Anshuman Daga and Rosemary Arackaparambil
BANGALORE/MUMBAI: For Indian software firms, making a sales pitch to foreign
clients has usually been a case of promoting their high-quality and cost
competitive services.
But with India and Pakistan locked in a military standoff on the border,
software captains are turning to power point presentations, investor meets and
press relations to convey a new message — "It's safe to do business with
us."
"Now that the war clouds have blown over, clients have realized that the
situation is not as serious as it was made out to be," said Som Mittal,
vice-chairman of the National Association of Software and Services Companies and
president of software services firm Digital GlobalSoft Ltd., a Compaq unit.
"But as people become more and more dependent on India for IT services,
we have to show that the industry has a contingency plan in place." India
and Pakistan have massed a million troops on their border since an attack on the
Indian parliament in December, which New Delhi blamed on Pakistan-based
militants.
The nuclear-armed rivals came to the brink of war last month, but tensions
have eased following US-led diplomatic efforts. The United States and many
foreign governments issued travel advisories last month, urging their citizens
to consider leaving India and Pakistan which prompted some clients to cancel
visits.
The warnings are being lifted now, but the focus on the region as a potential
hot spot could scare away new business. "Clients actually are not the
problem because they have had long relationships with us," said Phaneesh
Murthy, head of sales at Infosys Technologies, India's No. 2 IT services
exporter.
"It is really the prospects, who you don't have enough of a relationship
with. So they may make a decision without even talking to you fully," he
said.
Back-up plans
Business continuity and disaster recovery are now hot topics in India's
software industry, which has seen exports zoom to $7.5 billion in the year to
March from $734 million in 1995/96. The US accounts for over 60 per cent of the
exports.
"Irrespective of war clouds going away, Indian IT services firms'
potential for business in the US today has to not only account for return on
investments but also satisfy the client's need for business continuity
plans," said Sujoy Chohan, head of technology research at Gartner India.
"They have to educate, plan, develop systems appropriately."
Most Indian company back-up plans include keeping key staff ready with valid
visas who can fly at short notice to client sites abroad and also ensuring that
their software centers abroad can support customers in case of any emergency.
"Even if there is some tension or some problems there, will it really
impact the operations? I think the answer to that is no," said Infosys'
Murthy, referring to the disputed northern hilly region of Kashmir over which
India and Pakistan have fought two of their three wars since independence from
Britain in 1947.
Industry executives are quick to point out that Bangalore, India's ‘Silicon
Valley’ and neighboring tech cities of Hyderabad and Madras in south India are
located about 1,200-1,500 miles from Kashmir.
Companies like Wipro and TCS are investing in infrastructure and people in
other distant locations like Madras and Calcutta. Indian companies are also
supported by their centers in the US and other places, and analysts believe they
will set up more centers in other cost-effective locations such as China.
"Crisis management plans should be a natural process as part of
submissions to clients...yes there is a crisis in any part of the world, but we
know how to handle it," said, of Tata Consultancy Services CEO, S.
Ramadorai.
Outsourcing boom
During the past year, when the economic slowdown challenged the
profitability of companies and they were forced to tighten belts and boost
return on their technology spending, cheaper offshore locations like India were
a high priority.
So much so that Indian IT firms saw a silver lining in the outsourcing trend
after growth rates started slipping for the first time since the growth
juggernaut of the past decade.
"The Indian IT services industry has emerged stronger after a difficult
2002 and expectations of a challenging 2003," Merrill Lynch said in a
recent report. "It has taken steps to move to the next plane from
value-for-money code-writers to more mainstream IT solutions providers."
It said customers' spend priorities now matched Indian vendors skill sets
such as enterprise resource planning, customer relationship management, security
and application integration. Armed with a huge pool of English-speaking and
computer-literate workers, Indian firms are also aggressively wooing business
from scores of multinationals contracting out their accounting, financial claims
and payroll processing.
(C) Reuters Limited.