The Indian IT industry is moving on the right path towards achieving the target of $50 billion in revenues by 2008, says the Nasscom-McKinsey study 2002. The report was unveiled at the third IT and IT-enabled services (ITES) strategy summit that was held here recently.

The much-awaited report lays down strategies and implications for Indian IT companies, the government and Nasscom. Providing a sector-wise break-up of projected revenues, Arun Kumar, chairman, Nasscom, said by 2008 the Indian IT software services sector would be earning export revenues to the tune of $28 billion to $30 billion. The ITES sector would generate export revenues of $21 billion to $24 billion, while software products and technology services would contribute $8 billion to $11 billion. Apart from this, the report envisages the domestic market to be worth between $13 billion to $15 billion. The total IT exports from India would be in the range of $57 billion to $65 billion by 2008. These estimates exclude $10 billion projected as e-commerce transaction revenues projected by 2008.

According to the revised report, by 2008 the industry would employ around four million people, account for seven percent of the country’s GDP and 30 percent of India’s foreign exchange inflows. Software exports and ITES are expected to contribute to 20 percent of incremental GDP growth forecasted between now and 2008. Arun Kumar added that despite depressed economic conditions and a marked slowdown in the growth rate of the industry, the long-term potential of the industry is robust. Considering the high growth rate that the software industry has witnessed in the past, India would need to project a compounded annual growth rate (CAGR) of 34 percent between 2002 and 2008.

Nasscom president Kiran Karnik noted that the mix of services was slightly different from the mix projected in the earlier study. The IT services exports and products and technology services growth projections have remained unchanged, but projections for ITES exports and domestic market revenues have been upped from the earlier projection of $17 billion. The export market of ITES is expected to grow faster than the domestic market due to the delays in product market reforms, he added.

Gautam Kumra, partner, McKinsey & Co, said there were four main avenues for growth namely new service lines, under-penetrated geographies, high-potential verticals and product-centric opportunities. Kumra added that opportunities exist in other verticals such as retail, telecom service providers and healthcare.