IT industry growth slips to 14 percent: DQ Top 20

The Indian IT industry showed a dismal growth rate of 14 percent in fiscal 2001-02 (65 percent last year) to net total revenues of Rs 62,134 crore, against Rs 54,566 crore in 2000-01. And even this slower growth rate was possible only due to strong showing by the IT-enabled services (ITeS) exports segment, which jumped by 73 percent to Rs 7,100 crore (Rs 4,100 crore last year). Also helping stem the tide was software exports, which showed a much lower but still respectable growth of 20 percent to Rs 29,672 crore. Software exports had grown by 64 percent last year. (Software exports does not include
ITeS).

Leading the list of big losers was the domestic IT industry, which slipped from Rs 24,670 crore to Rs 24,288 crore, registering its first negative growth year--ever. The domestic IT industry has always registered strong growth, and the corresponding figure for the previous year was 45 percent positive growth, according to the annual Dataquest Top 20 analysis.

All segments showed lower growth rates compared to the previous year--software exports growth was just above one-fourth of the previous year's 64 percent, hardware grew at a negative three percent (53 percent growth last year) to Rs 14,323 crore. The overall server sales--which had led with a 76 percent growth rate last year--crashed to a disastrous negative 20 percent growth this year.

Hardware sales, which propelled Indian IT to record growth in 2000-01, were slow too--the scales tipped against PCs in general, and rest of hardware in particular. The only consolation was that Indian PC shipments crossed the two million mark in a financial year for the first time, with the total number resting at 2,008,083.

Services, one of the mainstays of the Indian IT industry, also slipped considerably--the growth tally was two percent, against the previous year's heady 39 percent. Further, the steep 37 percent fall in IT training and education revenues, against 49 percent growth last year, highlighted the tough year that the IT industry had just been through.

Software exports continued to stand tall amidst the ruins, though the slowdown and flexing of US military muscle in Afghanistan exacted a toll. And even in software exports, it was ITeS that puffed up final takings--geographically, it was the US and Canada that hogged over 64 percent of exports of software and related services from India in fiscal 2001-02. Of the total exports (including ITeS) of $ 7.6 billion, the US and Canada accounted for just under $ 5 billion. But in the final essay, the slower growth rate made the difference between speedy overall growth, and an industry that grew faster than any other, but still dashed the hopes it had inspired in the previous year, the DQ analysis said.

There were silver linings, though. While companies and economies across the world turned cautious, investment in enabling technologies simply continued, regardless of sentiment and intermittent events like 9/11 or war clouds. This was especially true in the two big growth areas in India--the telecom and banking/financial services sectors, which were heavy IT consumers showing sharp growth, with manufacturing remaining the biggest sector but showing flat growth.