Monday, January 21, 2002		Article

A study by the US-based research analysis group, Giga Information, comes to the conclusion that companies currently using Indian offshore resources or planning to use such resources are not deterred by the terrorist attacks like the one that took place on September 11. "And indeed there is no reason to rethink Corporate India’s outsourcing decisions because of the attacks. India’s outsourcing is just as viable an operation today as it was before the attacks," said the research group.

On the other hand, brushing aside serious concerns over the US economic slowdown casting a shadow over the Indian software companies, a study by the National Association of Software and Services Companies (Nasscom) forecasts and upsurge in software export from India during the current year. Indeed Nasscom is hopeful of $ 6.2 billion of exports in 2001-02 and $ 9.4-billion during the next. Nasscom president Kiran Karnik, expects the Indian software exports to touch $ 50-billion by 2008. Says Karnik "I see great opportunities in the Chinese market since the country is not ahead of India in terms of software development. We could also extend our reach to Germany, Italy and other European countries. Japan is another market which is yet to be explored by the Indian software industry."

Indian software outsourcing has been growing at 40 per cent per annum over the past one decade and Indian firms now develop software for one-third of the Fortune-500 companies. But the Achilles heel of the Indian software export drive is the overwhelming dependence on the American market. In order to sustain the long-term growth of the Indian software export industry, suggestions have been made from time to time to increase Indian association with East Asian, Pacific and Far-eastern markets.

All said and done, Indian software export venture will have to face stiff challenge from China. As it is, Chinese IT companies have started setting shops in Bangalore — the Indian Silicon Valley. For instance, Huawei Technologies Ltd, considered Asia’s biggest telecom equipment producer and network solution provider, has now a research and development centre outside China in Bangalore.

As pointed out by a recent pathbreaking research study by the management outfit Gartner, unless the Indian IT firms move up in the value chain from time and material oriented into turnkey projects, the Indian IT industry will not be able to sustain its export drive. The Gartner recipe for the Indian IT firms include investment in intellectual property creation and move towards packaged production, work on brand management and lastly, change the business model away from the US with or without a slowdown.

According to Mahesh K. Jain, Managing Director of the Bangalore-based Jataayu software, the biggest hurdle to achieve the country’s export target would be countries like China, Hungary, Czech Republic and Israel that are fast emerging as hot destinations for software services.