India will be well poised to capture 6% share of the global market in Services and IT Software by 2008-09 as against its present share of 3%, according to the findings of Study on `India’s Cutting Edge in Services’ released by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) in July 2005.
Study has pointed out that with increase in the offshore penetration and present annual growth rate of 30 per cent in the IT and ITEs service exports, their total exports will exceed US $ 50 billion by the year 2008-09. The ASSOCHAM is of the view that in next few years, the annual growth rate of IT and services will be over 45%.
Software and services exports have reached 17.2 billion dollar for the year 2004-05 and the annual growth rate is well over 30 per cent. From a relatively low share of 10.02 per cent in 1995-96, exports of software services occupied 48.9 per cent of India’s total services exports in 2003-04. The trend highlighted the country’s growing competitive advantage in production and exports of such services.
By 2020 most of the developed countries will have problem in finding people in the working age group. This is because development is accompanied by a decline in the proportion of working age people to total population as birth rates decline and life expectancy improves. The EU is so much concerned about the impact of the demographic decline and ageing on the economy that the European Commission has highlighted the need to review the immigration policies for the longer term. Between 2010 and 2030, at current immigration flows, the decline in the EU-25's working age population will entail a fall in the number of employed people of some 20 million.
According to study, in fact, there is a competition among the main regions of the world to attract skilled, educated and English-speaking migrants. Here lies an opportunity for Indians who can go and become the global service providers to the EU enterprises. It may be mentioned here that the service sector in GDP has risen from 38 per cent in 1980”s to 51.43 per cent in 2004. The global trading architecture realised the potential of services and it was in the backdrop that the services came within the purview of the World Trade Organisation under the General Agreement on Trade and Services (GATS)
Given the requirements in EU and the US for the service providers, India should strongly explore the possibility of signing an Economic Cooperation Agreement with EU, focused on Services. It would be a win-win situation for both India and the EU.
Besides, Indians will occupy a leading position in providing services to developed economies like EU and others by 2020 as by then it is estimated that India will have a surplus of 47 million professionals in Services and IT who can be gainfully used by recipient countries, highlights the Study.
It also reveals that in Services and IT Software exports, India will have competition only from smaller countries like Pakistan, Bangladesh, Indonesia and Egypt, which it will conveniently take on as Indians will be enjoying a competitive edge when it comes to providing knowledge-driven services like IT and R&D.
Besides IT and ITEs, there is scope for diversification into areas such as consultancy and R&D services, healthcare, entertain services, ship repair services, satellite mapping services, accounting services and hospitality services.
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