IT czars say business as usual

N JAYALAKSHMI

t seems to be business as usual for India's Silicon czars, the `Bush fire' in Iraq notwithstanding. For, last week amidst a brash US attack on Iraq and analysts' worries on the economic front, techies and developers in India were quietly listening to Sun Micro chief Scott McNealy talk about the future of Java in India and about the inevitability of a networked world during his visit to this country. War and its threats to the economy, the IT economy in particular, seemed too distant. In fact, in a TV interview, to a question on whether the war would have an impact on the Indian IT industry which is so dependent on the US economy, McNealy had this to say, "In this industry, short-term investments are optional, mid-term discriminatory and long-term mandatory." This could be taken to mean that long-term investments will continue, war no war.

Our own IT execs seem more or less optimistic that the war, if it's a short one, will not pose too much of a problem. For example, at the recent Nasscom meet, most IT CEOs and CIOs are reported to have shrugged off any threat the war posed to this industry. Wipro Spectramind president Mr Raman Roy is reported to have said that business was actually booming and that he had received more queries and had personally traveled for meetings in the last few days. Nasscom president Kiran Karnik even predicted that the Indian IT industry would end the current financial with a growth rate of 30 per cent, as expected. He added that the BPO (business process outsourcing) segment would lead the pack.

Most of them feel that the war, again if it is a short one, will not impact this industry in a big way because they believe the industry has the capacity to withstand any pressure and face any challenges. They feel that while the war would delay business decisions and restrict travels and temporarily stall projects, things will bounce back to normalcy soon. This faith, though stemming from an inherent confidence in this industry, is also based on some assumptions. One such assumption is that the war would be short. Currently, there are no indications whatsoever that either support or dispute this view. But a long war is obviously a drain on the economy.

Currently, Iraq's capacity to match the allied forces' attacks in terms of its resources and weapons is, under doubt. Much of its weapons acquisition and armament plans have been scuttled. Given this, a long drawn out war seems unlikely. Remember, it takes two to fight and much as the US media would like to label this as a war, it may be more aptly labeled as an attack on Iraq. But then on the question of US economy itself, the opinions seem divided. An article in Fortune magazine suggests that there is no need for panic as there are still some reasons for optimism. This article, written by Justin Fox, argues that the US economy will go back to growing post-war. The writer does add that the growth will be moderate and not spectacular. "That means another year during which the job market doesn't get a whole lot better, but also doesn't collapse. It means another year during which promises of a strong economic rebound are postponed, but so are fears of a double-dip recession. Another year, that is, that will stump the doomsayers even while it fails to inspire us to party like it's 1999, " he says.

According to another report, "Until it is clear that Bush's Iraq intervention is a success and that it will not draw America into a costly quagmire, both the US and the global economy are hostages." But the surmise is that a quick short war could end uncertainties. Again, according to Alan Wheatley, Asian Economics Correspondent, "Even if swift success for US-led forces sparks a relief rally in equities and a drop in oil prices, economists and businessmen are growing increasingly worried about the long-term diplomatic and financial fallout of the war." Will the cost of occupying Iraq and of a continuing military build-up wreck the US budget and hurt the dollar? This is a question that many are asking. According to Stephen Roach, chief economist at Morgan Stanley, "And rest assured - if the US goes back into recession, the global economy will be quick to follow. That's the inescapable price that a US-centric world must eventually pay." That indeed says a lot for the Indian IT industry. But going by the assumption that the US economy will indeed by affected, there is still room for optimism according to our IT folks because, and this brings us to their next assumption: outsourcing will increase in a sluggish economy and India will be the best bet for US to outsource their IT projects.

With BPO and ITES (IT enabled services) riding the success wave, one has reasons to believe it. But then, an anti-Indian sentiment has been perceived in the US tech industry of late and this could translate into less number of deals and projects outsourced to India, particularly in a recessionary phase. This could be speculation or faulty perception but Nasscom has said that it is indeed working at wooing Silicon Valley tech entrepreneurs and dispelling India fears or anti-India feelings that may exist there. Obviously the body sees the need to do this. Also, during the last resssionary phase in 2001-2002, a number of Indian projects were stalled, Indian techies laid off and fresh recruitment frozen. It will not take too much for the US to do the same again. Yes, software and IT enabled services and outsourcing have been the success stories for the Indian IT industry. But instead of getting complacent t, they could perhaps do well to focus on other areas too that include product development and also look to tapping other markets, besides the US.

(N Jayalaksmi is a freelance writer, who writes for dailies like Times of India)

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