Survey on Computer Software & Information Technology Services Exports : 2010-11 - आरबीआय - Reserve Bank of India
Survey on Computer Software & Information Technology Services Exports : 2010-11
Survey on Computer Software & Information Technology Services Exports: 2010-11* The Reserve Bank conducts annual survey on Software and Information Technology Services Exports for compiling data on various aspects of computer services exports as well as exports of Information Technology Enabled Services (ITES) and Business Process Outsourcing (BPO). The survey collects details on export of software services as per the activity, type of services (on-site/off-site) and country of destination along with the four modes of supply, as per General Agreement on Trade in Services (GATS). This article presents the results of 2010-11 round of the Software and IT Services Exports survey covering 760 companies, including most of the major companies, which together accounted for nearly 78 per cent of the estimated total software exports of India. During 2010-11, India’s total export of software and IT services, as defi ned in IMF’s BoP Manual, is estimated at around `2,170.1 billion (US$ 47.6 billion), of which, export of computer services accounted for 73.7 per cent and ITES/BPO services accounted for the remaining. Considering all modes of supply, including the services delivered by foreign affiliates established abroad, export of software services during 2010-11 stood at around `2,547.8 billion (US$ 55.9 billion) of which over two-third share was accounted for by the cross-border supply mode. USA remained the major destination for software services exports. Highlights
Introduction The Reserve Bank has been conducting comprehensive annual surveys on ‘Software and Information Technology Services Exports’ since 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 export of computer services, as defi ned in the Balance of Payments and International Investment Position Manual – Sixth Edition (BPM6) of the International Monetary Fund (IMF) and the GATS Manual on Statistics of International Trade in Services (MSITS) 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 annual round of the survey was conducted with reference period 2009-10. Survey Results For the 2010-11 survey round, the schedule was canvassed among 6,400 companies of which 760 companies, including most of the large companies, responded to the survey. Among them 506 companies were common with the previous round. The responding companies together accounted for nearly 78 per cent of the estimated total software exports during the year. Software exports of the non-responding companies were estimated using median exports (see Annex I for methodological details). The Reserve Bank also collects information on export of non-physical software (offsite) from Indian companies, in SOFTEX forms. Reconciliation of survey estimates of software exports with the estimates of National Association of Software and Services Companies (NASSCOM) and SOFTEX data is presented in the Box item. Software Services Exports from India during 2010-11 Total software services exports from India during 2010-11 is estimated at `2,170.1 billion, which was 18.1 per cent higher than in the previous year (`1,836.9 billion) (Table 1). These exports are categorised under two major heads: (i) Computer Services and (ii) ITES/ BPO Services, which had shares of 73.7 per cent and 26.3 per cent, respectively, in total export of software services during 2010-11. The surge in software services exports during 2010-11 was led by computer services, which recorded 26.2 per cent export growth to reach `1,598.4 billion in 2010-11, whereas ITES/BPO services export remained nearly flat at `571.7 billion. In accordance, the share of computer services in total software services exports increased to 73.7 per cent in 2010-11 (69.0 per cent in 2009-10), whereas the share of ITES/BPO services declined to 26.3 per cent in 2010- 11 (31.0 per cent in 2009-10). Within computer services, IT services remained the dominant component which recorded 33.7 per cent growth in exports, even as exports of the Software Product Development component recorded a decline. In the ITES/BPO services category, the decline in exports of Engineering services during 2010-11was squared-off by BPO services exports to make the category export comparable with the previous year’s level (Chart 1 and Table 1).
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 export of ITES/BPO services. Export of Engineering services declined by 25.9 per cent in 2010-11 from the level in 2009-10, while BPO services exports recorded a growth of 8.7 per cent (Table 2). Among the major activities in BPO services, exports of Customer interaction services (12.2 per cent share in total ITES/BPO services exports) declined by 32.3 per cent whereas Finance & Accounting related services ( with 13.4 per cent share) increased by 13.1 per cent during 2010-11. Among the Engineering services, 184.4 per cent export growth, over a low base, was recorded in Embedded solutions and 15.7 per cent in Product Design Engineering, whereas exports of Industrial automation and Enterprise Asset Management and Other Engineering Service registered a decline. Other BPO service (including Legal services, Animation, Gaming, Pharmaceuticals & biotechnology services etc.), which constituted more than half of the total ITES/BPO services exports, recorded a substantial rise of 26.3 per cent during the year. Organisation-wise Distribution of Software Services Exports The public limited companies accounted for a higher share of 61.3 per cent of the total software services exports in 2010-11 (58.1 per cent share in 2009-10). During 2010-11, software services export by public limited companies increased by 24.7 per cent to `1,330.7 billion, whereas software exports by private limited companies recorded a lower growth of 15.8 per cent to `836.3 billion (Table 3). Country-wise Distribution of Software Services Exports United States remained the major destination for software services exports from India. United States and Canada together accounted for 65.0 per cent of total software services exports in 2010-11, registering 24.0 per cent growth over the previous year. Though the share of software services exports to European countries declined to 23.5 per cent in 2010-11 from 26.5 per cent in 2009-10, it recorded 4.4 per cent rise in value terms (Table 4 and Chart 2), which was mainly led by 42.3 per cent increase in export of software services to United Kingdom. Software exports to Asian countries recorded 24.7 per cent rise in value terms and the share of the region increased marginally to 5.1 per cent from 4.9 per cent in 2009-10. There was a 15.7 per cent decline in software services exports to the South Asia. Software exports to Australia and New Zealand together registered 40.9 per cent growth in 2010-11 with their share increased to 2.7 per cent from 2.3 per cent in 2009-10. Currency Composition of Software Services Exports With 75.3 per cent share, the US Dollar (USD) remained the major currency of invoicing the software exports while invoicing in terms of Euro accounted for 7.0 per cent. The value of invoicing in USD and Euro increased by 16.8 per cent and 20.3 per cent, respectively, in 2010-11. The share of Pound Sterling (GBP) was 9.8 per cent and recorded 11.6 per cent rise in value terms.
The share of Australian Dollar (AUD) and Indian Rupee (INR) was low but they recorded high growth in 2010-11 (Table 5 and Chart 3).
Software Services Exports – Type of Service Software services are exported through both onsite and off-site routes, the latter accounting for dominant share (79.3 per cent) in total software exports. During 2010-11, export growth of on-site services (13.6 per cent) was lower than the growth in off-site services (19.4 per cent) (Table 6).
Size-wise Classification of Software Services Exports Large companies having export size of `1 billion and above accounted for the 94.6 per cent of total software services exports in 2010-11. The share of offsite services delivered by the large companies was 72.1 per cent of their total software exports, in case of smaller companies, the said share was more than 90 per cent (Table 7). Software Business as per Modes of Supply As per MSITS (2002) guidelines, international trade in services can be conducted through four different modes, viz., (i) transactions between resident and nonresident covering Mode-1 (cross-border supply), Mode-2 (consumption abroad) and Mode-4 (presence of natural person), and (ii) services provided locally by the affiliates established abroad, i.e., Mode-3 (commercial presence). 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 Statistics (FATS). In the present survey, the software services trade data are collected on all the four modes of supply. The total international trade in software services by India through all modes stood at `2,547.8 billion in 2010-11. Mode-1 accounted for 67.4 per cent of total international trade in software services by India whereas the shares of Mode-4 and Mode-3 were also double-digit but Mode- 2 accounted for a negligible share (Table 8). Small companies delivered 82.3 to 91.0 per cent of their software services exports through Mode-1(cross-border supply). This mode had nearly two-third share in large companies’ software services exports. Software Business of Subsidiaries/ Associates Abroad The survey also collected the information on the software business of foreign subsidiaries/associates of Indian companies (foreign affiliates), under the heads of software business done in host country, locally, to India and to other countries, for the purpose of Foreign Affiliates Trade in Services (FATS). Total software business of the Indian-owned foreign affiliates (excluding the services made available to India) was valued at `415.8 billion during 2010-11 (Table 9). Software services provided by the Indian-owned foreign affiliates were mainly in the respective host county. Indian companies were classified into four major activity categories, viz., IT services, Software product development, BPO services and Engineering services. Companies providing a combination of these services were classifi ed under ‘Others’. These multiservice providing companies remained the major source for generating software business outside India. Indian-owned affiliates in USA contributed over two-third of business done by the foreign affiliates. Among the remaining, Indian software companies in United Kingdom, Singapore, Canada and Germany accounted for 6.8 per cent, 3.4 per cent, 2.7 per cent and 2.5 per cent, respectively in total software business of the Indian-owned foreign affiliates (Table 10). Box: Comparison of survey results with NASSCOM and Softex data The Reserve Bank of India (RBI) collects the information of software exports through SOFTEX forms filed by software companies which accounts for only non-physical offsite software exports. As per the SOFTEX forms filed by Indian companies to the RBI, non-physical (off-site) software exports stood at `1,569.6 billion in 2010-11 which does not include on-site software exports. Adding the on-site software exports of `450.1 billion, as reported in the survey, the total software services exports in 2010-11 worked out to `2,019.7 billion. RBI publishes the software exports data in BoP using reporting by Authorised Dealers and STPI and also the software exports data released by the NASSCOM. 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 2010-11 was estimated at `2,170.1 billion (US$ 47.6 billion) and the software business done by the Indian subsidiaries abroad in 2010-11 was estimated at `415.8 billion (US$ 9.1 billion). Thus, the global software export of India based on the survey was `2,585.9 billion (US$ 56.7 billion) as against `2,689.0 billion (US$ 59.0 billion) published by the NASSCOM. The software business done by the overseas subsidiaries of Indian companies accounted for 16.1 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 exports data collected through Softex forms by RBI. References: 1. International Monetary Fund (2008): Balance of Payments and International Investment Position Manual – Sixth Edition (BPM6), Washington, D.C. 2. Government of India (2001): Report of the National Statistical Commission (NSC), New Delhi, August. 3. Government of India (2003): IT-Enabled Services; Ministry of Information Technology. 4. Reserve Bank of India (2003): Report of the Technical Group on Re-examination of Data Reporting System on Software Exports, Mumbai 5. Reserve Bank of India (2011): Survey on Computer Software & Information Technology Services Exports: 2009-10, Reserve Bank of India Bulletin, June issue. 6. United Nations (2002): GATS Manual on Statistics of International Trade in Services (MSITS), Geneva. Annex I: Methodology for estimation of Software Exports of Non-responding companies In total, 760 companies responded to the annual comprehensive survey covering all major companies. So, the non-responded companies were the smaller companies. Further, it was observed from data received from the responded companies that onsite export was mainly reported by the major companies. So while estimating the exports done by the nonresponded companies, only offsite export was considered. As no information was available about the business activity of the non-responded companies, these were classified into 4 groups viz., IT services, ITES/BPO services, Engineering services and Software Product Development based on the observed proportion. Also, the distribution of export in all the four groups i.e., IT services, BPO, Engineering and Software Product Development was highly positively skewed. So median exports done by each of these groups was used for estimating the exports done by respective group of business. The detailed methodology for estimation of exports is given below. Using the methodology, the software services exports of non-respondent companies was estimated to the tune of `479 billion (around 22.0 per cent of total software services exports). To estimate other distributional patterns of exports, observed proportions were used. Annual survey on Software and IT Services Exports for the period 2010-11 was launched canvassing around 6,400 Software and ITES/BPO companies. Of these, 876 companies responded to the survey which includes 116 NIL and closed companies. All the major software and IT/BPO companies responded to the survey. Using the observed proportion, number of NIL and closed companies have been estimated from 5,524 non-responded companies and software exports have been estimated for the remaining 4,793 non-responded companies, using the following method: I. 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 Services (having 100 per cent business under respective group). II. 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 services have been used. III. 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 nonresponded companies. IV. As the observed distribution of exports was highly positively skewed in each of these groups, median was used for estimating Estimated software exports for ith group of nonrespondent companies
Then, the total software exports of India has been compiled as the sum of reported software exports and the estimated software export for nonresponded companies in each of the four groups. * Prepared in the External Liabilities and Assets Statistics Division, Department of Statistics & Information Management. The previous article in the series with reference period 2009-10 was published in June 2011 issue of the Bulletin which also contains concepts, defi nitions and survey schedule. |