Indo-Australian alliance can create IT superpower in Asia-Pacific

'SME scope for joint marketing in EU, NA is tremendous'

THE prospects of India and Australia forging together to emerge as an IT super power in the Asia-Pacific region are bright, feels Mr. Rob Durie, CEO of the Australian Information Industry Association (AIIA). “The combination of the successful Indian companies with their blue chip customer base and the innovation available in Australia could be a compelling proposition if we get it right”, he told Amitabha Sen in an interview. On the scope of collaborative activities of IT SMEs of both the countries he said: “there is tremendous scope for collaboration between Indian and Australian SMEs, in terms of joint product development and joint marketing in Europe and North America, not to mention Asia."

AS: In the Asia-Pacific region Australia's information and communications technology (ICT) sector has emerged as one of the most highly developed and cost competitive ICT platforms. Besides a strong local industry, many international ICT corporations have significant global operations based in Australia. What, according to you, are major planks of ICT growth in Australia? Why it’s Destination Australia for international ICT players?

RD:Australia may not be able to compete with the labour cost of India, Philippines and China, but the major planks of growth are a sophisticated and large market (10th largest ICT market globally), a highly skilled workforce, sound infrastructure, quality educational system, process quality, cultural compatibility and a stable political and legal system.

AS: One is witnessing perceptible changes in the IT sector across Asia-Pacific region, particularly in developing and even in some cases underdeveloped countries as well. How as the CEO of AIIA you view this change? What could be the possible factors prompting developing nations, many of which are yet to raise their economy to a comfortable level, to get closer to IT?

RD: IT is clearly a key factor in economic growth for all economies. The contribution from IT to the economy takes 2 forms. In Australia, IT drives productivity growth across the economy, in mining, government, financial services, manufacturing etc etc. IT accounts for a large share of the record 14 consecutive years of economic growth Australia has enjoyed. As well, information technology can provide high growth in itself and India is a great example of this with the contributions from export growth, value-added and employment generated by the highly successful Indian offshoring companies. It is not surprising that other developing countries are looking for the same benefits. I have traveled extensively in Asia over the last decade and every country I have visited is looking to enjoy these benefits: Myanmar, Vietnam, Mongolia, Pakistan, Sri Lanka, Thailand – the list goes on.

AS: How would you like to strike a balance between digital divide and globalization? Is it feasible in countries confronted with poverty, economic under development, illiteracy and killer disease HIV/AIDS? How IT could be used as a tool in these countries to enable them first and then create an atmosphere of globalization?

RD: I think it is pretty clear by now that economic development is the best cure for poverty, illiteracy and disease. IT can play an important role in that. But also, IT can play a key role in attacking these problems directly, such as the hole in the wall project initiated by NIIT in India, which brings the Internet and literacy to the smallest and poorest villages in India.

AS: Is ‘fair globalization’- the term used by the African leaders- possible at all in a digitally divided world where even sharing of information with advanced nations is not possible?

RD: Globalization has to include investment by the more advanced countries in capacity building in the poorest counties so that in the end we are creating wealth for all.

AS: ICT generates 5 percent of GDP of Australia and approximately half of GDP growth can be attributed to ICT. ICT is a key enabler for industries such as mining and energy, agriculture, finance and transport. What policy measures you would be suggesting to the further growth of ICT sector of your country? What kind partnership you would be envisaging with major global players in this sector?

RD: Policy for the development of the industry should focus on 2 complementary areas: first the development of local capability, especially support for small and medium sized enterprises. The Australian ICT industry is characterized by the very small scale of our local companies, with almost 19,000 of our just under 23,000 companies having fewer than 4 employees. Measures are required to improve the availability of capital and to support research and development. Access to markets especially the government market which probably accounts for 20-40% of the domestic market is also important. The small scale of the local ICT sector also makes access to global markets difficult and the government agency Austrade is doing a great job, helping small Australian software companies enter the world market.

For the major global players, the focus is on attracting investment into Australia. So far, Australia has been a clear winner in globalization of our industry, with more jobs coming on-shore, then going offshore. More needs to be done to promote Australia as a destination for offshoring, especially where lowest cost is not the determinant. Australia offers significant savings over North America, Europe and Japan, and coupled with our skills, sophisticated infrastructure and stable environment, we have a good story to tell which needs to be promoted more energetically.

Also, we are working with both local and global players to promote partnering. Again we have good stories to tell, with, for example, Indian services companies already taking innovative Australian software products to the Indian and global markets.

AS: In most of the countries SMEs play very important role and contribute significantly towards the growth of IT sector. What is the scope of the SMEs in both these countries to build up JVs or undertake collaborative programmes for third country business?

RD: I think there is tremendous scope for collaboration between Indian and Australian SMEs, in terms of joint product development and joint marketing in Europe and North America, not to mention Asia. AIIA is already working with NASSCOM both directly and through ASOCIO, the pan-Asian grouping of national ICT associations, to promote SME collaboration.

AS: What are the areas in IT that offer vast scope such collaboration? Would you be suggesting anything to your own government as well as Government of India to facilitate such collaborative programme?

RD: The best things that both governments can do is to support more interaction between our two industries. There has been some activity in terms of trade missions but these need to be more frequent and more strongly supported financially by governments.

AS: Do you think the Australian FDI policy is attractive enough to draw Indian investments in the ICT sector in your country? Are you happy with the Indian Government’s policy in this respect? Any suggestions for the Indian government to make the policy much more attractive?

RD: We are already seeing significant investment in Australia by the major Indian companies, such as TCS and Infosys. The policy is attractive and the market is attractive – Australian governments need to make sure they welcome Indian investment and this is happening, especially in Victoria.

AS: At the end of the day it’s the bottom line that matters. Can you identify products that the IT companies in both the countries could do business in the mutual interest of the industry and the country concerned?

RD: This is really for the firms to determine, but I imagine it will be around the vertical markets where India has had success with offshoring and Australia has had success with software applications, eg eGovernment, financial services, network management and so on.

AS: India is globally positioned today as a software giant. At the same time, the country has also emerged as one of major global destinations for BPO. The AIIA report on Outsourcing says that the offshore outsourcing represents a significant structural challenge for the Australian ICT industry with potentially profound and far-reaching impacts for both individuals and companies alike. Would you kindly elaborate on this?

RD: The challenge is that we must strive to maintain competitiveness in the face of a rapidly globalizing industry. This means building up our skills, both as individuals and as companies, in being outward looking, rather than insular, it means moving up the value chain, and focusing on high end project management, customer engagement and the like. We also need to market our skills and capabilities to the world – we must go to it, it will not come to us.

AS: What is the prospect of India and Australia forging an alliance to emerge as IT super power in the Asia-Pacific region?

RD: I think the prospects are very positive. The combination of the successful Indian companies with their blue chip customer base and the innovation available in Australia could be a compelling proposition if we get it right.

June 2, 2005