The Hindu Business Line : `Going steady, guv'

An election year is always a period of intense drama for Santosh Raman (name changed), COO of a reputed IT firm in India. If it's the US, then he spends most of his time there - meeting clients and lobbying with government bodies. For this is when the emotive issue of job losses due to outsourcing IT is rekindled.

But with elections round the corner in India, Raman is comparatively relaxed. And mind you, this is in spite of talk that the global economic slowdown could bring down the IT spend by Indian domestic companies, especially in the bread and butter areas of financial services.

Raman is busy lobbying for what he thinks is a `recession-free' industry. The buzzword, he says, is e-governance. Though there are challenges of a different nature awaiting IT companies, they are busy mustering resources for strengthening their grip in this space.

TWO KEY CATEGORIES

e-governance enables citizens and the outside world to access government information and respond to it as efficiently as possible through use of the Internet and other channels such as mobile phones.

e-governance projects typically fall under two key categories: the first is related to providing solutions that would improve the operating efficiencies of the government. The second refers to opening up electronic communication channels between the government and people, thereby resulting in quicker responses and services, explains Satish Gaonkar, Vice-President, Consulting Services Practice of Blue Star Infotech.

Based on various industry sources, the overall market potential in the e-governance space is in the range of $6 to $8 billion. In 2005, the Ministry of IT rolled out a national e-governance plan (NeGP) that is to be implemented through 26 mission mode or large-sized projects and 10 components. The total cost of the project, till 2011, is estimated be over Rs 23,000 crore.

This spend is split between projects related to the State government as well as those related to the Central government. For instance, State Wise Area Networks or SWAN is a mission mode project that is implemented in different States.

It incorporates networks that provide State-wide data, voice and video services. SWAN networks may be used to link up different hospitals in the State and also help in providing telemedicine. The vision of the NeGP programme, as captured in the department of Information Technology Web site, is: "Make all Government services accessible to the common man in his locality, through common service delivery outlets and ensure efficiency, transparency and reliability of such services at affordable costs to realise the basic needs of the common man."

Apart from the NeGP, different State governments have set apart individual budgets for various state-level IT initiatives (such as online portals of various cities in the State).

However, the market size cannot be articulated yet, as it is not clear as to what portion would be spent on pure services and how much on hardware/packaged software, says Anirudh Prabhakaran, Executive Director & President, South Asia, 3i Infotech, which derives 14 per cent revenues from this space.

INITIAL CONSULTING INPUTS

e-governance entails a lot of initial consulting inputs from IT companies to various government entities in order to determine the roadmap for serving their needs, says Tanmoy Chakrabarty, Vice-President and Head, Global Government Unit at TCS. "This is because e-governance is merely a milestone towards the end goal, which is good governance," he stresses.

As a spokesperson for IBM says, another important step in the overall scheme of things is to build the necessary infrastructure. "First you need to automate the set-up by providing computing environment, networks, data centres, etc. The solutions that ought to be provided to the masses - such as online booking of railway tickets - can then be hosted on the infrastructure."

Thus IT companies help governments in hardware procurement, software development, networking and trouble-shooting. In some cases, IT firms work directly with the government or quasi government entities. A case in point is the five-year contract worth Rs 205 crore that IBM secured last year from the Central Board of Direct Taxes for modernising the latter's infrastructure. IBM was the sole vendor involved in the deal.

The other model entails being part of a consortium working with systems integrators and other channel partners. For instance, the decision support system implemented by Blue Star Infotech for the Government of Maharashtra was done in conjunction with SAS, HP and Oracle.

COMPARATIVELY SAFE

Going forward, the domestic IT services market could show signs of an economic downturn largely due to high inflation and the wobbly economic conditions prevalent in India, several industry officials told eWorld. The banking and financial services sector is expected to see a slowdown, due to the spillover effect from the US.

However, the same yardstick cannot be applied to the e-governance space, as it is recession-proof by the very nature of business, feels Chakrabarty, at TCS.

This is because, the necessary budgetary support - of Rs 23,000 crore for the large mission mode e-Governance projects - has already been provided for, according to Prabhakaran of 3i Infotech. Since the funds have been earmarked, even a liquidity crunch in the external environment would not have a drastic impact on the spending pattern of the government.

Of this earmarked spend (Rs 23,000 crore), only Rs 5,600 crore has been spent till date, says a state government official tracking this space.

UP FOR GRABS

Many e-governance projects are still in the process evaluation stage and are hence yet to be awarded to IT companies, according to Sourabh Kaushal, Industry Manager (ICT Practice), Frost & Sullivan.

But with the deadline of 2011 fast approaching, acceleration is certainly on the cards.

Moreover, soon after the end of the current fiscal, general elections will be held, before which the government would want to throw as many services as possible towards its citizens."With all these factors at work, all IT contracts related to e-governance will have to get awarded either in this or the next financial year. This is a great opportunity for Indian IT companies," says Guru Malladi, Partner, Advisory Services, Ernst &Young. He expects the overall opportunity in the next two years alone to be worth $2.5-3 billion for Indian IT firms.

As the country matures, government departments would look beyond homemade, two-three-people IT departments to more transformational implementations.

"Even if we try and match the per capita spend of developed economies, we are looking at increasing IT spend by at least 10-20 times," sums up Chakrabarty of TCS.

Response to:adith@thehindu.co.in

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