CB RICHARD ELLIS REPORT

Overview of the Indian IT Industry Increasingly, India's vast human, industrial and technological resources are being utilised at the global level making India a key player in the international IT arena. The advantages and value addition that IT can bring to the industry and the Government are now becoming self-evident. There has been a gradual shift towards the use of IT in the Government, Public sector and Private sector as also in public services and education. One of the major factors that led to the emergence of this sector was the unrivalled success of India's export led software industry.

Contribution to the Economy The IT industry in India has witnessed a phenomenal growth in the last eight years, with revenues exhibiting a Compounded Annual Growth Rate (CAGR) of 42.3%. The Industry has now attained a level of maturity, wherein, the revenues generated can be viewed as a dependable source of national income. In terms of contribution towards GDP, the IT industry constituted 0.59% in 1994-95, which increased to 2.87% in 2001-02, and as per NASSCOM projections, is expected to grow to 7% by 2008.

Source: Nasscom

Export Orientation The Indian IT industry is highly export oriented with export revenues constituting approximately 76% of the total earnings (year 2001-02). As per recent estimates, the IT industry has become the largest contributor to Indian exports with a share of 16.5%, which is expected to rise further to 18.6% in the current fiscal year (2002-03) as highlighted by the exhibit overleaf.

Source: Nasscom

In terms of markets serviced, majority of the Indian IT exports were focussed towards North America (constituting approximately 63% of the total Indian IT exports) followed by Western Europe (contributing approximately 25%).

IT Industry Segmentation
The IT industry can be broadly defined under two categories:

1. Software and Services - This category can be further divided into two key segments.

a. Software - including Projects (both offshore and onsite), Professional Services and Consulting, Generic Software Products (the most successful example being the accounting software - Tally), Training & Development and Support & Maintenance.

b. IT Enabled Services (ITES) - including back office operations, data processing, medical transcription, customer contact centres, digital/ website content management, disaster recovery storages, HR/ payroll services, insurance and financial claims management amongst others.

2. Hardware and Peripherals - including manufacturing and assembly of computer hardware components and peripheral device.

The Indian IT industry is dominated by the Software and Services category which solitarily accounted for more than 79% of the revenues generated in the year 2001-02 while the hardware and peripherals category contributed 21%.