'Indian IT sector not hit by global Recession'

The prospects of India's information technology industry have not been adversely affected due to global recession following the September eleven terrorist attacks, experts said on Friday.

''There is not much cause for despair,'' said IT and communications secretary R R Shah. He quoted figures released recently by the Software Technology Parks of India which predict a growth rate of 62 per cent in the IT sector.

''The September 11 incidents have instead opened up more possibilities for the sector as a decline in air travel has increased the demand for communication and has had a positive impact,'' Shah said.

To meet the opportunities for the future, he said, the Indian IT industry must move up the value chain, get into production, increase efforts in the field of hardware and strengthen its advantage in embedded software.

''We also need to diversify our overseas markets and, for this, we need to train IT professionals who can converse in different languages,'' Shah said. He was speaking at a round table on 'Global Recession: Challenges and Opportunities for the Indian IT Sector' organised by the Amity Institute of Information Technology.

IT has helped unlock fields like bioinformatics and nanotechnology that have infinite potential. Shah said the government is giving a serious look at these emerging fields where India has unmatchable advantages.

Making his presentation, president of the National Association of Software and Service Companies Kiran Karnik said the world IT services market, which was estimated at $390 billion in 2000, is set to grow at 9 per cent per annum through 2005.

''Though Indian penetration of the addressable market totalling $90 billion is very low at seven per cent, its value proposition is compelling.''

Karnik quoted Forrester Research as saying that offshoring to India is bound to increase to 28 per cent of IT spending in 2003 from 12 per cent last year.

In the domestic market, the growth in IT spending is estimated at 8-10 per cent during 2001-2002 from the previous year's level of Rs 226 billion. But the growth rate in software exports could reach secular levels in 2001-2002 and touch the 30 per cent mark from last year's level of Rs 283.50 billion.

Karnik said India spends only 1.7 per cent of gross domestic product on the IT which is forecast to grow from $5 billion now to $18 billion by 2008.

Saurabh Srivastava, president of the Venture Capital Association of India, said the global recession is driving the IT industry to become more efficient. ''It is forcing the industry to diversify markets and to look at costs. Imagine what it is doing to our fledgling competitors. Hundreds of companies globally are now looking at outsourcing from India.''

Srivastava said one-fourth of Fortune 500 companies outsource their software needs from Indian companies. He said the IT industry will play a major role in enabling wireless technologies besides opening new avenues in biotechnology, pharmaceuticals, electronic manufacturing, media and entertainment.

Some speakers, like Major Chugh of Cisco Systems India, however struck a cautious note and said India still does not have adequate networking infrastructure to become a leader in knowledge-based global economy.