India's IT growth to fall on Western slowdown

By Peter Apps

LONDON (Reuters) - Growth in India's information technology sector will slow due to a Western slowdown but should still reach 22 to 24 percent this financial year against 28 percent last year, its industry body chief said on Tuesday.

The president of India's National Association of Software and Service Companies (NASSCOM), Som Mittal, told Reuters domestic growth of 28 to 30 percent in the industry would help support the sector, which now employs some 2 million people across India.

"When we look at this downturn we think it is probably shallow at this point," he said in a telephone interview.

"Based on what we have seen from companies so far we still think we will have growth of 22 to 24 percent, down from 28 percent."

A downturn in Western Europe and the United States have an overall mixed impact on India, he said, which has seen technology sector employment improving on the back of outsourcing from foreign firms keen to cut costs and access new markets.

"In downturns companies tend to outsource more to save costs but they tend to expand less," he said.

Employment in the sector would likely grow around 20 percent in the current financial year to April 2009, he said. NASSCOM estimated total software and services revenues last year at $64 billion.

He said the Indian information technology sector was facing mounting competition from other rivals such as the Philippines, which also had good infrastructure and good English skills -- but that Indian firms were also expanding into both emerging and established markets in at least 28 countries.