per cent export growth translates into volume growth of only 36 per cent year-on-year. If we categorise exports into staffing, captive back ends and MNCs, and consider slower growth and price reductions in staffing segment, the actual growth of the IT services exports would range between 23-28 per cent," says the report.

It further states that FY02 exports are likely to be around $6.1 billion, thereby indicating a 51 per cent growth in value terms but a mere 35 per cent growth in volumes.

Also, firms with strong offshore bases are expected to register much higher growth than the other software firms.

The US-based global investment bank and equity research outfit has identified Satyam Computer Services Ltd and Hughes Software Systems as its top picks for the year. Significantly, Infosys has been left out of the top league.

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