The Hindu Business Line : Hardware sector set to grow at 30 pc

THE National Association of Software and Services Companies (Nasscom) has indicated that the domestic hardware market is poised for a growth of about 30 per cent next fiscal riding on the duty cuts announced by the Finance Minister.

The Vice-President of Nasscom, Mr Sunil Mehta, told newspersons that the duty cuts, as industry trends suggests, meant a price cut of up to 14-15 per cent on the personal computers, which will help speed up PC penetration and spur the demand for hardware.

"As per recent Nasscom's estimates, the sale of PCs is expected to grow from 2.8 million to 3 million during 2003-04 and to about 3.7 million - 4 million during 2004-05. This will kick off a chain reaction in various applications across the country. Another interesting pattern is emerging, wherein non-PC access devices including CDMA phones will increase. We expect that the CDMA phone base, which is a little over 6 million now, will cross the 25 million mark by the end of 2004," Mr Mehta said.

"While the hardware sector itself will grow backed by lowering of costs, it will spur a range of e-governance projects. Large projects like the Income-Tax Department computerisation, which will enable about 15 million users to file returns online, and the Automation of Employee Provident Fund, which has a base of 25 million users, who will have smartcard access will further expand the PC penetration in the country," he said.

The business process outsourcing (BPO) space is set to grow by about 54 per cent this year to $ 3.5 billion. As per Nasscom estimates, 65 per cent of the BPO business is contributed by the captive units of corporations such as HSBC, GE and Amex. Out of about 450 BPO companies, these 120-130 captive units accounted for about 65 per cent of the business and they continued to move up the value chain, he explained.

For instance, GE does most of its strategic processing work out of India, Amex handles a lot of credit risk modelling work from India as also bond risk analytics. eValue Serve, a Delhi-based company provides IP-based research that is extremely specialised. iNotices provides data mining solution that helps in better procurement work. India needed companies like these that could provide new dimension to BPO services away from basic call centre work, Mr Mehta said.

The BPO industry had 1,71,000 employees as on March 2003, and this number had grown to 2,00,000 plus by December. One issue that continues to cause concern the industry is about the high attrition rate of the employees in this space. But as an industry body, Nasscom would not like to get into the regulatory mode but preferred the market dynamics to dictate the business.

With regard to the Do-Not-Call legislation, Mr Mehta said there had been no impact on Indian call centres. With the demand for higher data speeds, Nasscom was in the process of articulating a case to provide up to 20 Giga Bits Per Second so that industry did not have to face bandwidth constraints.