Performance & Contribution towards Exports by IT-ITeS Industry

Revenue

As shown in figure 1, Indian IT-ITeS industry revenue is estimated at USD 151.0 billion in FY2017-18 as compared to USD 141.0 billion in FY2016-17, registering an increase of around 7.0%. The overall industry’s growth of this sector over the last five years is given in the table below.

Year/ Description 2013- 14 2014- 15 2015- 16 2016- 17 2017- 18(E) CAGR %(2013-18)
Exports 87.3 97.8 107.8 117.0 126.0 10.49
Domestic 19.0 21.0 21.7 24.0 25.0 5.42
Total 106.3 118.8 129.5 141.0 151.0 9.55

Source:NASSCOM SR-2018, E: Estimate

Figure 1: Indian IT-ITeS industry revenue

As per figure 2, the IT Services exports accounts for the largest share of 57% of about US$ 86.0 Billion; ER&D and software products has emerged as the second largest segment with 21.8% share followed by BPO exports contributing 21.2%.

Figure 2: Revenue share of various segments in IT/ITeS Sector (in %) Source: NASSCOM SR-2018

Exports

As shown in figure 3, IT-ITeS exports are estimated as US$ 126.0 billion in FY2017-18, growing by 7.7% over FY2016-17. A combination of solutions around disruptive technologies such as SMAC (Social media, mobility, analytics and cloud), artificial intelligence, embedded systems etc. have become the life-force of the industry.

IT Services is the fastest growing segment within the Indian IT-ITeS sector. This segment is estimated to generate exports revenues of the order of US$ 69.3 billion in year 2017-18 as compared to US$ 66.0 billion in year 2016-17.

ITeS/BPO segment has been reinventing itself in the past few years and is expected to generate export revenue of the order of ~US$ 28.4 billion in year 2017-18 as compared to US$ 26 billion in year 2016-17.

Engineering R&D and Product Development has registered a growth of about 12% in the exports, which is estimated to reach US$ 28.3 billion in year 2017-18 from the level of US$ 25.0 billion in year 2016-17.

Year/ Segment 2013- 14 2014-15 2015-16 2016 -17 2017- 18 (E) CAGR %(2013-18)
IT Service 49.2 55.3 61.0 66.0 69.3 10.07
ITeS-BPO 20.4 22.5 24.4 26.0 28.4 9.19
Software Products, Engineering Services, R&D 17.7 20.0 22.4 25.0 28.3 13.09
Total IT-ITeS 87.3 97.8 107.8 117.0 126.0 10.32

Source: NASSCOM SR-2018, E: Estimated

Figure 3: Export of various segments in IT/ITeS Sector

Source: NASSCOM SR-2018, E: Estimated

Domestic Market

The Size of the domestic market is become significant now in the IT/ITeS Sector, though it largely remains export driven. As shown in figure 4, Domestic IT-ITeS revenue (excluding hardware) is estimated to reach INR 1738 billion in FY2017-18, as compared to INR 1608 billion in FY2016-17, a y-o-y growth of ~8.7%. In FY 2018, India’s domestic IT-BPM market is likely to grow 7.9% Y-o-Y to reach US$ 41 billion (~₹ 273750 crore), excluding e-Commerce as compared to US$ 38 billion in 2016-17. Rapid digitization is expected to further catalyse growth. Domestic IT-BPM industry is also seeing continued growth as various government initiatives encourage technology usage (push factor) and Indian enterprises across industries are rapidly implementing digital technologies to adapt to a changing competitive landscape and the ever-demanding customer. Domestic IT Services sector is the largest segment with close to 40.5% share, expected to reach ₹. 113600 crores in year 2017-18 as compared to ₹ 100500 crores in year 2016-17 with a estimated growth of about 13.1% in INR terms.

The IT-ITeS industry domestic revenue growth trend over the past 5 years is as under:

Year/ Segment 2013- 14 2014- 15 2015- 16 2016- 17 2017-18(E) CAGR %(2013-18)
IT Service 72721.6 81662 89562 100500 113600 11.37
ITeS-BPO 19593.8 21490 23364 26800 26800 8.90
Software Products Engineering Services 22468.8 25788 27907 33500 33500 10.32
Total IT-ITeS 114784.2 128940 140833 160800 173800 10.75

Source: NASSCOM SR-2018, E: Estimated

Figure 4: Domestic Revenue of various segments in IT/ITeS Sector

Source: NASSCOM SR-2018, E: Estimated