The growth rates in the domestic market would start improving. Consequently, the revenues accrued by the IT companies from the domestic business vis-a-vis exports might go up in the next five years.
The National Association of Software and Service Companies (Nasscom)
expects a plethora of opportunities from the initiatives of the Narendra
Modi government, which, in business terms, can run into ‘several
hundred thousand crore’.
A very large number of opportunities are expected from the initiatives
such as Make in India, Digital India and Smart Cities. “I can’t put a
number to this. It could be several hundred thousand crore (business).
This is what the people are talking about for the IT sector,” Nasscom
Chairman, BVR Mohan Reddy, told The Hindu.
For example, he said, various aspects of the proposed Smart Cities would
have IT component. These cities had to be digitised in terms of land
information, which was an IT-enabled service, he added. “Similarly,
every asset in these cities, whether it is water, sewer, cable,
telephone or power, will be monitored through information communication
technology. This again leads to other applications such as smart grid
and smart metering, which all have components of IT,” he said.
However, Mr. Reddy said that ‘Ache Din’ had not yet come to the IT industry. “Ache din to nahi aaye. Aane wala hai. The hope is there,” he said adding that the government, at this point of time, was trying to articulate its vision.
Stating that he was pleased with the framework of Smart Cities announced
by the government last month, the Nasscom Chairman expressed the hope
that the growth rates in the domestic market would start improving.
Consequently, the revenues accrued by the IT companies from the domestic
business vis-a-vis exports might go up in the next five years, he
added.
“Today our (revenue) distribution between exports and domestic is 70:30
on a $148 billion base. The 30 (percentage of revenues from the domestic
market) will probably become 40 and the 70 (per cent from exports) may
become 60 by 2020 when the total revenues of the IT sector was targeted
to be $300 billion,” he said.
Mr. Reddy said that the improvement in the domestic market was a healthy
sign for any industry in the world. “The domestic market should be
stronger than the global markets because it will provide you an
opportunity to validate your thoughts and systems before you go abroad
and try to sell them,” he pointed out.
But does this mean better profit margin for the Indian IT industry? Mr.
Reddy has his own doubts. “I don't know because still there is lot of
uncertainty with the domestic business. Government continues to be a
very difficult (customer) to manage in terms of procurement,” he said.
The Chairman of Nasscom said that the government continued to have a
methodology called “T1 and L1, which means technically you should be the
best and pricing-wise you should be the lowest. Both (together) can’t
happen because if you want to have technically best guys, you need to
pay them the best (price). If you bid low, obviously you are employing
monkeys and the result what you are going to get is anarchy.”
Therefore, he said, Nasscom was working for a change in the procurement
processes, especially with the Department of Electronics.
