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RE: India's Software Exports: Reply to Mr. Aggarwal



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>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" 
> >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) 
> > 
> >--------------------------------------------------------------------- 
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> >--------------------------------------------------------------------- 
> > > > 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 

I think the $50 billion export and $87 billion export target mentioned in
the Mckinsey/Nasscom report, is a case of setting an ambitious target in
the hope that it will become a self-fulfilling prophecy.
 
For India to achieve that target is not impossible because of the following
reasons
(a)Call Centres, Transcriptions Industries are set to grow at over 50% in
the next 5-10 years, with most global majors setting up shop in the form of
collaborations, for their call centre services in India. This will lead to
potentially billions of dollars of revenue.
 
(b)Design : India has just begun to tap markets such as VLSI and Chip
Design and these will potentially earn a lot more per manhour than our
present service offerings.
 
(c)While we have a good presence in the US, we have barely begun to scratch
the surface in Europe,Japan, Australia etc.. and by focusing on these
markets we can achieve the needed growth
 
(d)Product development and higher-value added services are also areas where
we have a miniscule presence, meaning a huge opportunity.
 
Therefore ensuring we graduate to value added services and product
development , will mean we will meet and even better the Mckinsey/Nasscom
estimate.
 
--Gautam
 
>From: "Asher, Mukul Govindji" 
>Reply-To: debate@indiapolicy.org 
>To: debate@indiapolicy.org 
>Subject: RE: India's Software Exports: Reply to Mr. Aggarwal 
>Date: Sun, 4 Feb 2001 19:39:30 -0800 (PST) 
> 
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>A point to consider: 
> 
>In today's world, PERCEPTIONS, if strategically used, can be an 
>important 
>instrument for changing targets and goals in reality. HOW we communicate 
>our 
>ideas is important. 
> 
>So let us not get topo deeply involved in measurement issues, but create 
>a 
>dynamic where India and Indians are regarded as indispensable in IT 
>sector. 
> 
>Mukul asher 
> 
>-----Original Message----- 
>From: Raju Agarwal [mailto:krantikari@hotmail.com] 
>Sent: Monday, February 05, 2001 1:25 AM 
>To: debate@indiapolicy.org 
>Subject: Re: India's Software Exports: Reply to Mr. Aggarwal 
> 
> 
>--------------------------------------------------------------------- 
>Please help make the Manifesto better, or accept it, and propagate it! 
>--------------------------------------------------------------------- 
> >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, 
>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. 
> 
> 

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