Indian software: 3QFY01 exports up 65% YoY - Views on News from Equitymaster

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Indian software: 3QFY01 exports up 65% YoY

Feb 7, 2001

Software exports for the 3QFY01 stood at Rs 43.4 bn. The figure is 65% higher than for same quarter last year. This is an indication of the performance of the software industry. Most of the top rung software companies showed YoY growth of more than 100%. For the 1HFY01 the software industry in India generated revenue of Rs 171.5 bn against Rs 108.6 bn for the corresponding period in the previous year (up 58%). Of this, Rs 131 bn (i.e. 76%) was from exports. NASSCOM had projected export earnings for the year to be at Rs 290 bn initially. However, later it scaled down the figure to Rs 285 bn. According to Mr. Devang Mehta, President NASSCOM, this was due to the devaluation of the rupee and had nothing to do with the impact of an economic slowdown.

The total export figure at the end of 9 months FY01 stands at Rs 174.5 bn. To achieve the Rs 285 bn target, the software sector will have to earn around 63% of combined earnings for the first three quarters in the period of January March 2001. This looks difficult at first sight, but not unachievable. In the previous year, the fourth quarter of FY00 saw export earnings, which were equal to 61% of the consolidated nine month earnings of the first 3 quarters of FY00.

One of the drivers that could boost the exports would be increased outsourcing and shifting to offshore vendors by the corporates globally. According to a Merrill Lynch survey only 14% Fortune 500 companies used of offshore vendors when the survey was done. But the heartening fact was that 46% were actively considering offshore operations. This would spell vast opportunities for Indian software, but on a longer-term basis.

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