Software industry: Cashing in on US slowdown?

NEW DELHI: Following reports of US slowdown, the Confederation of Indian

Industry (CII) carried out a survey among its members in the IT sector. While

there were some concerns over the impact of slowdown on the Indian software and

services sector, the overwhelming response was that the slowdown in US had

provided a great opportunity to Indian software and services companies.

Indian software and services sector comprises mainly of 'body shopping',

maintenance projects and new/R&D projects. It is believed that the bigger

Indian companies primarily engaged in maintenance work will not be affected in a

major way, as maintenance of existing software and services would continue to be

necessary. The volume of new and R&D projects will come down in the

short-term, but only a few Indian companies service this segment of the market

in the US.

'Body shopping' is likely to suffer with concurrent impact in the short-term.

However, respondents felt that in the medium and long term the slowdown offered

a great opportunity to Indian companies for moving projects to India - from

onsite to offshore. US corporates looking to

cut cost will find outsourcing their work to India attractive. This would

ensure that exports from India may continue to grow.

The respondents felt that in order to facilitate the promotion of India as

the preferred offshore site, the government may need to have a closer look at

the areas of hindrance such as high communication costs and inadequate

infrastructure, especially in the telecom sector.