The Hindu Business Line : `Exciting year ahead for tech sector'

THE technology sector has gathered momentum coasting over to the year 2005 despite some irritants — outsourcing debate concerns and the US Presidential elections during 2004. In the end, outsourcing seems to be the winner going by trends and industry feedback.

If the recent visit by the Microsoft Chief Executive Officer, Mr Steve Ballmer, to announce Microsoft India expansion plans, Mr June Min's of Intellect Inc, bid for a semiconductor fab or for that matter, the announcement of expansion of SAP India and R&D centres of Intel, Qualcomm and Cypress among others, and the Satyam Chairman, Mr B. Ramalinga Raju's statement on the company's potential to grow the headcount from 20,000 to 50,000, in the next few years, are any indication of the shape of things to come, the New Year can only get better for the tech sector.

The President of National Association of Software and Services Companies (Nasscom), Dr Kiran Karnik, answering queries from Business Line said that the IT sector is expected to employ close to 2.2 million by the year 2008, of which ITES-BPO segment could be over 1.1 million in terms of direct employment by 2008.

During his recent visit to Hyderabad, Dr Karnik reiterated that the country was poised to grow by 30-32 per cent in IT exports including ITES sector despite some of the early blushes with regard to outsourcing issues.

When the predictions were made, it looked a tough task.

However, he sounded a note of caution about the paradox of potential and the ground reality with regard to the domestic sector and the rising rupee.

On the paradigm shifts in the tech sector, the Managing Director of Cognizant Technology Solutions, Mr R. Chandrasekaran, said "With outsourcing becoming mainstream, one important trend we witnessed in 2004 was that of customers putting together an "active sourcing program" to select their best-of-breed vendors.

"During the year, we saw the reliance on a single vendor to provide end-to-end services in an integrated manner diminishing, and as a logical extension, customers unbundling requirements, sourcing from different best-of-breed vendors and retaining the strong integration capability in-house."

" This trend has emanated out of experience of customers with large scale outsourcing, and also just as important, the transparency and maturity of the vendors."

The Managing Director of Mentor Graphics India (Hyderabad), Mr Srinivas Mandavalli, said the tech sector is getting exciting with Indian companies scaling up the value chain.

The heartening aspect is many large companies continue to expand their R&D work in India, so is the case with EDA companies.

The Managing Director of Cendura, Mr.Lav Nigam, said 2004 had seen a rise in the fortunea of the Indian IT industry.

There was an increase in the share of the software services sector, with more and more US companies outsourcing their back-end work to India, with a shift in the nature of jobs relating to market research, accounting, legal and film animation.

US companies have shown an inclination to set up their development centre in India. This trend will continue, irrespective of the outcry over outsourcing in the US.

However, China can be a major competitor in the coming years.

On the potential growth of the sector, Mr Chandrasekaran said, "Offshore has gone mainstream with customers finding it difficult to ignore the compelling value proposition that offshoring offers."

" Clients are no longer sitting on the fence; rather experienced clients are seeking a rapid ramp-up and an expansion of the range of services to be done offshore."

" In 2005, clients could seek to move to a broader range of services to their Tier 1 offshore partners."

The Vice-President of Comsat Max, Mr Joyjit Chatterji, said, "While Comsat Max has continued to grow in the traditional connectivity business, the icing has been the industry recognition of other value-added offerings like disaster recovery, intellectual resource management and network infrastructure management services.

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`Exciting year ahead for tech sector'