Nasscom, the apex body of the Indian IT industry has earned for itself a reputation of being an association dedicated solely to the biggies in this space. However, that is set to change. The body recently decided to set up several special interest groups that will cater to specific needs and also rationalise its research processes. Pankaj Mishra reports

According to KArnik, Nasscom has now evolved and will help companies generate additional business

Nasscom is all set to restructure its research division and shed the traditional image of being too bullish when projecting growth figures for Indian software exports. The mouthpiece of the Indian software industry now plans to rationalise its research processes by introducing new approaches to conduct research. Official sources indicate that several Special Interest Groups (SIG) would be formed within Nasscom to address the SME segment and also encourage domestic software firms focussing on products. Also on the cards is an ‘India brand fund’ for assisting start-ups and investing in establishing global brand equity for Indian software firms.

“We are talking to various industry players and the Ministry of Information Technology (MIT) for establishing an ‘India brand fund’. Our forecast for the year 2002 is a 30 percent growth, which is doable,” says Kiran Karnik, president Nasscom. He however denies that Nasscom projections have been over-optimistic in the past. Official sources indicate that a joint research project for SME software players will be announced soon in collaboration with an international consulting house. “There is a dramatic shift happening at Nasscom. The association has now evolved and is all set to facilitate companies to do business. Even Confederation of Indian Industries (CII) has transformed,” says Pradeep Kar, chairman of the Microland Group.

Nasscom has recently entered into a ‘data sharing’ agreement with Software Technology Parks of India (STPI) which will enhance its reach to SMEs operating under STPI. “Nasscom has traditionally been looked upon as an ‘elite’ body consisting of big players. Small start-ups were never treated equally,” says the founder of a Bangalore-based start up. Mehta says SMEs are now going to be included in the research activities and they will also be provided various platforms to enhance business prospects. “We are going to organise seminars and road shows to help SMEs reach their target segments,” says Sunil Mehta, vice president, Nasscom. The body will soon have an office in New York, which would help small players tap the regional market.

“Our first task is to clean up the numbers and rationalise research practices at Nasscom. We will undertake research in a more elaborate manner. Earlier, only the top twenty firms were interviewed. Now research will be done across segments like tier one players, MNCs, product firms and SMEs,” says Mehta. Nasscom is going to ‘revisit’ the McKinsey projections of software exports worth $50 billion by 2008 and is working with several research agencies. This will add value to Nasscom’s projections. He further adds that Nasscom will be coming out with ‘short term’ projections. “Long term projections are more prone to risk. Short term projections give a more realistic and immediate picture,” he says.

The US market accounts for more than 65 percent of the Indian software exports. It is expected to grow at 0.6 percent in 2002. Analysts predict that the $50 billion software export figure has to be revised downwards taking into account the prevailing situation. Nasscom might be announcing the relevant details during its annual event ‘Nasscom 2002’ to be held next month.

“We are also looking at Nordic countries like Sweden as potential markets,” adds Mehta. Business Process Outsourcing and IT enabled services are expected to grow at 70 percent in the year 2002. R&D services hold a great potential for Indian players and this will be a $4.8 billion market by 2005. Most analysts believe that with MNCs shifting their development bases to India, offshore outsourcing done to the Indian companies is in danger. “I don’t think MNCs are going to reduce outsourcing, they hardly account for 15 percent of total software exports done from India,” says Mehta.

Owing to slower growth in the second half of 2001-02, Nasscom recently scaled down its software exports revenue growth projection for the financial year 2002 to 30 percent. This worked out to Rs 37,000 crore as compared to Rs 28,350 crore clocked in 2000-01. In August 2001, the software association had said that the software exports will touch Rs 40,000 crore in revenues in 2001-02, a growth rate of 41 percent. The growth rates for 1999-00 and 2000-2001 were 56 percent and 65 percent respectively. The world wide IT services market is pegged at $90 billion with India having a meagre 9 percent of the market share.