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Anu Pushkarna

Look East: Mr Som Mittal (left),President,Nasscom, and Mr Ambaresh Dasgupta, Executive Director, PricewaterhouseCoopers, at a function in the Capital on Monday. –

Our Bureau

New Delhi, Oct. 20 Software association Nasscom on Monday asked the Indian IT industry to look at opportunities in the $108-billion Japanese IT services market, where India’s current share at a mere $1-1.5 billion lags behind that of arch-rival China.

The report titled ‘Opportunities for the Indian IT industry’ released by Nasscom and PricewaterhouseCoopers on Monday, comes at a time when the Indian IT industry is grappling with slowdown headwinds in its largest export market — the US.

“The Japanese market is growing at a 3-4 per cent compounded annual growth rate (CAGR). Embedded systems development, engineering and Research and Development services are the prospective quick-win service offerings for Indian vendors. Application development and maintenance are the next big opportunities,” Nasscom President, Mr Som Mittal, said.

At present, less than 10 per cent of the outsourced IT services are offshored. The estimated revenue from offshoring of Japanese IT services stands at about $8.6 billion. China has cornered over 50 per cent of the offshore market, while India’s share stands at about 13 per cent, the report said. It added that the Philippines and Vietnam were the other low-cost offshoring destinations.

“There is an opportunity for Indian IT companies to establish themselves as the high-end service providers, with differentiated service offerings compared to Chinese counterparts,” it said, and added that there were also concerns over offshoring to China due to its limited capabilities to manage large complex projects, lack of high-end domain and technical expertise and inadequate data privacy and IP protection norms.

Nasscom said it expects the impact of the ongoing financial turmoil in the US to last 3-4 quarters. “We are waiting for the dust to settle down … to see action on implementation of the bailout package in the US. We still do not know how the consumer sentiments will vary. So we will come back with a view on this. When we had given the growth target at 21-24 per cent, we had expected the growth to come at the higher end of the range. This probably could be at the low end of the range given the circumstances,” Mr Mittal said.

The software body had recently said that it would undertake, in December, a review of the export growth forecast for FY09.

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