Booming India no threat to locals
Booming India no threat to locals
India's software industry is booming, with exports reaching 340 billion rupees for the last three quarters of 2002; yet Australian software developers are not phased by India's growth, they respect their Asian partners, but do not see their contracts heading north across the Indian Ocean.
Demand for Indian software and services grew by 28 per cent, India's National Association of Software and Services Companies (Nasscom) said. Exports totalled 340 billion rupees (US$6.9 billion) and it is predicted that India will have earned $9.6 billion by July, almost two billion more than the previous year.
"India tends to provide service contracts to the big end of town, we certainly see them about the place," said David Gillespie, the chief technology officer at local search and document management application developer 80-20 Software.
Nasscom said the US is its largest market, creating 62 per cent of software exports followed by Europe, which could bring India into direct competition with Australia. Nasscom predicts that demand will grow from Latin America, Africa and the Middle East.
"Indian companies have also invested in building global delivery models to over come geopolitical risks," said Kiran Karnik, the president of Nasscom. In a statement Nasscom said it will be targeting markets such as network consulting, support, systems integration and customer care. Applications will also be developed for finance, human resources, engineering design, animation and research and development services and vertical markets such as healthcare, retail, IT services and utilities.
Noel Jones, the managing director of Tower Technology said that he has seen local companies begin to work with Indian partners, with Indian companies providing technical support for older applications. Tony Walls, the chief executive officer of Objective said he didn't see Indian companies competing in his market place and are not a threat.
A sign of the growing importance of software as an Indian industry, the trade created 4.9 per cent of the nations export revenues in 1997, but has now grown to 20.4 per cent and is expected to continue growing. Nasscom said that there has been growth in volumes sold by Indian companies, but not profitability. Investment in sales and marketing efforts by Indian vendors has kept profits low; Mr Karnik said, "While this may affect the bottom lines in the short term, it would help in strengthening the long term prospects of the company [sic].
"Further, if the appreciation in the rupee continues in the next quarter, it might lead to growth rate in rupee terms coming under pressure. Though we are confident of achieving strong stable growth in volumes in the coming quarters also," he said of the nation's strengthening currency. Local developers believe that the having a weak currency is advantageous.
"Over the last year it has been to our advantage, it would be prohibitive to this development in the US," 80-20's Mr Gillespie.
Mr Walls added, "There is plenty of international companies in IT that see Australia as an attractive place to do research and development."
Noel Jones said, "I think they will find that the growing attraction of China will detract from that [the rupee's strength]. It all boils down to the bottom line." Despite strong currencies, European countries continue to be market leaders in software development.
Local developers are not concerned about India's growing strength though, Mr Gillespie believes that Australia's colleges and universities are still producing a "good strong supply" of talented developers who are cheap on "global terms". Mr Jones said there is a differentiation - Indian developers tend to produce bespoke applications rather than continual development of products. Mr Walls backed this statement up, "There has been a definite trend towards buying rather than building."
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