The Hindu Business Line : Software export growth may top 35%

BUOYED by the performance of Indian software and services companies, the National Association of Software and Services Companies (Nasscom) believes that the overall exports could surpass the projections for 2004-2005.

Exports growth may exceed 35 per cent as opposed to the 30-32 per cent projected earlier in the year, which was considered stiff then given the outsourcing backlash concerns and the impending US elections.

"With most of the numbers for 2004-2005 in place, we believe that the software exports would possibly go past the 35-per cent mark," the Nasscom president, Mr Kiran Karnik, said on the sidelines of a CEO conclave hosted by Nasscom here on Monday. He reiterated that the targeted $50 billion in software exports was on track.

IT top honchos are in Hyderabad on the eve of the Nasscom National Council meet.

In 2003-04, the Indian software and services industry registered revenues of about $15.9 billion, including domestic revenues of $3.4 billion. Earlier exports were expected to grow to $16.3 billion from $12.8 billion. The IT-enabled service (ITES) segment is growing rapidly and trends indicate the companies are scaling up the value chain.

Given the business trends, Nasscom has projected that the Indian software and services revenues would grow to about $20.5 billion in 2004-2005, including domestic market revenues of $4.2 billion.

xports are likely to be over $17 billion. This would mean that the software and services sector is reaching a major landmark of Rs 100,000 crore.

Referring to the fringe benefit tax, Mr Karnik said that "in the present form, it is like a disincentive. A representation has been made to the Finance Ministry to reconsider this and we are hopeful this would be addressed."

On the value-added tax on the hardware sector, Mr Karnik said the hardware manufacturers were of the view that this was detrimental to their interest and favoured imports. There seems to be some anomaly requiring corrections. Having said that, a uniform VAT regime is good but disparities in terms of some States not adopting cause concern.

Hyderabad and Pune have moved a few notches up and with infrastructure pressure on large metros, the emergence of some new cities on the IT radar is heartening. Kolkata is showing signs of growth and Chandigarh, Jaipur and Visakhapatnam are joining the mainstream. Wipro, TCS and Satyam have evinced interest in Visakhapatnam.

While Nasscom would be very happy to see the establishment of semiconductor fab, the growing interest of some electronics companies looks promising.

"LG, Haier are investing here, we would be happy if HP or Dell sets up a plant. This could have a greater spin-off affect. There is a great potential for partnership with Chinese firms," Mr Karnik explained.

"While the IT sector has become a preferred industry in terms of jobseekers over the last decade, this is set to change. We believe this will not last long as this coincides with the emergence of other competitive sectors and good pay packages could challenge this system. We need to brace up for the challenge of manpower growth," Mr Karnik said.

"Given the momentum, meeting the demand for quality human resource would prove to be a tough task. This calls for a concerted effort on the part of the policymakers and the industry to work in tandem to address this crucial issue if the industry were to sustain growth," he said.

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