The Hindu : Business : Japan can be a large IT market: Nasscom

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Tuesday, Oct 21, 2008
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Japan can be a large IT market: Nasscom

Special Correspondent

Scope for reducing dependence on U.S., European markets

— PHOTO: ANU PUSHKARNA

EXERCISING CAUTION: Som Mittal (left), President, Nasscom, with Ambaresh Dasgupta, Executive Director, PricewaterhouseCoopers, releasing a report on ‘Opportunities for Indian IT industry’ in New Delhi on Monday.

NEW DELHI: The current global slowdown and financial crisis will have a short term impact on the Indian information technology and business process outsourcing (BPO) companies, National Association of Software and Service Companies President Som Mittal said here on Monday.

“Though we had factored in some problems starting from the sub-prime crisis in the U.S., but the current crisis was not factored in.... its real impact will be known only when we come out with figures in December this year. We have had 30 per cent growth in previous years and this year we have projected this to be at 21-24 per cent. Despite this slowdown, we will still have significant growth,” Mr. Mittal said after releasing a report titled “Opportunities for Indian IT industry in Japan.”

Mr. Mittal pointed out that the current crisis had led to companies slowing down their decision-making processes and exercising caution on their spending. “This might impact the Indian IT sector a few quarters ahead. Indian companies too are following interim caution and accessing the situation, but our fundamentals are strong and growth would continue. Companies are confident about the future and still hiring. This is also the time for Indian companies to scout for companies globally due to their lower valuations and rupee depreciation,” he added.

Mr. Mittal also said Indian IT companies, which export 90 per cent of software and services to the U.S. and Europe, might see a decline in new orders due to the financial crisis. Commenting on opportunities in Japan, Mr. Mittal said the $108-billion Japanese IT market was likely to be an alternative to the Indian IT industry to reduce its dependence on the U.S. and European markets. “The Indian IT-BPO companies are fast diversifying into newer territories. With the shortage of technical skills in Japan, it will be a large market for India,” he added.

Mr. Mittal further said Japan, the second largest economy in the world, constituted only two per cent of India’s IT exports at $1-1.50 billion. The report, prepared in collaboration with PricewaterhouseCoopers India, highlights that this could go up to at least five per cent in next 5-7 years.

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