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Nasscom sticks to export forecasts

India's leading software body stuck on Thursday to forecasts that software exports would rise by 40 to 45 per cent this year, despite a slowing US economy.

The group said the mood among companies was that of "quiet optimism" as they hoped to bag new business orders from global companies, especially those in the United States, which were looking to cut costs without compromising quality.

"In terms of new business, this will be a boom time as there have been many more visits (by foreign firms) to India lately," Phiroz Vandrevala, chairman of the National Association of Software and Service Companies, told a news conference.

"As of now there's no reason to change our outlook for the sector. We're sticking to our (April) forecasts," he added.

A Nasscom statement said firms such as DuPont and Deutsche Bank had announced an increase in outsourcing services to India while technology firms such as Intel and Hewlett Packard had increased investment commitments.

The economic slowdown in the US has clouded the outlook for several Indian software companies amid fears that many of their clients would lower technology spending.

The United States is the biggest market for Indian software firms and accounted for 62 per cent of their business in 2000-01. Europe accounted for 24 per cent of business.

Software exports represented 14 per cent of India's total exports and the industry accounted for two per cent of its GDP, Nasscom said.

CUT FORECAST

Nasscom lowered in April the software export growth forecast for the current year (April-March) to 40-45 per cent or $8.5-9 billion from 52 per cent or $9.4 billion.

On Thursday, it said the software industry posted exports of $6.2 billion 2001/02, up 55 per cent from $4 billion a year ago.

The software services industry registered overall growth of 55 per cent during the year with total revenues rising to $8.26 billion from $5.7 billion the previous year.

"The interesting highlight of 2000-01 was that one out of every four global giants outsourced their mission critical software requirements to India," Vandrewala said.

A Nasscom statement said it expected e-commerce and information technology -enabled services to be the two big growth areas in the years ahead.

A study by Nasscom and McKinsey forecast that India could earn revenues worth $10 billion from e-commerce business by 2008. E-commerce revenues were expected to rise to $1.8 billion during 20001/02 from $1.2 billion a year ago.

Nasscom also forecast that revenues of the IT-enabled services sector would rise to Rs 63 billion ($1.34 billion) in 2001-02, up 54 per cent from Rs 41 billion a year earlier.

But the sector's performance in the domestic market was a worry, Vandrevala said. He said the software industry's revenue growth in the domestic market fell to 31 per cent in 2000-01 from 45 per cent a year earlier as a result of a slowing economy.

The domestic software market recorded revenues of Rs 94.10 billion, up from 72 billion the year before.

"The domestic market does not present as rosy a picture as the export market. This may be partly reflective of the slowdown in the domestic industry," Vandrevala said.

He said, however, increased spending on information technology by some large state-run banks and the government and the spread of Internet and e-business would boost future growth.

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