SOURCE : NASSCOM
The Indian software sector seems to
have survived, even thrived in the challenging year gone by.
What have been the reasons for this performance?
The Indian software and services sector has put in an admirable
performance during 2001-02. Compared to what other Indian
industries have achieved in the same period, this is a very
positive performance. Not only has the software and services
market crossed the $10 billion mark in 2001-02, it has set
records for growth in segments such as IT enabled services.
The fact that Indian software companies were quick on their
feet, and managed to change track and focus rapidly, helped
to create a strong de-risk growth model. The situation was
helped by the fact that foreign companies—under economic
pressure, which led to cost cutting—began outsourcing
their software requirements to able Indian vendors. The offshore
development trend is in fact expected to increase over the
next 12 months and hopefully, India will have a larger piece
of this pie.
Looking ahead, what do you see?
Even though some doubts are being expressed within industry
circles about whether the Indian software and services sector
will be able to maintain momentum and meet its long term goals
and objectives, studies show that, considering the opportunities
available, India should achieve its ambitious targets set
for 2008. The recently released NASSCOM-McKinsey Study 2002
(a revised version of the 1999 report) states that despite
the prevailing economic downturn that is impacting some segments
of the software industry, the long term potential of the sector
remains robust.
Is the software industry increasingly becoming a
playground for the larger players? Is there any hope for the
SME (small and medium enterprise) companies?
While it is true that the slowdown has widened the divide
between the larger and smaller (SME) companies within the
software industry, making it increasingly difficult for the
latter to grow. However, the future does hold potential for
these contenders, provided these companies are able to develop
innovative business models, maintain focus and adopt a strong
niche orientation, which will be enable them to perform well
and grow.
Will the Indian software industry achieve the targets
it has set for itself for 2008?
The Indian software industry, including the IT Services and
IT-enabled services sectors are likely to achieve their long
term objectives. Given its earlier performance, the industry
needs to grow at a reduced compounded annual growth rate of
34 percent, to cross its 2008 projections.
What has been the reason for the runaway success
of the ITES segment?
One of the best performances has been logged in by the ITES
sector, which will continue to be a key driver of the overall
software export industry in the months ahead. Registering
a growth of 67 percent in the year 2001-02 and projected to
grow at the same pace, the sector is attracting significant
investments from both global MNCs and domestic players.
The ability of entrepreneurs to spot opportunities, build
new skills and develop innovative delivery models has resulted
in the higher than expected growth of the ITES market. This
vast pool of English speaking manpower, strong process orientation
and high track record in quality solutions and cost efficiency,
have given India has a significant edge in each of these areas.
What do you believe should be the future goals of
the Indian software industry?
As I’ve mentioned, the software industry has proved
its worth in the export markets. Over the next few years these
efforts have to be intensified and the sector has to contribute
even more significantly to national growth, growth in GDP
and overall growth in the country’s exports. We have
to make strides not only in the areas of software development
and software services, but also try and tap emerging, high
potential markets such as product software.
What more do you think the Government needs to do
to further catalyze the growth of the software industry?
Software is being considered a priority sector by the Government.
In the past the Government has heeded to NASSCOM’s recommendations
for zero duty on software, rationalization of customs and
other duties, taken care of income tax related issues and
provided a more liberal policy frame for the industry. It
has provided the necessary encouragement for the unimpeded
growth of the sector.
Looking into the future, I believe the government needs to
work on the proper implementation of some of our recent policy
initiatives such as the IT Act 2000 and the Communications
Act. These initiatives have to go beyond the letter and get
accepted in spirit as well.
The Government also needs to work on improving the country’s
telecom infrastructure, which we have been pushing for actively.
We realize the importance of a strong telecommunications backbone
in proliferating the Internet and supporting software exports.
Issues such as bandwidth are now in the spotlight and the
Government ought to try and redress some of these issues.
The government also needs to focus on three key areas: unlocking
the growth of the domestic market, further removing anomalies
in some of the recent policy initiatives. Further, strengthening
the infrastructure especially Telecom as well as the physical
infrastructure –
roads, ports and power.
What should be NASSCOM’s role?
Our belief is that NASSCOM should continue focussing on building
the India Inc. brand and further strengthening the image of
the Indian software industry overseas. We should focus on
helping Indian software companies move into fresher geographies—basically
high potential markets such as Africa, some countries in Europe
and the Asia Pacific, which have remained untapped until now.
NASSCOM needs to help SME players develop strategies for the
future and create a niche for themselves in the global markets.
NASSCOM will also continue promoting the sharing of information
and best practices amongst companies through round tables,
focused forums, seminar and conferences.
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Last updated : February 2, 2004
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