Startups, e-comm to boost IT revenue: What Nasscom’s IT exports projection is all about

India’s IT and software services export revenue is likely to grow 10-12 percent in the fiscal year beginning on April 1 to as much as $121 billion, the National Association of Software and Services Companies (Nasscom) said.Here are the key points made by the software lobby group:

1) The slower growth in domestic IT services exports has been attributed to lower technology spending by global clients.

2) Another reason for the lower growth is the rupee’s volatility against major currencies as the global markets adjust to the devaluation of the yuan and a strengthening dollar.

3) The rupee recently fell to 29-month low against the dollar. Currency movements impact the spftware industry, which earns around 80 percent of the revenue from the US and Europe.

4) However, the cutback on routine IT services spending by clients is likely to push companies including Tata Consultancy Services and Infosys to sharpen their focus on high-margin digital services, analytics and artificial intelligence to cushion the impact on earnings.

5) Exports in the current fiscal year ending March are estimated to grow 12.3 percent to $108 billion, at the lower end of Nasscom’s projection, with digital services seen up 19 percent. Digital services include cloud, mobility, IoT and Big Data. Another factor that would help the industry hit the double-digit growth this year is the rapid growth in the start-up ecosystem in 2015-16.

6) “Start-ups and eCommerce are the new champions of the industry and I expect these segments to increase their contribution to industry growth in the years to come,” Nasscom Chairman BVR Mohan Reddy has said, adding that India increased its market share in global sourcing from 55 percent to 56 per cent.

7) “The pressure of being competitive is forcing companies to increasingly adopt digital technologies and that again presents an opportunity for the industry,” the lobby group’s president R. Chandrashekhar told Reuters. The shift towards new services could also trigger a wave of mergers and acquisitions in the sector, after Indian IT companies spent $2.4 billion on digital deals in 2015 – three times higher than the year before, Nasscom said. “To acquire digital skills companies will have to re-skill employees and acquire new technologies and that is likely to continue,” it said.

8) The domestic IT-BPO revenue is expected to post 10 percent growth to Rs 1.41 lakh crore in the ongoing fiscal and further grow by 11-13 percent (in Indian rupee terms) to achieve revenue of Rs 1.56-1.59 lakh crore in 2016-17. “We had estimated that the domestic segment will grow at a certain pace on the back of the announcements made by the government and trends that we saw. However, many of those have not taken off. As and when they do, we will see a larger impact,” Nasscom President R Chandrashekhar said.

9) “eCommerce contributed $17 billion revenue boosting digital consumption. India continues to gain market share in the global sourcing sector and emerges as the largest, most diversified and scalable destination,” Chairman BVR Mohan Reddy has said. The industry is expected to add around 2 lakh jobs and is marching steadily to reach total revenue of $350 billion by 2025 with digital revenues spearheading growth. Including domestic sales, total revenue of the Indian IT sector, which accounts for 9.3 percent of the country’s economic output, likely rose 8.3 percent to $143 billion in 2015-16, Nasscom has said.

10) The Indian IT-BPO industry has received over $7 billion in FDI, including $5 billion in start-up investments, in current fiscal.