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Re: India's Software Exports: Mr Aggarwal's likely error



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Dr. Roy does not seem to understand the basic nature of the software 
industry.

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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>Please help make the Manifesto better, or accept it, and propagate it!
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> > The software imports of the software industry are so miniscule in
>proportion
> > to its exports, that it can be ignored.
>
>-- this almost certainly seems to be an error.   Mr. Aggarwal agrees/admits
>that most of the software trade may be "virtual" over telecom links.
There is not a "trade".  Just exports.

>Company XYZ then may well be "importing" $x million of its own softawre 
>into
>India; adding value of $y million to this; and re-exporting it at $x+y
>million.    This would be eactluy analogous to the diamong trade I 
>mentioned
>earlier.    Now, I agree Nasscom etc are asserting $x+y million to be
>India's "revenues" from software exports, but the basic question remains as
>to what the x and y figures are.
>
>As for Mr. Aggarwal's mention of Harvard and McKinsey etc, I have to say
>what I have never said on this forum: give us a break!!! (Or alternatively,
>what a joke!.... what a laugh~!!!!!  Come on! for goodness sake, surely in
>this day and age, everyone knows that nonsense can be and is produced
>anywhere!)
>
>Subroto Roy
>
>
>
>
>
> > Most of the data with respect to exports comes from the audited 
>financial
> > results, as declared by the companies themselves.  As some of these
> > companies are listed in US stock exchanges, many leading Wall Street
> > investment firms also track and issue research reports on Indian 
>companies
> > and the Indian software industry in general. One has to look at the
> > credibility of the firm that makes issuing the report.  For example,
> > McKinsey is the most highly respected consultancy in the world.  Ten
>percent
> > of Harvard's Business School's graduating class, get hired by McKinsey.
>The
> > Wall St. investment firm, Goldman Sachs, Big Five chartered accounting
>firms
> > (auditors) are also very reliable.
> >
> > Also note, that it is extremely difficult to quantify software imports 
>as
> > much of the software in circulation is pirated.  Secondly, how does one
> > quantify the indirect benefits of the imported software.  For example,
>many
> > software companies donate their used computers and software to schools.
> >
> > The repuation of most of the players - Big Five chartered accountancies,
> > Investment Banks, Consultancies, Market Research Firms, Industry
> > Publications, Industry Associations - provides a fair degree of 
>assurance
> > that the figures are reliable.
> >
> > How can Policy ignore such data given the enormous implications for
>India's
> > economy?
> >
> >
> > In the broader context, today, computers and software are analagous to
> > "paper and pen".
> >
> > In the 1980's, American businesses spent an estimated one trillion 
>dollars
> > in technology.  This investment did not cause any significant increase 
>in
> > productivity however, during the 1980's.  However, the result of this
> > investment in technology was became strikingly evident in the 1990's.
>Alan
> > Greenspan, attributed America's "Goldilocks" economy and the decade long
> > boom (high growth and low inflation) to increased productivity gains
> > resulting from corporate investment in technology.  Productivity gains 
>are
> > expected to accelerate as businesses invest further in technology.
> >
> >
> >
> >
> > >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 good point
> > >Date: Tue, 30 Jan 2001 11:18:18 -0800 (PST)
> > >
> > >---------------------------------------------------------------------
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> > >I am obliged to Mr. Aggarwal for his excellent point.  In reply to my
> > >comment:
> > > >
> > > > >Cause for doubting it arises from e.g. the data of the
> > > > >Centre for Monitoring of the Indian Economy, which is recording
>India's
> > > >
> > > > >software exports in the millions of dollars when Nasscom is doing 
>so
>in
> > > >
> > > > >the
> > > > >billions of dollars
> > >
> > >-- he points out what we had been surmising in any case, namely, that
> > >
> > > > The CMIE's numbers are based upon shipment of software through a
> > > > physical
> > > > medium, such as disks.  However, these days almost all software
> > > > companies
> > > > send the software directly over their telecom links.
> > > >
> > >I fully agree that this is very likely.   But then the basic question
> > >arises, how on earth is anyone measuring this?    In the accounts?   
>Are
> > >they measuring the value of software being impliclt imported by the 
>same
> > >route?  Does anyone know?    How can policy be built on such a basis?
> > >
> > >Subroto Roy
> > >
> > >
> > >
> >
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