The Reserve Bank’s annual survey on Computer Software
and Information Technology Enabled Services Exports
(ITES) collects information on various dimensions of
exports of computer services and ITES exports, including
Business Process Outsourcing (BPO). Details on export of
software services are collected as per the type of activity/
services (on-site/off-site) and country of destination along
with the modes of supply. This article presents the aggregate
results of 2013-14 round of the survey and examines any
changes in the characteristics of software services exports.
It also analyses the trend in major aggregates based on
current and earlier round of survey results1.
I. Introduction
The annual survey on Software and Information
Technology Enabled Services Exports is conducted by
the Reserve Bank for estimation of various aspects of
Computer Services Exports as well as exports of ITES/
BPO. The Reserve Bank started to conduct the annual
survey on ‘Computer Software and Information
Technology Enabled Services Exports’ in 2002-03 as per
the recommendations of the National Statistical
Commission (2001) and subsequent guidance from the
Technical Group on Computer Services Exports (TGCSE)
(2008). The survey collects details of exports of
computer services following the Balance of Payments
and International Investment Position Manual (BPM6)
of the International Monetary Fund (IMF) and the
Manual on Statistics of International Trade in Services
(MSITS), which is joint work of seven international
agencies, as well as other select information on ITES/
BPO services exports. The survey also collects exports
data as per the four modes of supply (viz., cross-border
supply, consumption abroad, commercial presence and
presence of natural persons) as defined in MSITS. The
previous round of this survey was conducted for the
reference year 2012-13.
For the 2013-14 survey round, which was eighth
in the series, the schedule was canvassed among 6,700
companies. Responses were received from 873
companies, of which 128 cases were for Nil-return or
for closed companies. The remaining 745 companies
included most of the large IT companies as well as other
companies. The responding companies together
accounted for 74.7 per cent of the total software
services exports during the year. The detailed
methodology for estimation of software exports of the
non-responding companies is given in the Annex.
II. Software Services Exports from India – Recent
Trends
Software and IT-enabled services are considered
important activity in the Indian economy, including for
their role as net exports from the country. As per the
balance of payments (BoP) Statistics, the software
services exports (other than on-site exports), stood at
`4,206 billion in 2013-14 and constituted around 46
per cent of total services exports of India as well as 3.7
per cent of GDP. After growing at remarkable pace
during the period 2001-02 to 2007-08 (30.4 per cent in
US $ term), India’s software service exports reflected
some moderation following global financial crisis in
2008-09 but recovered in the subsequent period.
In this survey, software services exports have been
divided into two major categories: (i) Computer Services
exports which include IT services as well as Software
Product Development and (ii) ITES/ BPO services which
includes BPO services and engineering services. As per
the survey results, export of computer software services
and ITES/BPO services are estimated at `3,181.7 billion
(US$ 52.6 billion) and `1,141.1 billion (US$ 18.9 billion),
respectively, during 2013-14. India’s total export of
computer services and ITES/BPO services (excluding
commercial presence) is estimated at `4,322.8 billion
(US$ 71.4 billion), showing 14.1 per cent annual growth
in US $ terms.
 Computer services remained the dominant
component (around 73.6 per cent share) in India’s total
software services exports during 2013-14 (Chart 1 and Table 1). ‘IT services’ was the major component in the
‘Computer Services’ category. The share of computer
services exports, in the total Computer software and
ITES/BPO services exports increased, whereas, the
share of ITES/BPO services exports declined.
| Table 1: Software Services Exports from India with Components |
| (` billion) |
| Activity |
Software Services Exports |
Share in Total (%) |
| 2009-10 |
2010-11 |
2011-12 |
2012-13 |
2013-14 |
2009-10 |
2012-13 |
2013-14 |
| (1) |
(2) |
(3) |
(4) |
(5) |
(6) |
(7) |
(8) |
| A) Computer Services |
1,266.6 |
1,598.4 |
1,867.1 |
2,447.8 |
3,181.7 |
69.0 |
71.9 |
73.6 |
| Of which: i) IT services |
1,115.8 |
1,492.2 |
1,661.8 |
2,256.7 |
2,936.7 |
60.8 |
66.3 |
67.9 |
| ii) Software Product Development |
150.8 |
106.2 |
205.3 |
191.1 |
245.0 |
8.2 |
5.6 |
5.7 |
| B) ITES/BPO Services |
570.3 |
571.7 |
617.2 |
957.4 |
1,141.1 |
31.0 |
28.1 |
26.4 |
| Of which: i) BPO Services |
431.3 |
468.7 |
523.0 |
789.6 |
934.1 |
23.5 |
23.2 |
21.6 |
| ii) Engineering Services |
139.0 |
103.0 |
94.2 |
167.8 |
206.9 |
7.5 |
4.9 |
4.8 |
| Total Export of Software Services (A+B) |
|
|
|
|
|
|
|
|
| in ` billion (A+B) |
1,836.9 |
2,170.1 |
2,484.3 |
3,405.2 |
4,322.8 |
100.0 |
100.0 |
100.0 |
| in US $ billion * |
38.7 |
47.6 |
51.8 |
62.6 |
71.4 |
|
|
|
| Annual Growth (in US $ terms) |
|
22.9 |
8.9 |
20.7 |
14.1 |
|
|
|
| * Using Average Exchange Rate for the year (applicable for all tables). |
| Table 2: Industry-wise Share of ITES/BPO Services Exports |
| (per cent) |
| Activity |
2009-10 |
2010-11 |
2011-12 |
2012-13 |
2013-14 |
| (1) |
(2) |
(3) |
(4) |
(5) |
| BPO Services |
75.6 |
82.0 |
84.7 |
82.5 |
81.9 |
| Customer interaction services |
18.0 |
12.2 |
14.4 |
10.9 |
8.4 |
| Finance and Accounting, auditing, book keeping and tax consulting services |
11.9 |
13.4 |
23.5 |
9.7 |
11.2 |
| HR Administration |
1.3 |
0.5 |
0.2 |
0.9 |
0.7 |
| Procurements and logistics |
0.3 |
0.5 |
0.0 |
0.4 |
0.3 |
| Medical transcription |
0.4 |
0.6 |
0.2 |
0.7 |
1.3 |
| Document Management |
0.3 |
0.6 |
0.4 |
0.5 |
0.9 |
| Content development and management and publishing |
1.0 |
0.8 |
0.7 |
1.4 |
0.9 |
| Other BPO service |
42.4 |
53.4 |
45.3 |
58.0 |
58.1 |
| Engineering Services |
24.4 |
18.0 |
15.3 |
17.5 |
18.1 |
| Embedded Solutions |
0.8 |
2.4 |
2.1 |
4.1 |
5.3 |
| Product Design Engineering (mechanical, electronics excluding software) |
7.5 |
8.6 |
7.0 |
5.9 |
5.5 |
| Industrial automation and enterprise asset management |
2.6 |
0.6 |
0.0 |
2.4 |
0.2 |
| Other Engineering service |
13.5 |
6.4 |
6.2 |
5.1 |
7.1 |
| Total BPO Services |
100.0 |
100.0 |
100.0 |
100.0 |
100.0 |
III. Industry-wise Distribution of ITES/BPO Services
Exports
The classification given by the Department of
Information Technology (DIT-2003), Government of
India, was used for compilation of data on exports of
ITES/BPO services. Among the BPO services exports,
‘Finance and Accounting, auditing, book keeping and
tax consulting services’ and ‘Customer interaction
services’ were the major components.
During 2013-14, exports in BPO services and
Engineering services increased by `144.5 billion and
`39.1 billion, respectively, as compared with `266.6
billion and `73.6 billion increases in the previous year.
In the total ITES/BPO services exports, the Engineering
services recorded higher growth than BPO services.
Among BPO services, the share of ‘Finance and
Accounting, auditing, book keeping and tax consulting
services’ increased whereas the share of ‘Customer
interaction services’ declined (Table 2). However, ‘other
BPO services’ (i.e., Legal services, Animation, Gaming,
Pharmaceuticals and biotechnology services, etc.) as
well as combination of services constituted more than
half of the ITES/BPO services, and recorded an increase
of `107.4 billion in 2013-14.
Among Engineering services, the contribution of
‘Embedded Solutions’ increased, whereas the share of
‘Product Design Engineering’ (mechanical, electronics
excluding software) and ‘Industrial automation and
enterprise asset management’ declined in 2013-14
(Table 2).
IV. Organisation-wise Distribution of Software
Services Exports
Public limited companies continued to have the
highest share of the total software services exports
though their share declined marginally from 64.6 per
cent in 2012-13 to 63.6 per cent in 2013-14 as the share
of Private limited companies increased (Table 3).
| Table 3: Organisation-wise Share of Software
Services Exports |
| (per cent) |
| Organisation |
2009-10 |
2010-11 |
2011-12 |
2012-13 |
2013-14 |
| (1) |
(2) |
(3) |
(4) |
(5) |
| Private Limited Companies |
39.3 |
38.5 |
41.2 |
35.3 |
36.0 |
| Public Limited Companies |
58.1 |
61.3 |
58.7 |
64.6 |
63.6 |
| Others |
2.6 |
0.2 |
0.1 |
0.1 |
0.4 |
| Total |
100.0 |
100.0 |
100.0 |
100.0 |
100.0 |
V. Country-wise Distribution of Software Services
Exports
United States & Canada remained the top
destination (62.7 per cent) for software services exports
from India followed by Europe, which had nearly onefourth
share in 2013-14 (Chart 2). The shares of United
States & Canada in total software exports decreased,
whereas the share of Europe, Asia and Australia & New
Zealand increased as compared to 2012-13.
VI. Currency Composition of Software Services
Exports
US Dollar continued to remain the major currency
of invoicing software export accounting for nearly
three-fourth of total invoicing during 2013-14. The
shares of GBP, Euro and Indian rupee have increased
and the same of US dollar and Australian dollar have
decreased since 2012-13 (Chart 3).
VII. Modes of Software Services Exports
Software services are exported through both onsite
and off-site routes. The share of export of software
service through on-site mode, which recorded declining
trend since 2008-09, increased to 19.8 per cent in
2013-14 from 15.8 per cent in 2012-13.
As per the MSITS, international trade in services
can be conducted through four different modes, viz.,
(i) transactions between resident and non-resident
covering cross-border supply (Mode-1), (ii) consumption
abroad (Mode-2), (iii) presence of natural person
(Mode-4) and (iv) services provided locally by the
affiliates established abroad, i.e., commercial presence
(Mode-3). However, as per the BoP manual, foreign
affiliates established abroad are treated as the domestic
units in the host economy and hence the services
delivered by them are not considered as the exports of
the home country. To this extent, data on services
exports in BoP differs from those in the Foreign
Affiliates Trade in Services (FATS) statistics.
The survey collected the software services trade
data on all four modes of supply. The total international
trade in computer services by India by all four modes
of supply stood at `5,011.8 billion (US$ 82.8 billion) in
2013-14. The share of software services exports by
India through Mode-1 and Mode-2 declined, whereas
the share of software services through Mode-3 and
Mode-4 increased in 2013-14, reversing the trend
followed since 2009-10 (Table 5).
| Table 4: Share of On-site and Off-site Exports |
| (per cent) |
| Type of Services |
2009-10 |
2010-11 |
2011-12 |
2012-13 |
2013-14 |
| (1) |
(2) |
(3) |
(4) |
(5) |
| On-site (Mode 4) |
21.6 |
20.7 |
17.8 |
15.8 |
19.8 |
| Off-site (Mode 1 & Mode 2) |
78.4 |
79.3 |
82.2 |
84.2 |
80.2 |
| Total |
100.0 |
100.0 |
100.0 |
100.0 |
100.0 |
| Table 5: Software Services Exports by Different Modes |
| (per cent) |
| Type of Mode |
2009-10 |
2010-11 |
2011-12 |
2012-13 |
2013-14 |
| (1) |
(2) |
(3) |
(4) |
(5) |
| Mode 1
(cross-border supply) |
64.6 |
67.4 |
69.0 |
74.7 |
69.0 |
| Mode 2
(consumption abroad) |
0.0 |
0.1 |
0.5 |
1.6 |
0.1 |
| Mode 3
(commercial presence) |
17.6 |
14.8 |
15.4 |
9.4 |
13.7 |
| Mode 4
(presence of natural person) |
17.8 |
17.7 |
15.1 |
14.3 |
17.1 |
VIII. Software Business of Subsidiaries/Associates
The survey also collects information on the
software business of foreign subsidiaries/ associates of
Indian companies (foreign affiliates), under the heads
of software business done in the host country, i.e.,
locally, to India and to other countries, for the purpose
of Foreign Affiliates Trade in Services (FATS). The total
software business of the Indian-owned foreign affiliates
(excluding the services provided to India) observed
slowdown following global crisis in 2008. However, in
2013-14, it increased significantly by `427.3 billion
(US$ 7.1 billion) as against a decline of `122.5 billion
(US$ 2.3 billion) in the previous year (Table 6). The
business of these subsidiaries to India increased by
`87.1 billion (US$ 1.4 billion) in 2013-14 on top of
increase of `173.2 billion (US$ 3.2 billion) in 2012-13.
Indian companies providing the combination of
four broad group of services (viz., IT services, Software
product development, BPO services and Engineering
services) were classified under ‘Other services’ category.
Under ‘Other Services’ category, foreign affiliates were
the major source for generating the software business
outside India. Software services provided by foreign
affiliates in all countries increased for ‘IT services’,
whereas it declined for ‘BPO services’ ‘Engineering
services’, and ‘Software product development’.
| Table 6: Software Business by Foreign Affiliates of Indian Companies |
| (` billion) |
| Activity |
2009-10 |
2010-11 |
2011-12 |
2012-13 |
2013-14 |
| Locally |
To India |
Other
Countries |
Locally |
To India |
Other
Countries |
Locally |
To India |
Other
Countries |
Locally |
To India |
Other
Countries |
Locally |
To India |
Other
Countries |
| (1) |
(2) |
(3) |
(4) |
(5) |
(6) |
(7) |
(8) |
(9) |
(10) |
(11) |
(12) |
(13) |
(14) |
(15) |
| IT services |
6.4 |
0.0 |
0.4 |
17.9 |
0.2 |
1.6 |
27.5 |
10.7 |
5.4 |
23.9 |
1.8 |
0.4 |
37.4 |
2.0 |
3.0 |
| Software Product Development |
0.2 |
0.0 |
4.9 |
4.7 |
0 |
0.6 |
1.6 |
0.7 |
8.0 |
5.0 |
2.3 |
11.2 |
0.0 |
0.0 |
14.1 |
| BPO Services |
15.1 |
0.4 |
17.2 |
15.2 |
0.6 |
9.1 |
31.0 |
4.4 |
12.3 |
15.9 |
0.4 |
3.6 |
7.1 |
0.1 |
0.2 |
| Engineering Services |
0.6 |
0.1 |
0.0 |
1.7 |
0.3 |
0.0 |
1.5 |
0.3 |
20.6 |
1.6 |
0.5 |
0.0 |
0.1 |
0.0 |
0.0 |
| Other services |
370.1 |
7.1 |
22.3 |
338.2 |
4.4 |
26.7 |
391.8 |
0.4 |
20.8 |
307.4 |
184.6 |
28.9 |
644.3 |
274.6 |
118.9 |
| Total (` billion) |
392.3 |
7.7 |
44.9 |
377.7 |
5.4 |
38.1 |
453.4 |
16.4 |
67.0 |
353.8 |
189.6 |
44.1 |
689.0 |
276.7 |
136.2 |
| Total (US$ billion) |
8.3 |
0.2 |
0.9 |
8.3 |
0.1 |
0.8 |
9.5 |
0.3 |
1.4 |
6.5 |
3.5 |
0.8 |
11.4 |
4.6 |
2.3 |
USA had the maximum share of total software
business by foreign affiliates though its share declined
in 2013-14. It was followed by UK which recorded a
higher share. The share of Germany and Singapore in
the total software business of foreign affiliates also
increased during the year (Table 7).
| Table 7: Software Business by Foreign Affiliates of
Indian Companies – Country-wise Distribution |
| (per cent) |
| Country |
2009-10 |
2010-11 |
2011-12 |
2012-13 |
2013-14 |
| (1) |
(2) |
(3) |
(4) |
(5) |
| USA |
54.7 |
67.5 |
65.0 |
71.3 |
65.4 |
| United Kingdom |
6.1 |
6.8 |
5.3 |
6.6 |
7.9 |
| Canada |
4.0 |
2.7 |
3.6 |
4.1 |
4.1 |
| Germany |
3.1 |
2.5 |
2.9 |
3.0 |
3.5 |
| Singapore |
3.0 |
3.4 |
4.4 |
2.7 |
3.3 |
| Netherlands |
3.1 |
3.6 |
4.3 |
2.1 |
3.2 |
| Other Countries |
26.0 |
13.5 |
14.5 |
10.2 |
12.5 |
| Total |
100.0 |
100.0 |
100.0 |
100.0 |
100.0 |
IX. Conclusion
During 2013-14, India’s export of computer
software services continued to have robust growth even
as the growth of ITES/BPO services moderated. Total
international trade in software services by India,
including the services delivered by foreign affiliates
established abroad, stood at `5,011.8 billion (US$ 82.8
billion) in 2013-14. Software exports by foreign affiliates
of Indian companies increased substantially in 2013-14.
The share of on-site exports increased in 2013-14,
for the first time after 2008-09 even as Mode-1 (cross-border
supply) continued to be the major mode of
software services exports. The share of software
services exports through Mode-1 and Mode-2 declined,
whereas, the share of software services through Mode-
3 and Mode-4 has increased in 2013-14. USA continued
to remain the major destination for software exports
and US dollar remained the major invoice currency for
software exports during 2013-14.
Box: Comparison of survey results with NASSCOM and BoP data
The Reserve Bank publishes the software exports
data in BoP using data reporting by Authorised
Dealers (ADs), STPI and also the software exports
data released by the NASSCOM. This accounts for
only non-physical offsite software exports. As per
the BoP data released by the RBI, non-physical (offsite)
software exports stood at `4,206.0 billion in
2013-14 which does not include on-site software
exports. Adding the on-site software exports of
`857.3 billion(US$ 14.2 billion), as reported in
the survey, the total software services exports in
2013-14 worked out to `5,063.3 billion (US$ 83.7
billion).
NASSCOM publishes exports of IT-BPO industry
which is based on the global software business of the
Indian software companies, i.e., software exports of
Indian companies together with the software business
of their overseas subsidiaries. Accordingly, in order
to make the data generated through the RBI’s survey
on Software & ITES/BPO Services Exports comparable
with NASSCOM data, the software business of
overseas subsidiaries of Indian companies have been
added to the estimated software services exports of
India, based on the survey.
Based on the survey, export of software services
from India in 2013-14 was estimated at `4,322.8
billion (US$ 71.4 billion) and the software business
done by the Indian subsidiaries abroad in 2013-14
was estimated at `689.0 billion (US$ 11.4 billion).
Thus, the global software export of India based on
the survey was `5,011.8 billion (US$ 82.8 billion) as
against `5,228.9 billion (US$ 86.4 billion) published
by the NASSCOM. The software business done by the
overseas subsidiaries of Indian companies accounted
for 13.7 per cent of the global software business,
estimated through the survey.
The survey results are quite comparable with the
software exports data released by NASSCOM and
also with the software service exports data of BoP.
| Reconciliation of Software Services Exports of India during 2013-14 |
| (` billion) |
| Software exports
as per NASSCOM
(Global business) |
Software Exports based on annual Survey |
Software Exports based on Balance of Payment Statistics |
| Indian companies
(Mode 1, Mode 2 &
Mode 4) |
Subsidiaries
abroad (Mode
3 & export of
Subsidiaries other
than India) |
Global Business |
Software Exports
based on BoP data |
On-site software
exports based on
survey (Mode 4) |
Total Software
Exports of India |
| (1) |
(2) |
(3) |
(4)=(2)+(3) |
(5) |
(6) |
(7)=(5)+(6) |
| 5,228.9 |
4,322.8 |
689.0 |
5,011.8 |
4,206.0 |
857.3 |
5,063.3 |
Annex:
Methodology for estimation of Software Services Exports of Non-responding companies
Annual survey on Software and IT enabled Services
Exports for the period 2013-14 was launched among
nearly 6,700 Software and ITES/BPO companies. Of
these, 873 companies responded to the survey which
included 128 NIL and closed companies. The non-respondent
companies were generally the smaller
companies, as the 745 active companies that supplied
data included all major companies in the sector.
Using the observed proportion, number of companies
with NIL exports was estimated from 5,827
non-respondent companies and software exports
have been estimated for the remaining 4,973 non-responded
companies, using the following method:
-
Based on the ITES/BPO reported activity,
companies have been classified in four groups,
viz.; IT Services, ITES/BPO Services, Engineering
Services and Software Product Development
Services (having 100 per cent business under
respective group).
-
For classifying the other companies having
combination of these as their business activity,
reported proportions of their exports done in
IT, BPO, Engineering and Software Product
Development services have been used.
-
Based on the reported data, it was observed
that ‘On-site’ software export was primarily
reported by the major companies. Therefore,
only offshore software exports component was
used for estimating software export of non-responded
companies.
-
As the observed distribution of exports was
highly positively skewed in each of these
groups, median was used for estimating
software exports in each group.
Estimated software exports for ith group of non-responding
companies
The total software export of India has been compiled
as the sum of reported software exports and the
estimated software export for non-responded
companies in each of the four groups.
Using the methodology given above, the software
services exports of non-respondent companies was
estimated to the tune of `1,093.4 billion (around
25.3 per cent of total software services exports).
* P
|