It is strange how human psychology works. When expectations are low, even modest performance seems great, and when good performance is repeated, a trendline is established – and then the expectations become high.
The National Association of Software and Service Companies (Nasscom) announced last week that India's IT and IT-enabled service exports will slow to 15 per cent growth in 2009/10, and that too, after growing at only 17 per cent in the current year, below the earlier expected figure of 21 to 24 per cent.
Come March, IT and IT-centric exports will close the year at about $47 billion – and this is in the middle of a very deep slump in the US economy, India’s main export market. Including the domestic revenues, the year should see revenues of $60 billion (that's nearly Rs. 300,000 crore!)
Now, I take you back to 1999, when consulting firm McKinsey and Nasscom set an export target of $50 billion for 2008 and total revenues of $87 billion (including the domestic market revenues). I would think the export target has been nearly met, inspite of the Internet "dotcom" meltdown of 2000/01, 9/11 attacks, the current "sub-prime" meltdown, persisting problems of the Japanese economy and a sticky start to 3G telephony.
Phew! Consider that the targets were set when the export figure for IT-based exports was as low as $2.6 billion. I don’t even bother to count the domestic figure then.
While it is true that the targets have been technically missed, it must be remembered that these figures were based on aspirations and potential when no one cared to believe in the “India Shining” story except for a few. About 22 lakh jobs have been created already, and only real estate firms betting on more have burnt their fingers.
The US recession hit IT companies when they were worried about getting quality professionals in large numbers, while employees were expecting too much on salaries. In a way, the US meltdown could be a blessing in disguise for India's IT industry to stabilize the quality and culture of its work-force.
I also see domestic revenues growing in the future to catch the bus missed earlier. For instance, last week there was news that as much as $2 billion was going to be spent on e-governance by state agencies. Of course, these may not match up to the hefty profit margins that US-based financial institutions gave, but perhaps it is also wise to know that some of these clients, like Lehmann Brothers, have gone bust.