Debashish's Writings : All is well with IT

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ALL IS WELL WITH IT

BY DEBASHISH CHAKRABARTY

First, it was the dotcom burst. Then the global slow-down got further aggravated as WTC went down and if this was not enough, the diplomatic air began reverberating with fiery rhetoric signaling an inevitable Indo-Pak war. Information Technology (IT) training schools and their students were worried alike and the fear among the industry was substantial. The proverbial doomsday for the Indian IT industry was near, they felt. The reality, however, is a far cry from this. Contrary to popular belief, Moore’s Law[1] is still relevant and the present and future of IT according to expert opinions seems good, if not spectacular. And if IT is missing something, that’s the hype and rightly so.

The threat that never was

How many of us really believed that India-Pakistan were wielding swords and would have really gone for an outright war? At least I never did. NASSCOM, the apex industry association of IT Software and Service companies in India, agreeably assessed that the tension between India and Pakistan did not lead to any loss of business.

It was abundantly clear right from the beginning that the premiers of both nations were busy orchestrating the tension to conveniently divert the attention of their people from the more pressing domestic issues. Vajpayee had a two fold agenda, first to shift focus from Gujarat and prevent Congress to gain any mileage from it, and second to gratify the war mongering hard-liners demanding their POK back. News channel were happily busy - brewing frenzy. They convinced people that the tension was real and would surely lead to an immediate full-scale war, at least in the war-rooms in their studios. Cameras smiled as our Army and Air chiefs belligerently termed it a time for action. Musharraf was happy with the frenzy too, he had emerged as a better leader than any elected Pakistani has ever been and he had America by his side while playing the double card. Troops were moved towards the LOC and many crores and human lives later retreated. Leaders on both sides were content with the grand spectacle while the taxpayers understood little of it. The dangerous play that both the nations staged was so convincing that many nations issued travel advisories to their citizens. What a sham!

Fact remains; politicians never had and never will care about the welfare of nation, especially when it comes to saving their necks. Thankfully the industry understood this. We have a large number of marketing offices of Indian Software companies in the big markets and a comparable base of multinational executives working here, which updated their headquarters on the ground situation regularly. In a poll conducted by India's leading market research agency, IMRB 70% of the respondents have said that there has been no impact on their business in any way in the last 3 weeks due to the alleged tension between Indian and Pakistan.

What’s the ground situation then?

Forget the Indo-Pak standoff; is IT scenario in India encouraging otherwise? If you have apprehensions, consider this: according to the revised Nasscom-McKinsey study 2002, by 2008 the industry would employ 4 million people and account for 7% of India's GDP and 30% of India's foreign exchange inflows. The Indian IT software and services sector is on track to achieve its aspired target of US$ 77 billion. Current year is expected to see a 30% rise in exports despite a sagging recovery in the US. The number of shutdowns and bankruptcies by dot-com companies in the first half of this year fell 73% from the same period last year. And even if life may not be junket for all, Wipro recruited around 1000 programmers in the first quarter. Infosys declared a 14% rise in its profits for the first quarter of 2002-2003 compared to last year. That’s pretty encouraging!

Of the four segments of the Indian IT software and services industry the IT services exports sector, information technology-enabled services (ITES), product and technology services and the domestic market, the domestic market expenditure on IT is abysmally low (a mere 1.1% of GDP compared to the US’s 5%). But it will become significant, particularly for smaller players.

India had taken lead in providing software development and back-office support to leading global companies. It is now poised to straddle the ITES market that entails medical transcription, claims processing, data entry and call centers. ITES would soon include design engineering services, support for software components, analytics support and data mining. Suffice to say that ITES is expected to account for 37% of the total IT software and Services export market in India by 2008.

Whither IT?

Times ahead seem heartening. Apart from application development and application outsourcing India is expected to enter new service lines such as Packaged Software Support and Installation, IT consulting, Network infrastructure management, Systems integration, IT Training and Education, Hardware support and Installation and Network consulting and integration. Indian IT vendors, who have been UK and US oriented, have now been paying attention towards the sizeable non-English speaking market in Japan and Western Europe, which despite of having an export potential of over $6 billion remains under penetrated. Apart from telecom, financial services and manufacturing sector, India will also target other potential verticals like Retail and Healthcare, utilities, automotive, computer and pharmaceuticals. It would also be sneaking in the software products market where large gamut of possibilities are available in areas such as embedded Software, development and delivery of specialized components, offshore product development and product acquisition and enhancement.

So, the omen is good and at least for the moment it can be said that all is well with IT.

***

[1] The law predicted 3 decades back that the power of microprocessors doubles every 18 months.

Author's Note: This piece originally appeared in my column 'Reality Bytes' in issue dated 13th July 2002 of the Free Press Journal, an English daily published from Indore, India. Figures quoted from following sources: NASSCOM-McKinsey Report and Hindu Business Online.

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