The Hindu Business Line : Change your target, friend

WHEN the going gets tough, the tough get going. And here the ones keen to get going are the small and medium enterprises in the IT arena. And they are getting help from the Ministry of Information Technology, Government of India, through its representative bodies such as the Electronics and Computer Software Export Promotion Council (ESC), and other apex agencies such as the National Association of Software and Services Companies (Nasscom) and various State level associations as also State Governments. The ESC is helping SMEs to train their focus on new areas they can benefit from best to tackle the slowdown effect, says the Executive Director of ESC, D. K. Sareen.

Out of about 800-plus IT companies currently functioning, more than 750 firms are in the SME segment. The slowdown has triggered big changes in the global IT industry, making it necessary for companies to rework their strategies, says M. Vijay Kumar, Director, Software Technology Parks of India, Hyderabad. This is particularly felt necessary because, despite the slowdown, big corporations are continuing to invest and there's vendor consolidation too happening. "This means, we need to refocus by addressing new markets," says Vijay Kumar.

For instance, the Andhra Pradesh Government and the Hyderabad Software Exporters Association (HYSEA), the apex body of software exporters in the State, are seeking ways to build a consortium model so that small and medium companies, who are finding it difficult to firm up new business, can bid for projects together by leveraging each other's capabilities.

E-Governance promise

In fact, the Andhra Pradesh Ministry of Information Technology and Communication is working out a policy framework that seeks to address these issues. The Government is particular that these firms focus on e-governance projects so that by the time the industry looks up, they can benefit from the domestic market while further fine-tuning their skills.

In November this year, the Nasscom President, Kiran Karnik, in Hyderabad to commission its representative office here, observed that about 55 per cent of the country's overall exports are contributed by a select bunch of firms. The rest is from the large number of blossoming small and medium-sized firms. They are particularly impacted as they are finding marketing strategies and costs a big challenge for growth.

Nasscom has also represented to State Governments to explore the possibility of associating IT firms in e-governance projects as this has the potential to boost e-commerce. By addressing this segment, SMEs will be able to scale up the value chain.

However, in the short and medium term, SMEs are faced with several problems and a consolidation in this space is on the cards. Only the niche players in this space will survive. "Though this is a reality with which we have to contend with, it will do a world of good for the industry over the long-term," says Karnik.

J. Satyanarayana, Principal Secretary, IT&C, Government of Andhra Pradesh, says from the prolonged boom and a slowdown phase over the last year-and-a-half, the industry has now stabilised and the trends indicate that business is looking up.

However, from a predominant US-centric approach, SMEs will have to make a more logical progression by addressing new markets.

Andhra Pradesh is keen to support SMEs by encouraging them to be associated with e-governance projects. This will help them build a healthy business track record and a portfolio, which is essential to capitalise on business opportunities, he says.

vrishi@thehindu.co.in

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