Thursday, February 16, 2006

36 billion USD and 13 lakh jobs

I am not a great fan of Nasscom reports, but this one made me sit up. The technology sector (give or take a few) accounts for 36 billion dollars in revenue and just about 13 lakh jobs. The Hindu Businessline reports on the ITES/BPO part of it.

...INDIAN ITES-BPO exports are estimated to grow to $6.3 billion by the end of fiscal 2005-2006.

Exports from the sector had grown 48 per cent in 2004-2005, to $4.6 billion, up from $3.1 billion the year before, according to an analysis done by Nasscom. ( National Association of Software and Services Companies).

Net employment in the sector is estimated to have grown by approximately 1 lakh in 2004-2005, the total direct employment having risen to 3.16 lakh.

Based on the hiring trends over the year, this segment is likely end the current fiscal with total employment at 4.09 lakh...

Net employment in this sector is only about 3-4 lakhs? Umm, I was under the impression that it is much more than that. As it turns out from the Nasscom link, that figure is only the ITES/BPO total. IT services are estimated to employ about 3.98 lakh in comparison. If you count engineering services and R&D, you can add another 1.15 lakh estimate. The domestic market caters to around 3.65 lakh jobs. In any case, the entire tech sector seems to employ only about 13 lakh people.

To put that in perspective, Indias small scale industries employ about 282.9 lakh employees and account for 249,064 crores (approx 55 bn USD), as per an RBI report quoted in ET a few days back.

This is definitely worth a thought...

(cross posted on The Indian Economy blog)


Hiren said...

Remains to be seen what happens in the years to come.

Abi said...

Neelakantan, don't you think there is something more here than the comparison you have made? For one thing, much of the N billion (17 or 36, depending on what you include and who you ask) for software (IT/ITES) is money that comes into the country from elsewhere. Roughly 25-50 (probably more?) percent of it stays here by way of employees' salary and residual profits, and contributes to demand for other products and services.

Second, the employees in IT/ITES you are talking about are the direct beneficiaries; downstream employment (in the form of services these companies need, not to mention domestic help that the employees hire) is excluded from your figure.

It's entirely possible that even after this, one may find that the employment bang for the revenue buck is far smaller in IT/ITES.

Neelakantan said...

well :) that was going to be a follow up post, which will happen. In India, every IT job creates about 2-3 jobs (I am not sure of this figure, hence the follow up post was for later) downstream, which is a big big thing. In the ABCD - ayah, bai, cook, driver market- category, IT jobs are a great enabler. This is the trickle down theory of prosperity at work.

Is this really about employment bang for the buck? Not to me, because thats more of arbitrage. I see it in two ways. One, as how much our IT can scale up to and second, our SSIs which employ such huge numbers can do much much more if labour reforms happen.

There really are many many angles to this figure.