The Hindu Business Line : Nasscom confident of 28 pc export growth

The trend is towards offering business process transformation that means a lot of value addition through consultancy services where integration is the key issue.

Mr Kiran Karnik, President, Nasscom

Hyderabad , Sept. 28

The technology sector has begun to look up lately and the general feeling is positive. Given the current business scenario, the National Association of Software and Services Companies (Nasscom), the apex body for software companies, is confident that the Indian industry will be able to record a growth of about 26 - 28 per cent this financial year.

The President of Nasscom, Mr Kiran Karnik, who was in Hyderabad to take part in a security-related meeting arranged by E2Labs, spoke to Business Line about some recent technology sector issues and current business trends.

Excerpts:

How is the technology business shaping up?

The general feeling is extremely strong and positive and there are indications there is upswing in the customer interest. Based on such a business outlook, we are confident we will be able to meet our guidance of about 26-28 per cent growth in the overall exports from the technology sector. This is particularly significant given the fact that we had to face two tough years. It is clear that we have put behind the slowdown blues and the recessionary trends witnessed after the 9/11 developments. While there has not been quantum jump in the overall IT spend, this is expected to be reflected in the next calendar year.

Which are the sectors that Nasscom expects will fare well?

The BPO (business process outsourcing) sector is performing extremely well and this will help by contributing significantly to the overall exports from the country. For instance, during the last financial year, while the IT services sector contributed about $7 billion in exports, the BPO sector chipped in with export of about $2.5 billion. This year, total exports are likely to be in the range of about $12 billion. Of this, the BPO sector is expected to contribute about $2.5 billion to about $ 3.6 billion, which is no mean achievement given the current environment. On the other hand, IT services sector is expected to contribute about $ 8.4 billion to $ 9 billion plus. So, the BPO sector is likely to grow by about 50 per cent this year and the IT services by about 18 to 20 per cent.

Can we achieve $ 70 billion in revenues as projected by Nasscom-McKinsey by the year 2008?

We have had two tough business years which were further complicated by general recession leading to lower IT spend. In spite of that the growth rate we have achieved speaks volumes of the strength of the IT sector.

If we have two/three good years, we will be able to significantly grow the overall exports and be in a position to achieve the targets. There is significant ramp-up in the quality of services bandwidth we are offering.

The trend is towards offering business process transformation that means a lot of value addition through consultancy services where integration is the key issue. This is what big corporations like IBM, Accenture provide.

We are constantly engaged in the process of building the products development culture, along with increasing the domestic market business. Though there has been much thrust on market other than the US, the business continues to be US-centric. We have concerns for European thrust— language, different business culture, and the overall mode functioning. It will be a while before we harness the potential there.

What about billing pressures?

Billing pressures are decreasing but have not gone away. They are flattening out. While the big companies continue to do well, there is pressure on small companies. But the best part is that small and medium sized companies are contributing significantly and have shown resilience in these tough times.

Do you see the market getting stirred up with IPOs?

While it is difficult to judge the market, definitely the climate is good for investments. Lately, there is talk of TCS IPO. This could perhaps trigger other offers.

How is Nasscom handling the issue of artificial curbs through legislation?

This is not a serious issue. We don't see these legislations becoming law since this will not benefit the US economy or US companies. We are also building up necessary pressures against such artificial curbs. However, in some cases, this is limited to government-related business, which is relatively small.

With regard to call centres, we have looked at the potential of such developments; we don't see this having much impact on them since a small per cent is engaged in such outbound call business.

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