BOMBAY, 18 June — All are aware about the “pink slip” syndrome which has hit millions of software engineers in the US. This largescale job cuts have come in mainly on account of the slowing down of the largest economy in the world.
And this slowing down of the fastest growing sector, Information Technology (IT) led to widespread panic on the Indian shores as the nation’s largest software market is the US. It seemed as though the sun was all but set on this industry.
But now, a ray of hope has come from the National Association of Software & Service Companies (NASSCOM) which this week, stated that software exports from India would exceed Rs. 40,000 crore in the current fiscal year, implying it would record a decent if not a whopping, 43 percent growth.
The figures were based on the assumption that last quarter (January-March) of 2000-01 had recorded a revenue of Rs. 9,000 crore which was the highest in the history for any quarter. And that the IT industry continues the pace achieved during last quarter, the export earnings should touch Rs. 36,000 crore during the current financial year, besides about Rs. 4,000 crore coming from IT-enabled services.
NASSCOM has agreed that margins might come under pressure this year due to worldwide economic slowdown but what is reassuring is that the decline would not be significant over a short period of time.
What also comes as a major news is that despite reports of the US software market slowing down and companies taking tough cost cutting steps, US and Canada accounted for the maximum exports from Indian software firms during 2000-01. As per NASSCOM, these two countries accounted for almost 62 percent of the Rs. 28,350-crore software exports from India last year.
Europe accounted for around 24 percent of Indian exports and Japan imported software worth $250 million from India. But there is no denying the fact that India cannot afford to depend solely on the US which is why it is increasing its presence in Europe and setting up alliances in other Asian countries as an alternative to the US market.
Among the European countries UK has turned out to be the most favored destination for Indian software exports.
What is also good news is that firms such as DuPont and Deutsche Bank have announced an increase in outsourcing services to India while technology firms such as Intel and Hewlett Packard have increased investment commitments.
The interesting highlight of 2000-01 was that one out of every four global giants outsourced their mission critical software requirements to India.
This data released by NASSCOM also revealed that in 2000-01, almost 30 software companies in India exported more than 200 crore ($44 million) worth of IT software and services and 75 companies exported more than 50 crore ($11 million) worth of IT software and services. This means that at present, the top-25 IT companies account for 65 percent of software exports and top-20 for 60 percent This week, NASSCOM also released the Top-20 Indian companies in terms of their export performance. The numero uno exporter in IT continues to be the unlisted Tata Consultancy Services, its total revenues stood at Rs. 3,142 crore, while export revenues amounted to Rs. 2,870 crore.
Infosys Technologies displaced Wipro from the position of the India’s second-largest software exporter. Infosys’ exports stood at Rs. 1,853 crore ($393.82 million) in 2000-01, while Wipro’s were at Rs. 1,756 crore.
However, Wipro continues to be India’s second largest software company in terms of total revenues. Its revenues of Rs. 1,966 crore were higher than Infosys’ revenues of Rs. 1,854 crore.
The fourth and the fifth slots have been taken by Satyam Computer Services and HCL Technologies at Rs. 1,241.22 crore and Rs. 1,126.92 crore, respectively. While Congnizant Technology has ended up as the sixth-largest Indian software exporter with earnings of Rs. 703.08 crore with Silverline coming next with Rs. 647.44 crore.
But what is worrying is that the IT sector’s performance in the domestic markets. The revenue growth to 31 percent in 2000-01 from 45 percent a year earlier as a result of a slowing economy. However with increased spending on IT by some large state-run banks and the government and the spread of Internet and e-business would boost future growth.
Another thing which is certain is that the days of a three digit growth and even superlative two digit growth of 50-40 percent would soon become a thing of the past as growth rates would now settle at more realistic and sustainable levels. The mismatch of demand and supply in the last few years had given abnormally high margins to the IT industry and now with more and more competition coming in, margins will surely come down.