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Software revenues to skyrocket - Views on News from Equitymaster
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  • Jul 4, 2000

    Software revenues to skyrocket

    The only industry to have reported mind-boggling growth in recent years is the software. Once again the industry has reported a rise of 53.2% to Rs 243.5 bn during FY00 as per the annual industry survey released by Nasscom. The industry is expected to grow by further 60% in the next year.

    The high growth rate in the software industry suggests a bright future for the fundamentally strong software companies. According to the survey more than 185 of the Fortune 500 companies have outsourced their software requirements from India. As per the survey around 37 software firms have exported more than Rs 1 bn worth of software and services. The prominent software exporters are TCS, Wipro, Infosys, Satyam Computers, HCL Technologies and NIIT.

    The one way growth (Rs bn)
    Years Exports change Domestic Change
    FY96 25   17  
    FY97 39 54.8% 24 44.3%
    FY98 65 67.4% 35 45.6%
    FY99 109 67.5% 50 41.0%
    FY00 172 56.8% 72 45.5%
    FY01E 285 66.2% 110 52.8%
    Source: Nasscom

    The next major growth driver for the industry will be the emerging opportunities in e-commerce. During the year IT enabled services generated revenues of Rs 23.9 bn contributing around 10% to the total revenue. The Nasscom-McKinsey study in 1999 had predicted that the country could earn income of $10 bn from e-business solutions by 2008 registering a CAGR of 44%. However some of the factors which hinder the growth rate are lack of global parity in telecom tariffs and inadequate telecom infrastructure in the country.

    The interesting fact to note is that the market capitalization of listed IT companies as on June 30, 2000 was estimated at $ 55 bn reflecting a YoY growth of more than 900%. As the companies register excellent financial performance the market cap is expected to move up further. The projections of the Nasscom for Indian software industry suggest growth opportunities, which are yet to be tapped. The leader in the race would be the one who can grab this and make the optimum utilization out of it.



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    Aug 23, 2017 02:39 PM