India's information technology and IT-enabled services industry will more than double in size by 2012, led by a fast-expanding domestic market, according to a report released on Wednesday.
The industry's revenues, including those from export markets, will reach Rs 5.3 trillion (132 billion dollars) in 2012, from Rs 2.46 trillion last year, said the report by market-research firm IDC India.
Two trillion rupees of that will come from a domestic market, which is growing at an average annual rate of 18.4 per cent, outpacing overall industry growth of 16.5 per cent, it said.
India's expanding economy, growing annually by nearly nine per cent, is spurring domestic IT spending as companies upgrade technologies to stay competitive and consumers log onto the Internet on personal computers and mobile devices.
The forecast growth rates will be achieved on the back of the industry offering "innovative services to the evolving domestic buyers," said IDC India country manager Kapil Dev Singh in a statement.
The domestic market has largely been ignored by an industry that has boomed on work from Western firms trying to cut costs by taking advantage of India's English-speaking, computer-savvy graduates who work for lower salaries.
Last year, India's overall IT and IT-enabled services industry logged 22.4 percent growth in revenue to Rs 2.46 trillion, of which the domestic market contributed Rs 900 billion, according to IDC India.
In 2008, the market researcher expects the overall industry to grow 20 percent, with the Indian market expanding 22.4 per cent, maintaining its growth rate last year.
Indian IT companies, including software makers, are grappling with a slowdown in demand from the United States, their biggest market. US companies are paring technology budgets in the wake of a downturn in the world's biggest economy.
The slowdown follows a more than 12 per cent appreciation last year in the value of the rupee against the dollar, which reduced the local equivalent of every dollar earned by exporters such as software makers Tata Consultancy and Wipro.
That has forced exporters to look at non-American geographies and the home market to diversify risk and maintain growth.