Monday, February 24, 2003		Feature

IF the pundits are to be believed, the sun is not setting on the Indian software industry. Chastened by a major churn in the IT sector that saw annual growth come down to a conservative 28 per cent as opposed nearly double that in the last decade, the industry is however consolidating.

According to Rita Terdiman, director, Gartner, the focus will henceforth be on core competency. "Software business would need to focus on a niche area and deliver quality."

Management guru C.K. Prahlad says the companies must first establish a core competency in a niche and seek to ‘own’ that niche by becoming the most important player in that segment.

According to a survey by McKinsey on behalf of Nasscom, over 70 per cent of the top 30 global IT services vendors have an Indian presence and are now looking at business process outsourcing (BPO).

"The ITES-BPO segment is expected to grow in financial year 2003 by 60 per cent, blistering by today’s standards, to reach $ 2.4 billion. However, the challenges the industry is facing are different from the ones last year. This year, the uppermost concern is the geopolitical risk, the threat of war and the political backlash of US federal governments," McKinsey says in its report.

McKinsey feels four types of ITES-BPO companies could emerge: task experts in areas like credit card and payroll processing; process boutiques like HR (human resources) processing; horizontal factories like call centres; and bundled service providers.

Nasscom, in its survey, notes that the demand for software professionals is expected to increase to 1.1 million by 2008 as against a supply of only 8,85,000.

While IT services posted a growth of 20 per cent in the April-December 2002 period, ITES and BPO rose 61 per cent in the same period, Nasscom said.

Embedded software

According to Nasscom chairman Arun Kumar, the embedded software and system market is scheduled to grow at a steady clip. "The worldwide market of $ 21 billion in 2001 in embedded software offers a huge opportunity for Indian companies," Kumar said.

He noted that a number of international applications developers are tapping the Indian expertise in this regard. Texas Instruments, Motorola, Intel, and Cadence are setting up large development centres in India and leading Indian IT companies such as TCS, Wipro, HCL Technologies have begun to focus on this sector.

Nasscom has identified the four factors that will make embedded systems space an exciting arena for Indian companies that include rising software content, rapidly evolving hardware, and opportunities in protocols and software skills in original equipment manufacturers.

Britain eyes India

British Minister for Small Business Nigel Griffith asked Indian technology firms and professionals to choose to work in Britain over the USA, India’s prime software export destination.

Griffith, who visited India to attend a four-day IT industry conference, says Indian IT companies can make Britain a gateway to the emerging markets in Europe.

"The British government is making it easier for Indian businesses to operate in Britain with quicker visa procedures and multiple-entry visas that are valid for long periods of 10 years," the minister told the conference.

The minister said many Indian companies such as Hexaware Technologies,

Himachal Futuristic Communications and SSI have tied up with technology firms in Britain to tap outsourcing opportunities in third countries.

Referring to reports that some US states were mulling to ban off-shoring government contracts to India, Griffith said: "How can you be sure the work you are putting in now with US partners won’t be undone by local politicians."

The reported move comes close on the heels of introduction of a bill in New Jersey Senate that seeks to block outsourcing of back office works to other countries, including India.

Griffith says the business environment in the USA is becoming increasingly risky for Indian companies.