A tumultuous, yet mixed start to the millennium

From slowdown to stabilization: The global tech sector started the

year amidst the dotcom crash. As the bear grip tightened and companies started

cutting down on spending, tech companies became the most visibly affected ones.

Just when industry leaders such as Intel’s Barrett started talking of the

worst being over, came the September 11 tragedy, which further pushed the

recovery by a few months.

Layoffs: Perhaps the most frequently talked about issue after the

Slowdown, in the global tech sector was the layoffs. Layoffs, which began in the

dotcom industry in early 2000, soon spread to engulf most tech giants. By the

end of the year, there was not a single big name in the IT industry that did not

announce layoffs. What surprised the industry watchers, who were anticipating

the trend, was the layoff figures, which in the case of tech giants such as

Cisco, AT&T, Lucent, Nortel and others touched tens of thousands. The latest

unemployment figure in the US is 3,92,000. A big respite is then reduced numbers

towards the end of the year.

Microsoft Antitrust update: When the year began, the market was

optimistic that the long drawn Microsoft antitrust case would come to a

conclusion in 2001. When the judge gave a deadline to the warring parties, all

but nine US states reached an agreement with Microsoft, where the latter agreed

to a series of measures that includes donation of software and other products

worth $1 billion to US schools and allowing states to look into its account

books. While the other nine states plan to continue their case against the

Redmond giant, Microsoft’s latest offering is yet to be okayed by the court.

This means Microsoft Antitrust Case will continue to be in the limelight through

yet another year.

The mega merger awaits: For HP chairperson and chief executive, 2001

seems to be a replica of 2000. Carly Fiorina ended 2000 with a failed attempt at

buying PricewaterhouseCoopers’ consulting arm. In September 2001, she

announced plans to acquire Compaq for $25 billion. As the year ended, the

anti-merger camp, which includes the siblings of the company founders, seemed to

be gaining advantage, even as Carly made every attempt in explaining the

advantage of the buyout. As the merger plan goes for shareholder voting in 2002,

it will be decided whether Carly emerges successful to be labeled as one of the

most flamboyant corporate chiefs in recent times or fails and is relegated to

the pages of history.

Napster nipped: The music industry won, legally that is. The court

asked Napster to pull down curtains on its free file swapping service and the

site, which in February had witnessed a peak of 13.5 million in unique users,

now promises to come back with a paid subscription model after tying up with

major record labels. Despite the closure of Napster services, the number of file

swapping users on the Net has increased by five times. Is this a message to the

music industry that exercising censure is not the most effective way to curb the

file swapping sites?

Internet and Dotcom update: Slowdown notwithstanding, Internet’s

popularity continued to look up during 2001, albeit at a slower pace. The

September 11 WTC attack and the Anthrax scare that gripped the US prompted many

new users to rely on the Net. Cost cutting measures and personal reasons

increased the use of instant messaging at work to more than twice that of the

previous year. At home, the use rose by 48 per cent, according to Jupiter Media

Metrix. As for businesses, more and more enterprises the world over posed

confidence on the Internet as a tool to enhance customer value and improve their

bottomline.

As for the dotcoms, the year started with crashes but is ending with

stabilization. The rate of the dotcom fall has reduced and 2002 will see the

strengthening of the survivors. Even in a recession time, e-commerce volumes

have shown increase. Venture capitalists, the breed that remained largely

underground during 2001, are now seen taking a relook at their dotcom

strategies, in a matured manner.

INDIA FIGHTS

The software market: Software services companies began the year with a

lot of caution. Infosys, in April, cut down its growth forecast for 2001-02 to
30 per cent. Projects were hard to come by for middle level companies and most

felt the pressure on their billing rates. However, when six months of the

current fiscal ended, the results were more than satisfying. Infosys reported 57

per cent jump in revenue while Wipro Technologies went up by 40 per cent. They

reflect the fact that India continues to enjoy its premium position as the

software services center of choice. Moreover, the slowdown has made these

companies reduce their reliance on the US clients and venture towards newer

markets in Europe and South East Asia. Nasscom has now put its growth forecast

for software sector during the fiscal year at 30 per cent.

The loss of the torchbearer: The biggest loss in the year for the

Indian software sector came as the death of its torchbearer Dewang Mehta. Dewang,

as the President of National Association of Software and Services Companies (Nasscom),

in the 90s, successfully helped India emerge the most suitable destination for

software services.

Positive signals from the government: To its credit, it must be said

that the Union government looked serious in helping the IT industry. The biggest

step that came from the government was the merger of communications and IT

ministries. The move will have far reaching consequences on the advent of

convergence in the country. The government also disinvested in its cash cow CMC

in favour of the Tatas. Towards the end of the year, it was also seen moving

deftly in preparing to disinvest in VSNL. Going by the mood of the IT and

Communication ministry, 2002 will be an interesting year to watch. Telecom

tariffs for National Long Distance and International Long Distance are expected

to fall dramatically during the year, while Internet telephony market will open

up. However, not much was done once again to provide boost to the hardware

sector. Government measures will be fruitful only when the country witnesses an

increase in telecom and computer penetration.