The Indian Economy Blog

February 17, 2006

$36 Billion And 1.3 Million Jobs

Filed under: Business,Labour market,Outsourcing — Neelakantan @ 1:09 am

I am not a great fan of Nasscom reports, but this one made me sit up. The technology sector (give or take a few) would account for 36 billion dollars in revenue and just about 1.3 million (13 lakh) jobs as per their estimate for 2006. 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…

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 employees in comparison. If you count engineering services and R&D, you can add another 1.15 lakh employees to the estimate. The domestic market is expected to cater to around 3.65 lakh jobs. In any case, the entire tech sector is expected to employ only about 13 lakh people. For a nation of a billion, it shows how big (or small) the industry really is.

To put that in perspective, India’s small scale industries employ about 28.29 million (282.9 lakh) employees and account for Rs. 249,064 crores (approx 55 bn USD), as per RBI statistics quoted in the Economic Times a few days back.

This is definitely worth a thought…

16 Comments »

  1. I’m dumb to think if we can scale this up?

    on the other side, where is that huge money going into? per employee average export income stands at 27000 USD. Average income of IT pro is not even half that amount.

    Comment by smitha — February 17, 2006 @ 8:25 am

  2. Yes, compared to SSI employment, the 1.3 million figure is miniscule but look at the figures – 36 Billion by 1.3 Million people and 55 Billion by 28 Million people !!

    Comment by Prasanth — February 17, 2006 @ 9:41 am

  3. >>per employee average export income stands at 27000 USD. Average income of IT pro is not even half that amount.

    Shakes his head.

    Comment by ATJ — February 17, 2006 @ 9:48 am

  4. There are two things here in the fact that the SSI’s in total are bigger than the IT industry.
    One is, it shows how small a drop in the ocean is our IT industry and as rightly pointed out by Smitha, there is so much that we can scale up.
    The other is that, SSI’s can employ so much more (big if, labour reforms) and become so much more productive.

    Comment by Neelakantan — February 17, 2006 @ 10:08 am

  5. Yes, the impact of the IT sector on the labor market directly, does not look as substantive as the SSI sector – in terms of number of jobs. However I believe it has had a material impact in the salary levels across the labor markets, and also in instilling HRD processes in the Indian COrporate sector, by being the trend-setter. I dont know how it will show up in economic benefits, but I believe all of us would have anecdotal experiences of the same.

    The SSI sector maybe more widespread – in geography and the skill bases of people it is employing, however its experience in bringing the innovativeness of the workforce to the market maynot be as sharp as its depth of manpower talent it has bought into the fold. I think this is an area where the IT sector has put inplace processes to capture the value of the same – some of the value goes to the shareholders, some goes towards the capital investments and market development investments necessary for undertaking such an effort, and some I guess goes to the Top management !

    Comment by venkat — February 18, 2006 @ 12:32 pm

  6. It’s again ignorance to think that by doubling the headcount(scaling up) we can double the exports. There must be takers to absorb additional heads India produces. This may break even at a point as long as IT services fail to address India needs. We simply can’t serve world countires and live in dreams forever. For somebody when it means business, and others eying for a pie in our share, it is going to be competitive and salaries of 15% may become history and IT service jobs may well become a common man’s job. At least we have to make hay while sun is shining and that’s exactly what we are doing now.

    Comment by Smitha — February 19, 2006 @ 4:33 pm

  7. Due to the socialist attitude of our governments from independence and strong communist and bureaucratic policies, the manufacturing sector suffers from huge disincentive. The concern in Small Scale Industries (SSI) is to provide employment rather than be productive. One can see the concern in governments to provide jobs to burgeoning population, but that does not mean that productivity is compromised in order ot employ more.

    IT sector has so far been immune to government interference which has resulted in growth. Also, it consists of large set of educated, like minded homogeneous manageable population. Hence, in terms manageability and produviity it does not suffer the disadvantages suffered by SSI. Hence the difference.

    Nagesh
    http://o3.indiatimes.com/eccentric

    Comment by eccentric — February 19, 2006 @ 10:05 pm

  8. I think the comparison to SSI is just to put the number in perspective.

    As a founder of a jobs search engine site (bixee.com) for India, the numbers disappoint me too. For all the hoopla about the prosperity generated by BPO, IT, ITES, even the future predictions of 3million jobs are

    Comment by Himanshu Nautiyal — February 19, 2006 @ 11:07 pm

  9. IT, ITES and other might contribute only 1.3 million jobs directly but indirectly they contribute much more. As these 1.3 million high earners spend their money in the restaurants, on clothes, on weddings, others get employed.

    If export oriented SSI employed more people because of increase in the exports, we would all be cheering! Why? Is selling to high earning foriegners is different than selling to high earning Indians?

    Also importantly, I would like to know how much capital was employed by the IT, ITES, etc. and the SSI to generate the employment for comparison.

    Comment by Ashish Hanwadikar — February 21, 2006 @ 9:23 pm

  10. yeah even i think that we shouldn’t only take into account the direct emplyment but the indirect ones too. Lots of the dollars coming into India is being spent in the country only, either it is clothing, eating, wedding or investments in stock markets. It helps to get tons of money if they are being spent inside.

    Comment by Amit Srivastava — February 23, 2006 @ 3:49 pm

  11. The comparison between SSI and the IT industry is not completely justified, for the simple reason that the qualifications of the individuals working in IT industry hasnt been taken into consideration.
    Most employed in IT industries would be graduates or more, unlike the SSI.

    Comment by Aneesh — February 23, 2006 @ 11:13 pm

  12. Indirect employment holds no substance in this context since the point here is how much revenue is being generated.

    Comment by smitha — February 24, 2006 @ 6:39 am

  13. The amount you calculated is wrong.

    Average income of a small scale industry person is eqaul to

    55000 million/28.2 its just approximately Rs.90,000 .

    not $27,500(Rs 12,37,500).

    Comment by Nandakumar — July 4, 2006 @ 12:10 pm

  14. [...] The Indian Economy Blog $36 Billion And 1.3 Million JobsI am not a great fan of Nasscom reports, but this one made me sit up. The technology sector (give or take a few) would account for 36 billion dollars in revenue and just about 1.3 million (13 lakh [...]

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