IT sector to post 18 % growth next fiscal

Som Mittal , president of NASSCOM addressing the media at Global Captive Conclave, in Hyderabad on Thursday. Photo: G. Krishnaswamy

The information technology industry is likely to register an overall growth of 16-18 per cent in the next financial year.

The industry is set to register an 18.7 per cent growth in the current fiscal in spite of concerns over the European markets and it has now crossed the $75-billion mark with exports accounting to $60 billion and the domestic segment contributing to over $15 billion. “Eighteen per cent growth next year is not small as it is much higher in the context of the expanded base,” National Association of Software and Services Companies (Nasscom) President Som Mittal said.

He said the IT sector had added close to 2.40 lakh new jobs in the current fiscal and the addition was likely to be same in the next financial year too. He spoke to reporters on Thursday on the sidelines of the Nasscom's two-day global captives conclave.

He said the attrition levels too declined sharply in the last couple of years. Attrition, which crossed 20 per cent last year, came down to around 18 per cent this year and this was likely to come down further in the next financial year.

The Nasscom chief, however, expressed concern over the proposed Minimum Alternate Tax on special economic zones claiming it would send wrong signals outside.

“The Finance Minister did not say about any reversal in the policy. It is not just a question of tax, but the impact it will have. This will serve as a deterrent to small and medium units where innovation is happening,” he said.

Coupled with this was the expiry of the STPI scheme by the end of the current fiscal and ushering in of the Direct Taxes Code from the next fiscal. “There is no coverage for one full year,” he said.

Elaborating on the IT-BPO captives, he said the estimated size of the sector was of the order of $12.3 billion in 2010-11, accounting for 20 per cent of the overall services export revenues.

Captives registered a compounded annual growth rate in revenue of 11.6 per cent employing over 4.4 lakh people and these were gradually turning out into centres of excellence for specific areas of many companies.