India's software export growth rate cut further

BANGALORE: India's software export growth is expected to slow to 30-35 per

cent in the year to March 2002 due to a slowdown in the key US market, the head

of the industry association said on Thursday.

The National Association of Software and Service Companies (NASSCOM) had

earlier estimated software exports to grow by between 40-45 per cent, lowering

it from a previous forecast of 52 per cent after clients cut back spending in

the United States.

"We will be in the ballpark of a growth of somewhere between 30-35 per

cent," NASSCOM Chairman Phiroze Vandrewala said at the inauguration of the

annual BangaloreIT.com trade show.

The US accounts for about 60 per cent of India's software exports, which

topped $6.2 billion in 2001/02, a growth of 55 per cent from the previous year.

The September 11 attacks in the United States, India's top market for

software exports, exacerbated an already weakened business environment and

forced overseas clients to delay or cancel new project work for Indian firms,

industry officials say. India's software exports have grown by more than 50 per

cent every year since the mid-1990s, zooming from $734 million in 1995/96,

driven by a technology-fed boom in the US.

Growth despite trouble

"On a $6 billion to $8 billion base, there is no industry anywhere in

the world, which can, in this current economic environment talk of a 30-35 per

cent growth," Vandrewala said. "So, I think we have a great

story," he added.

Indian software firms cater to a diversified mix of technology, banking and

telecom companies, by mixing cost-effective offshore work done out of India with

"onsite" staff who work directly with overseas clients at their sites.

Top Indian software companies last month individually forecast revenue growth of

about 30-35 per cent this year, as they struggled with slower order growth and

pricing pressures, mainly from clients in their premier market. Smaller firms

have been generally reporting higher falls in growth rates.

The reduced growth rate outlook for software firms have battered their stocks

and the sector has been among the worst-performers in Indian markets. Shares of

Infosys Technologies, Wipro and Satyam Computer Services, India's top

three-listed software exporters, once dizzy market darlings, have fallen between

48 and 55 per cent in calendar 2001. In contrast, Bombay's benchmark 30-share

index has lost about 23 per cent in the same period.