Sunday, October 02, 2005

IT export of India

One of my college always state that the India software export is only 2% of its all export and crib that Indian government is not doing any thing for its other export (agriculture according to him) which are the core of export. His cribbing and criticism enforced me to collect some vital statistics and know the truth. Why in country so much hype for software export sorry its better to say IT export . This small research help me to collect some of the information which are mind blowing . Like to share some of these information with u people so that some misconceptions and elegation will be removed. I agree the statistics are not every thing but still it is some thing. Proof is below.

Starting from Union budget 2003-2004 section 1.44 India continues to make progress on export-oriented production in electronics and computer technology. Software exports have grown at a compound growth rate of over 50 percent per year for the last five years. (unfortunatly our gov is not able to understand that its not software export but its and combined IT export hopefully they are able to correct it in next budget) So if government is concentrating more in this sector whats the harm . It doesnt mean that putting so much efforts in this sector makes them sleep for other sector.

As per the report published on 4th July 2005 India's merchandise exports have almost doubled in the last three years to $80 billion, and exports of software/IT-enabled services have almost tripled to $17.2 billion. which shows that the software/IT-enabled export is not 2% while its approx 21%. Might be he has some wrong data or some calculation mistake. It might be 2% once upon a time. Some other statistics which I am able to consolidate are as.

As per one of the prediction report published by McKinsey
India started exporting software in 1983 is expected to touch an envious $ 50 billion figure in 2008. India whose export earnings from all sources totalled $ 36 billion till recently will be able to boost its total exports to $ 260 billion in 2008, 35 per cent of it from the IT related exports.

Other key findings of this report are:

  1. Software & Services will contribute over 7.5 % of the overall GDP growth of India
  2. Total annual turnover of IT Industry is $ 87 Billion (Internal + export)
  3. IT Exports will account for 35% of the total exports from India
  4. Potential for 2.2 million jobs in IT by 2008
  5. IT industry will attract Foreign Direct Investment (FDI) of U.S. $ 4-5 billion
  6. Market capitalization of IT shares will be around U.S. $ 225 billion

India started IT related exports as early as 1984, the Indian IT industry remained in red till 1993. The first and only one multinational company, Texas Instruments, came to India in 1986. The year 1993 could be called a turning point for the Indian IT industry when the software exports crossed the $ 330 million figure, over six-fold that of $ 52 million in 1987. It was also the year when the US MNCs flocked to India in gangs to reap the profit.

A very interesting statistics is present in BREAK-UP OF PROJECTED $ 87 BILLION IT INDUSTRY

  • IT Services -$ 39 Billion- 45%
  • Software Products -$20 Billion- 23%
  • IT Enabled Services (BPO) -$ 19 Billion- 21%
  • e-Business -$ 10 Billion -11%

So what would you think so called software developers and software consultants. 80% of us who is working in software usually see IT Enabled Services (BPO) with some other angle which is competeting while IT Services (Support centers or maintenance project ) will be the leading the export economy.

This is the fact that fastest-growing export sector is the outsourcing of business services called BPO (business process outsourcing) or ITES (information technology enabled services). These span a huge range of services from simple call-centres to engineering and R&D services. They are growing so rapidly that one day they will surely overhaul software exports. In 2004-05, computer software exports rose 30.4 %, but service outsourcing exports rose even faster by 44.4 %.

Indian software giants like TCS, Infosys and Wipro are India's biggest exporters. Yet, foreign companies now account for 30 per cent to 35 per cent of software exports. Every big name in the world has opened an Indian unit, from Microsoft to Oracle to SAP. Here again, what look like Indian exports are also the internal trade of MNCs.

What is not so well known is that two-thirds of our outsourcing exports come from captive Indian units of multinational corporations. The entire industry was kick-started by General Electric, and others followed. So, India's most dynamic export sector is not Indian at all but foreign-owned. In official economic terms, such service exports are Indian exports. But in pure business terms, they are the internal trade of MNCs.

This shows that globalisation is not a zero sum game, in which the gains of one side are the losses of the other side. Both sides gain. There are some short-term losers in the US whose jobs travel to India. But US living standards rise only because workers are constantly forced out of lower-productivity jobs into higher-productivity ones. Every year, the US destroys 32 million jobs and creates 32.5 million jobs. The net result is a richer, more productive USA.


guess me said...

Kya bedu jhakaas figures hai,

Keep it up.

I know U r amazing.

Inderjeet Singh said...

keep it up mukesh. your blogs give good info!!