Waning boom

It is now officially out. There has been a slight decline in the growth of software exports. According to the official reports released by NASSCOM, exports in 2000-01 were $ 6.2 billion against the target of $ 6.9 billion.

In dollar terms, software exports have grown by a healthy 55 percent, from $ 4 billion in the previous year to last year's $ 6.2 billion. In Rupee terms, the growth rate is even better at 65.3 percent. For, in 1999-00, software exports were Rs 17,150 crore and it has grown to Rs 28,350 crore. The Rupee has depreciated by over 10 percent in the same period to boost software earnings substantially.

There are some significant changes in the list of top software exporters. Top five exporters have accounted for nearly a third (Rs 8847.73) of the national software exports. TCS continues to top the chart with exports of Rs 2,870.26 crore, followed by Infosys (Rs 1,852.94 crore). Infosys has clearly overtaken its same-city rival, Wipro (Rs 1,756.39 crore) by a clear margin of Rs 96.55 crore. Satyam has moved up the list to #4 with exports of Rs 1,241.11 crore. HCL Technologies (Rs 1,126.92 crore) completes the Top5 list, a peg down from last year's #4 slot.

Despite the forecast of slow down in growth, software exports were clearly becoming a major Forex earner for India. Three years ago, software's share of national exports was 2.5 percent. Last year, it has galloped to 14 percent of the total exports of $ 44 billion. By 2008, when software exports are expected to reach $ 50 billion, it will account for more than a third of the total exports. 

NASSCOM has revised its export growth rate for 2001-02. It has been revised to be below 40 percent against the earlier estimate of over 50 percent. Pheroz Vandrevala, Chairman, NASSCOM is confident of reaching the magic figure of $ 50 billion, even if the industry clocks an average 35 percent growth in the next seven years. Such growth rates are the envy of other industry sectors even in these days of a global economic slow down. Software segments is likely to change the dynamics of the Indian industry if things go as per plans in another five years. Indian economy will be the main beneficiary, for software services alone would be able to pay for the country's enormous petroleum import bills. 

Amidst the cautiously optimistic scenario, the software sector has a 'soft belly' in the domestic market. The size of the domestic software and services market is still minuscule, at Rs 9,410 crore, which has grown only by 30 percent. More than the growth the small size is a concern. Because a strong, vibrant domestic market will give a test place for new products and services and also a cushion for unexpected flux in the global market place. The industry and the government should give more attention to stimulate the demand for software in the home market. It is vital for the long-term growth of the economy.