IT-BPM exports to grow at slower pace of 10-12% in FY17: Nasscom

New Delhi: Software industry body Nasscom on Thursday lowered its growth projection for the information technology-business process management or IT-BPM industry exports for the financial year starting on 1 April, blaming an uncertain macro-economic environment marked by volatility in equity and investment markets, currency fluctuations and political instability in global markets.

The IT-BPM industry exports revenue is expected to grow between 10-12% to $119-121 billion in constant currency in fiscal year 2017, compared with a 12-14% growth estimate for the current fiscal year, Nasscom said.

For the current fiscal year, the IT-BPM export revenues would grow by 10.3% in dollar terms and 12.3% in constant currency reaching $108 billion, compared to $98 billion in the previous fiscal year. That means, it would fall into the lower range of the previous guidance provided by the industry body. Of the total export revenue, digital is likely to contribute between 11-14% for the leading IT companies.

There are about 16,000 IT companies in the country that the industry body knows of, said Nasscom.

The IT industry revenue will total $143 billion in the current fiscal year, while e-commerce services will contribute additional $17 billion, as compared to $132 billion and $14 billion respectively in financial year 2015.

Overall, the IT industry will expand to $160 billion in the FY 16 which would include $108 billion in revenue from IT services exports, $22 billion from the domestic market, $13 billion from IT hardware and $17 billion revenue from e-commerce.

IT-BPM domestic revenue would grow at 10% reaching a total of Rs1410 billion ($22 billion) in the current fiscal, driven by increased adoption of digital technology by consumers, e-commerce and start-ups coupled with the government’s technology-focused growth agenda, the industry body said.

Industry expects double digit growth to continue in FY 16- 17 on the back of growing tech spend and the digital technology adoption globally.

While the IT-BPM industry’s export revenue is expected to grow by 10-12% in FY 2017, domestic revenue is projected between 11% and 13% reaching Rs1560-1590 billion ($23.06-$23.5 billion) in FY 2017.

“With this, the industry is marching steadily on the path to reach $350 billion by 2025, with digital revenues spearheading growth,” said C. P. Gurnani, vice chairman, Nasscom.

The Indian outsourcing industry, which has the largest market share of the global outsourcing market, followed by China, Malaysia and Indonesia, grew to 56% in FY 2015-16 from 55% in 2014-15.

“The need of the hour is for industry to fundamentally transform its business models, solution offerings, organization structure and capabilities to strengthen its market leadership position,” said R Chandrashekhar, President, Nasscom.

“Further, going forward, revenue growth alone may not be an adequate indicator of the growing capability and capacity of India’s technology industry and factors such as investment, valuations, digital solutions portfolio, impact etc. would also need to be considered in assessing the industry performance and contribution to the economy.”

While global tech spend remained flat in 2015-16 with global IT-BPM spend growing at 0.4% in dollar terms to $1.2 trillion, the Indian IT industry remains bullish about technology spend picking up in 2016-17.

“Our research, based on interview with CIOs (chief information officer), showed the tech spends would grow this year as digital technology adoption continues unabated and has become the survival strategy for the companies globally,” said Chandrashekhar.

The industry also continues to be the largest private sector employer, adding about 200,000 employees to reach a total employee base of 3.7 million in the current fiscal, while it is expected to add about the same number of people in fiscal year 2017.