NASSCOM BUILDING UP INDIA INC BRAND
'Global IT scenario may look brighter in the second half'
BRAVING rough weather, the global IT market is likely to look up in
the second half of 2003, so feels Mr. Kiran Karnik, President
of Indian IT industry's national platform, National Association of
Software and Service Companies popularly known as Nasscom. In an
exclusive interview with Amitabha Sen, the Nasscom President
says that future will be largely decided by the US economy trend.
Back home, to ensure a larger share of the cake, Nasscom is
formulating strategies to build up a strong India Inc. brand. Indian
industry, Mr. Karnik feels, needs greater presence and visibility in
various international IT forums. So far as China is concerned, the
Nasscom President maintains that in the short term, both India and
China should play a complimentary role to emerge as a force to
reckon with not only in Asia but also in other parts of the globe.
"We are thinking beyond IT and looking at consumerable goods
area where both India and China can take up joint initiatives",
AS: Immediately after taking over the Presidentship of Nasscom
you said that your primary objective would be to promote India Inc.
brand so that India and IT become as synonymous as France and wine
or Switzerland and watches. What is the brand promotional strategy
the Nasscom as the industry platform have already formulated and
implemented or is being thought of?
KK: Indian IT industry has a strong presence in the global map
today but to build up India Inc. brand, Indian industry needs
greater presence and visibility in various international IT forums.
It's an on-going process. To ensure greater involvement of the
Indian IT in globalisation process taking place in other parts of
the world, Nasscom is intensely interacting with its counterparts in
other countries. They know Indian IT industry but to get a better
understanding of what's happening in the world, emphasis is being
given on more and more participation in international IT
exhibitions, seminars etc . India is now a regular participant in
the Hanover and Milan international IT exhibitions. Our Information
Technology minister, Mr. Pramod Mahajan's keen and active interest
in almost every step of promotional activities of the country's IT
industry has given added speed and momentum to the entire process.
In last Milan IT fair Mr. Mahajan himself was present which shows
how serious the Indian government is to build up a strong India Inc
brand in the international IT sector.
AS: Many industry leaders are of the view that instead of
treating the country as its competitor, India should play a
complimentary role and build up a strong tie with China to emerge as
a force to reckon with not only in Asia, but in many other regions
of the globe. Don't you think that may clash with your basic
objective of building up India Inc brand in IT? How the Indian and
Chinese IT industry can play complimentary role without compromising
their individual brand promotional activities? What could be the
probable areas where such complimentary role could be more
KK: I feel in the short term, both India and China should play a
complimentary role to emerge as a force to reckon with not only in
the whole of Asia but also in other parts of the globe. There is no
denying fact, that in hardware, China is far superior to many other
nations. Similarly, India is far ahead of other countries in
software development. If both these two giants in hardware and
software join hands to build up a strong marketing base, it simply
can outshine the performance of many a leading countries.
But there is also no denying the fact that in the long term, as
India would be trying to emerge as a power to reckon with in
hardware, so also China in software. I am quite aware of that still
in the short term, if IT industries in both countries work together
that would yield benefits to both India and China. I find no
conflict in such approaches. Rather, that would be the natural
process in the long run. There are many comparable and competing
majors in many other non-IT segments but that does not mean that one
should not explore its latent potential. But all said and done every
country in the race for growth has its own domain areas, has its
exclusivity. If one looks at the issue from that perspective, one
should not find any clash or conflict despite being in the same
international market. Indian IT industry is being developed, grown
up in that direction only.
In fact, we are thinking beyond IT and looking at consumerable goods
area where both India and China can take up joint initiatives.
Intelligence chips are used to manufacture these consumer goods.
With the expanding market for such goods, the software requirement
is increasing more and more and there lies massive scope for Indian
software industry to chip in their efforts to have a sizeable share
in the Chinese goods manufacturing sector.
AS: Indian IT scenario has changed a lot and is changing every
now and then. Various studies being published in the past by Nasscom
and other bodies have focused on that. Newer areas like BPO are
emerging as a key player in country's foreign exchange earnings.
How would you like to roll up the year 2002 for the Indian IT and
what prospects do you feel awaits 2003 specially when the
international market is yet to recover fully from the post-World
Trade disaster impact?
KK: Yes. It is emerging as a major, influencing contributor in
the foreign exchange basket of India. It is expected that within
next six years time, ITES business would grow about 15 times from
US$ 1.5 billion in 2001-02 to US$ 17 bn in 2008. Yes, if one looks
at the IT exports scenario (including ITES), the share of IT
services have decreased. Nasscom estimates the current year’s
share of IT Services industry in exports would be around 76 percent
(86 percent in 2000-01) and ITES would account for 24 percent
compared with 14.5 percent in 2000-01.
But it would be absolutely wrong to presume that ITES is growing at
the cost of IT Services. Certainly not. One has to keep in mind that
growth in IT Services is comparatively slow because of the nature of
the business. IT Services is largely development process based
unlike many other industries. The Indian IT industry despite a world
economic slow down, had performed reasonably good and maintains the
tempo more or less at 2001 level.
As things stand today, it is expected that the international market
would look up in the second part of this year (2003), though issues
like US war threats to Iraq are there. But despite 11th
September's World Trade Centre's disaster, Indian IT industry
could not only stay afloat but clocked 30 percent growth and the
achievement is commendable, if placed with many other comparable
nations. Year 2002 also closed around that growth percentage. Till
2008, Nasscom estimate annual average growth of Indian IT industry
at 32-33 percent. Barring unforeseen situation which may lead to
economic downturn globally, I find no reason why we will not be able
to clock that 32-33 percent growth. With a favourable market
situation, the growth could be even higher but that would depend on
many other factors which are beyond our control.
One must admit that US economy is the major driver in the up or
downturn of global economy. Hence much would depend on how US
economy behaves in coming years. Yes, US-Iraq war threats are
causing some concern but we at Nasscom are closely monitoring the
development, exercising on various options to ensure bare minimum
impact on the Indian IT industry in the event such development
(US-Iraq war) takes place. There are some smaller and newer
countries we are trying to focus on but all said and done, if US is
involved in any kind of controversial international issues, the rest
of the world gets involved either way. Hence upturn in US economy is
a crucial factor in deciding the future of not only of Indian IT
industry, possibly of all the global players in the field.
AS: What, according to you, is greatest and most powerful
motivator behind Indian IT industry's rapid strides in recent years?
KK: Of course the changing attitude and industry-friendly role
of the Indian government, Besides industries' own initiatives.
This has to a great extent motivated the IT industry. In fact, with
every bit of development that takes place in the Indian IT sector
and that has international bearings, the government is trying to
provide the back-up support. The IT industry is today recognized as
not only a major source of employment (of technically skilled and
quality people), but also an important source of foreign exchange
earnings. But this does not in any way mean that government's job
is over. No. there are still many more areas like tax incentives
that have to be addressed by the govt.
For example, the proposed withdrawal of Tax incentives u/s 10 A / 10
B of the Kelkar Committee. The alternatives proposed in the revised
report are a step forward from the initial consultation paper, and
Nasscom is glad to note the committee's acknowledgement of some of
the special circumstances facing the industry. However, Nasscom
feels that neither alternative meets the needs of the industry,
rather will be a setback. Nasscom has urged the government to retain
the full Tax exemption under section 10 A/ 10 B as originally
envisaged. While the committee's thrust towards simplification of
the tax system and the extensive use of Information Technology in
the administration is appreciated, Nasscom is strongly opposed to
the withdrawal of the Tax incentives u/s 10 A/B. It is to be noted
that the government had declared a "no tax" regime for
software exports upto 2009 and it is expected that the government
would stick to its commitment.
AS: Almost everybody is talking about phenomenal growth of the
Indian IT sector over last two-three years but at the same time
Nasscom as well as industry leaders are cautioning themselves not to
remain complacent about the performance. Could you identify areas
that call for serious attention of industry itself and areas that
require industry-govt. joint initiatives to take India IT to a
KK: For any industrial development 'people' is focal
the prime mover. In case of IT industry this is more appropriate. A
strong human resource base is the deciding factor for any IT
organization. By strong human resource, I do not mean resource in
volume terms. I am talking in terms of quality and skill. Number of
English speaking people in India is much more than many other
countries. There India have an edge. But that alone would not do. We
have to develop more skilled and quality manpower. To achieve that,
industry-learning centers understanding and joint ventures are
vital. Nasscom has taken up this issue very seriously and working in
that direction. It has already initiated dialogue with the
University Grants Commission (UGC) so that technical educational
institutions could be provided required infrastructure to produce
more and more highly skilled, quality professionals.
Even to sustain and expand the growth in ITES sector we need more
and more skilled and quality manpower to match the international
standard. One such area, for example, is Accounting. We feel that in
Graduation, Post Graduation and Chartered Accountancy levels,
studies relating to International Accounting Practices should be
incorporated. We are talking of globalisation, we are sincerely
trying to get assimilated in that process, but we are yet to follow
international norms and practices. Power Infrastructure and
Transportation could be other potential areas where IT enabled
service providers could help the administrative authorities a lot to
run the systems much more efficiently.
AS: European Union has emerged as the largest single trading
block in the world today and with the recent joining of ten more
countries EU is set to become a giant in near next few years'
time. What Nasscom expects of EU for greater share of its IT market
by Indian industry or the existing EU imports policies are quite
accommodative for Indian IT industry?
KK: The importance of EU as world's largest trading bloc
cannot be overlooked. Precisely that is the reason why Nasscom has
initiated dialogues with the appropriate forums both at home and in
EU. The India-EU IT Summit only reflects the importance Nasscom
attaches to the market expanding trade bloc. While Indian IT
industry's potential is known to some of the EU countries like UK,
France or Germany, we would like to focus on other member-countries
in coming years. We are yet to make any inroads into those
AS: What preventive steps Nasscom is contemplating to avoid
Polaris like developments in future?
KK: As such Nasscom is not a body to take preventive measures.
It acts as a nodal body for interaction between industry and govt.
To minimize the sufferings of the Indian companies, Nasscom has
thought of building Market Intelligence Database for individual
country so that it can provide advance information to its
member-companies. Besides, we have taken up the issue with our
counter parts meaning national level IT associations in other
countries. Such joint initiatives, I hope, would help Indian IT
industry in future.
February 11, 2003