Bangalore continues to be king of IT

Karnataka's IT exports jump 36%

Indo Asian News Service

Bangalore: Karnataka has retained its pre-eminent position in IT exports by posting Rs.401 billion ($8.9 billion) revenue during 2005-06, registering a year-on-year (YoY) growth of 36 percent over the previous fiscal.

According to the Software Technology Parks of India (STPI), the nodal agency for promoting and facilitating the IT industry's growth, Karnataka has accounted for 37 percent of the country's total IT exports at Rs.1,008 billion ($22.4 billion) in the last fiscal (FY 2006).

"Of the total exports from the premier IT state, software accounted for Rs.376 billion and hardware Rs.24.8 billion. About 1,170 firms based in Bangalore contributed Rs.366 billion and the three secondary cities of Mysore, Mangalore and Hubli Rs.9.67 billion," STPI-Bangalore director B.V. Naidu told reporters here Wednesday.

With the booming industry hoping to sustain the current growth rate in the current fiscal (2006-07), STPI expects software exports from Karnataka would be about Rs.490-500 billion by March 31, 2007.

"Bangalore will not only maintain its premier position in the country, but also increase its share in the national IT exports during the current fiscal (FY 2007). The 36 percent YoY in FY 2006 was due to organic growth of major software firms.

"New global markets have also started opening up their IT outsourcing, leading to exports to many European, African and Southeast Asian markets," Karnataka IT & BT secretary M.K. Shankaralinge Gowda said.

Of the total IT exports in FY 2006, 57 percent revenues came from enterprise application, 24 percent from technology software and 16 percent from ITES (IT enabled services) and BPO (business process outsourcing) services.

"The US continued to be the major export destination, accounting for 61 percent of the total exports, followed by Europe with 24 percent, Japan six percent, Asia six percent and rest of the world three percent," Naidu said.

In terms of investments in the IT sector, the state has attracted 201 firms during the fiscal under review (FY 2006), including 124 foreign equity companies, with a combined investment of Rs.27.61 billion ($614 million).

The venture capital (VC) funded foreign firms have brought in Rs.18.82 billion, while 77 Indian companies invested Rs.8.79 billion. In addition, about 200 existing units expanded their operations in FY 2006.

"At the rate of four new companies every week, the STPI units have been growing at a CAGR of 13 percent. About 10 foreign equity firms were approved every month in the last fiscal. Of them, 17 percent were large, 14 percent medium and 69 percent small enterprises," Naidu said.

Among the global IT major firms which commenced operations in FY 2006 are Fortune 500 companies such as J.P. Morgan Services, Target, Caterpillar and Apple Computer.

In the hardware sector, seven new firms were approved, taking the total number of companies in the electronics hardware technology park (EHTP) in the state to 51 as against 44 in the previous fiscal, registering a growth of 16 percent YoY.

"The 51 units in the EHTP posted about 40 percent YoY export growth to Rs.24.8 billion in FY 2006 as against Rs.17.7 billion in FY 2005," Naidu added.

In order to ensure Bangalore remains the preferred IT destination, the state government is setting up 1,400-acre hardware technology park near the upcoming international airport at Devanahalli and 500 acres each at Bidadi and Dobbaspet on the outskirts of the city for setting up new software companies.

"As per the McKinsey-Nasscom report, Karnataka is projected to achieve $20 billion IT exports by 2010, with about 500,000 employed in the industry, including ITES/BPO segments," Gowda pointed out.

On the hiring front, the IT sector is projected to employ about 70,000 people in the current fiscal as against 40,000-45,000 in the last fiscal. The IT industry, including ITES/BPO segments in Bangalore, employs about 375,000 people currently.