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The year 2011-12 was marked by growing global uncertainties. Global recovery has stalled, growth prospects have dimmed and downside risks have escalated. By contrast, the Indian IT-BPO Industry (including hardware) continued to exhibit resilience. It weathered uncertainties in global business environment and reached a significant milestone in the year 2011-12 by aggregating revenue of US $ 101 billion, a growth of about 14.7 per cent over the previous year. Thus, the year 2011-12 is a landmark year for the IT-BPO Industry.
The Indian software and services export including BPO exports is estimated at US $ 68.7 billion in 2011-12, an increase of 16.4 per cent. The IT services exports is estimated to be US $ 39.8 billion, showing a growth of 18.8 per cent. BPO exports are estimated to grow to US $ 15.9 billion in 2011-12, a year-on-year growth of about 12 per cent. IT services contributed 58 per cent of total IT-BPO exports in 2011-12, followed by BPO at 23 per cent and Software products/engineering services at 19 per cent.
USA continues to drive IT-BPO exports growth. Growth is being driven by higher demand for IT services and support. Continental Europe and UK, the second largest markets for Indian IT-BPO exports are seeing their share decline in the last three years. Indian service providers have been aggressively growing business in the Asia-Pacific (APAC) market. Aimed at reducing their geographic dependency and spread currency risk, APAC is growing fastest at nearly 18 per cent; its share in total IT-BPO exports is expected to increase to nearly 8 per cent.
The IT-BPO market is being driven by demand across all key consumer segments. Notwithstanding the growth witnessed in the IT-BPO domestic segment, it accounts for a little over 21 per cent of overall industry revenues. India continued its dominant position as the leading sourcing market as compared to other emerging economies. Its share is global sourcing stood at 58 per cent in 2011.
The IT-BPO sector has become one of the key sectors for the Indian economy because of its economic impact. The sector is responsible for creating significant employment opportunities in the economy. Direct employment within the IT-BPO sector reached 2.77 million, with over 2,30,000 jobs being added in 2011-12.
The spectacular growth performance in the IT-BPO industry in the last decade has helped the industry contribute substantially to India's GDP. In 2011-12, this sector’s contribution to GDP is estimated to be 7.5 per cent. The IT-BPO industry has played a key role in putting India on the world-map. This segment has enormous potential to grow in the year to come. By 2012-13, this would have developed to a potential to touch US $ 100 billion in revenues as compared to US $ 87.7 billion in 2011-12, a growth of about 14 per cent.
Bringing the Economy Back to High Growth Path
PIB Features, June 08, 2012
Prime Minister Dr. Manmohan Singh called a meeting of Ministers and Senior officials of the Infrastructure Ministries - Power, Highways, Civil Aviation and Shipping & Ports on 6th June, this year. The purpose was to devise suitable measures to bring the economy back to high growth path. Indian economy which had been growing at 9 per cent per annum for the past eight years, grew only at 6.5 per cent in 2011-12 and in the last quarter of the financial year the growth rate was 5.3 per cent. Such turn of events, made the Government take suitable measures to reverse the down turn.
At the meeting it was decided to invest Rs 2 lakh crore in the current financial year and compared to past year made substantially increased allocations for several sectors of the economy. The quantum jump in investment in these sectors, with significant private sector participation through public-private partnership mode, is expected to provide a massive boost to overall manufacturing activity in allied sectors.
Indian economy needs $ 1 trillion of investment in infrastructure in the next five years. Explaining the rationale for increased investment in the core sector, the Prime Minister said that development of infrastructure would always be an integral part of any strategy for fast economic development. “In the short term, development of infrastructure will boost investment rates across the economy. In the long run, it will remove the supply constraints that affect industry and trade,” pointing out that the government alone would not be able to meet the vast investment needs and, therefore, “it is important that we involve the private sector in our efforts, through Public Private Partnerships.”
The meeting focused, in particular, on the ambitious projects and investment targets pertaining to ports, roads and airports. In the ports segment, the target for this fiscal comprising 42 projects valued at Rs. 14,500 crore is almost three times what was achieved in the last fiscal. Of these, two projects are for brand new major ports on the East Coast, one in Andhra Pradesh and the other in West Bengal — with a total investment of Rs. 20,500 crore. A statement issued by the Government said, “The total capacity which will be awarded this year will be 360 million ton per annum”. In roads, the total length to be awarded in 2012-13 will be 9,500 km, marking an increase of 18.7 per cent over the last year and an increase in investment by 73.6 per cent. Of these, a total of 4,360 km of roads will be awarded for maintenance under the OMT (Operate, Maintain, Transfer) system for the first time. In civil aviation sector, green field airports are proposed to be built in Navi Mumbai, Goa and Kannur. This apart, Delhi and Chennai will have airport hubs. Power generation capacity is also proposed to be hiked by 18,000 mega watt.
Dr. Singh described the targets as ambitious and impressive. He expressed hope that these are achievable and said that the Government is aware of the challenges involved in their implementation. Hinting at the global economy he said “The global economy is passing through difficult times with the Eurozone being the cause of concern all around. There is a flight to safety taking place globally. Then there has been the persistent problem of rising international prices of petroleum and other commodities in the last few years. Domestically, rising demand, along with supply side bottlenecks have contributed to inflationary pressures. All these factors combine to constitute a formidable economic challenge”.
It may, however, be remembered that this is not the first time the Government is taking up a major initiative to build massive infrastructure. One of the problems in implementing the projects is the delay in getting clearances and sometimes, different ministries take opposing stands on some projects. Keeping these in view the Prime Minister said, the Government will work on multi-fronts. When the Ministers present in the meeting cited inter-ministerial differences, Dr. Singh asserted “I would expect the ministries to very expeditiously resolve any inter-ministerial differences and turf battles that might arise as we go forward.”
The assertiveness shown by the Prime Minister in the Government’s drive to re-energise the economy will revive investors’ confidence. The Prime Minister said that, there will be a review of progress in implementation every three months. Hopefully all these factors hindering progress will be identified and removed as the projects progress and the Indian economy, which the Prime Minister said is capable of achieving double-digit growth, will return to high growth path soon.
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