Monday, March 12, 2001		Article

Indian software export relying heavily on US market
By Radhakrishna Rao

From being a lacklustre, low profile and little-known venture, the Indian software and services export sector has over the last one decade blossomed into a high profile, fast-growing and technologically-vibrant endeavour with a potential to change the socio-economic profile of the country. Buttressed by a sustained and consistent annual growth rate of 50 per cent, the Indian software industry hopes to net in around US $ 9.5-billion — during the current year — from the export of software and services to around 100 countries. No wonder, the software export that has emerged as the second-largest foreign exchange earner for India is being shaped into a vital pillar of India’s robust economic growth in the years ahead. A recent report from the consulting firm, Goldman Sacks, says India is an off sourcing success story and offers leadership in almost every aspect of outsourcing. This report also points out that the key opportunities of outsourcing are in the area of full service integration, strategic outsourcing application server provisioning, offshore development and business process outsourcing. "Though countries like Israel, Czech Republic, China, Ireland, Taiwan and Philippines all have offshore operations and look to grab a slice of this growing market, India is by far the largest and most evolved market.

However, the report drives home the point that "In order to fully realise the potentials of the huge global IT-service market, it is critical for the Indian companies to ensure flawless execution of the projects in order to sustain momentum. Further, Indian IT services companies must continue to compete with the US-based rivals to stay on cutting edge of technologies and move up the value chain within the context of the US computer service industry.

Perhaps, the weakest spot of the Indian software export dynamic is it’s over dependence on the American market for growth. Right now, more than half of the Indian software and services export is targeted towards the USA. And in the backdrop of the recent American decision to increase the number of H1-B visa being granted to Indian hi-tech workers, the American share of the Indian software export intake is likely to go up by a substantial extent.

Of course, for long American IT companies have been particular about outsourcing their software requirements from India. For India with its highly skilled, English-speaking IT manpower conversant with the emerging trends in the knowledge industry offers an alluring option in comparison to countries such as Israel and Philippines. A recent survey by International Data Corporation estimates that India provides 80 per cent of the software technology labour in the USA. According to Vijay Gurbaxani, a professor at the University of California, India laid the groundwork for its high-skilled technologies work force in the 1960s when the nation began grooming a large cadre of engineers to develop industrial independence. The country now has a dozen of internationally recognised universities and institutions that train engineers, managers and scientists.

Taking a cue from the USA and with a view to make good the critical shortfall of skilled manpower, many European countries are assiduously wooing Indian software talent with varying degrees of success. A rapidly growing geriatric population coupled with a desire to boost the engine of industrial growth, European countries are busy eyeing the Indian IT skills. However all efforts by Germany to attract the Indian IT talent — highlighted by the relaxed entry terms — have come as a cropper on account of the growing physical violence against the guest workers in that country. Moreover, Indian IT workers rate American environment better than that of Germany in terms of work culture, social ambience, food, culture, professional fulfilment and technological sophistication, Germany has also launched an initiative aimed at luring Indian IT companies to set up their units in Germany, urging them to tap the opportunities offered by the 150-billion German IT market. On the other front, both France and Germany are wooing Indian students to pursue IT courses in their respective countries.

Thanks to the visa relaxation announced by Great Britain, an increasing number of Indian IT workers are moving to London and other cities in the country. What’s more, about 70 India IT companies have opened their shops in Great Britain that are considered a gateway for promoting Indian software all over Europe. In particular, Indian software. Computer games have gripped Great Britain more than any other European country. Patricia Hewitt, UK minister for e-commerce expects a better cooperation between India and Great Britain in fostering the growth of IT in both the countries.

Not to be left behind, New Zealand and Australia, both of which are experiencing an acute shortage of IT manpower have gone out of the way to attract Indian programming skill. And the next destination for the Indian IT workers is Budapest in Hungry. A Budapest-based outfit headed by Indian IT professional is busy trying to recruit Indian IT geeks to work in Hungary.

But then this massive, unchecked outward migration of the highly skilled Indian software programmes to various parts of the world is likely to adversely affect the export prospects of the Indian IT companies.