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Re: India's Software Exports: Reply to Mr. Aggarwal
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>From what I have read of Dr. Roy's posts, I hardly think he is qualified to
be "giving a talk" on this subject.
Let me attempt, once more, to shed some light on the $50 billion export
target. India's software exports have been growing at the rate of 50-60%
since 1991. In 1992, when they were around $250 million, NASSCOM's Dewang
Mehta predicted they would cross the $1 billion mark in 1996/97. Few
believed him at the time, however his prediction was indeed accurate, and
software exports even today are maintaining a growth rate of 50-60%. So I
think the real question is: how long can India sustain the current 50-60%
software export growth rate?
The Mckinesy/Nasscom study and projections are based on exactly this kind of
analysis. The study assumes a gradual decline in growth rate from 50% to
about 20% by 2008, resulting in a "services" (i.e. software + IT Enabled
Services) export target of $50 billion by 2008.
Pros:
1. The commerical viability of outsourcing services becomes more favorable
over time thanks to advancements in telecommunications.
2. India has the critical "first mover advantage". Blue Chip international
companies will only outsource to a select group of companies with whom they
have existing relationships.
3. The annual growth of the global software market is expected to be
approximately 30% over the next several years.
4. Carriers the world over are spending approximately one trillion dollars
on building next-generation voice, wireless internet and broadband networks.
This has been described as the greatest capital expenditure in history.
These networks are expected to fuel demand for a new breed of software
applications that take advantage of these cababilities such as wireless
internet applications, voice portals, interactive television, etc.
5. Many other services, in addition to software can be similarly outsourced
to India. (Accounting, Insurance Claims Processing, etc)
Cons:
1. skilled manpower shortage
2. the law of large numbers
3. competitive threats from other countries
The Nasscom/McKinsey study is only a "best guess" based on the above.
Whether, you believe it or not depends entirely on your point of view as to
the macro-economic trends that are shaping the world economy and the global
software industry.
Dr. Roy has dismissed the study's projections as "nonsense",
"pie-in-the-sky" and "industry hype", without providing an iota of
substantiation to support his argument. Surely the good doctor can attempt
to put together an intelligent argument to substantiate his claims.
>From: "Dr. Subroto Roy" <sroy@vgsom.iitkgp.ernet.in>
>Reply-To: debate@indiapolicy.org
>To: debate@indiapolicy.org
>Subject: India's Software Exports: Reply to Mr. Aggarwal
>Date: Sat, 3 Feb 2001 17:00:47 -0800 (PST)
>
>---------------------------------------------------------------------
>Please help make the Manifesto better, or accept it, and propagate it!
>---------------------------------------------------------------------
> > > Dr. Roy does not seem to understand the basic nature of the software
>
> > industry.
>
>Mr. Aggarwal may be right to the extent that I quite likely understand
>less
>than do many others, but I did give a talk on the economics of IT in
>Bangalore a few months ago, and am likely to do similar things again
>shortly, so perhaps my understanding is not so bad. However, nothing
>Mr.
>Aggarwal has said below seems to me to indicate that he or I or anyone
>else
>on IPI or anyone else anywhere, including Nasscom's Dewang Mehta and
>everyone at Harvard and McKinsey, has the faintest idea at the moment of
>how
>to practically measure India's software exports in any meaningful
>way. My
>original question stands and on this I would be extremely happy to be
>enlightened: what is the precise basis for the projection of $87 bn in
>software exports by 2008 or whatever? How far is it genuine and how
>far is
>it industry-hype or pie-in-the-sky?
>
>Subroto Roy
> >
>
>
> > Indian software services firms win orders from international clients
>to
> > develop new applications or to modify the client's existing
>applications.
> > There is no software trade per say. The only software that Indian
>firms
> > would need to import are developer tools and off the shelf packages
>like
> > Windows, Oracle, etc., the value of which is almost insignificant
>compared
> > to the value of the client order. Once you have the basic software
>in
> > place, that serves as the IT infrastructure that is used to service
>all
> > clients. Indian software companies do not need to import software for
>
>every
> > single client order.
> >
> > Dr. Roy is correct in stating that nonsense can be produced anywhere.
> > However he should recognize that in the IT world, a company's market
> > valuation can increase or decrease in minutes on the upgrade or
>downgrade
>of
> > an influential analyst. My point was merely that there is typically a
>
> > direct correlation between the track record of an institution (and the
>
> > knowledge base of its key members) and the accuracy of its assessment.
>
> >
> > >From: "Dr. Subroto Roy" <sroy@vgsom.iitkgp.ernet.in>
> > >Reply-To: debate@indiapolicy.org
> > >To: <debate@indiapolicy.org>
> > >Subject: Re: India's Software Exports: Mr Aggarwal's likely error
> > >Date: Thu, 1 Feb 2001 11:21:14 -0800 (PST)
> > >
>
>
>
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