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Five key facts about Indian IT

So here we are again, wondering what will happen to India's information technology sector after the US economy went into a crisis last week with credit ratings agency Standard and Poor's taking it a notch down the highest AAA grade. Madhavan writes.

india Updated: Aug 07, 2011 23:48 IST
N Madhavan

So here we are again, wondering what will happen to India's information technology sector after the US economy went into a crisis last week with credit ratings agency Standard and Poor's taking it a notch down the highest AAA grade. As the prime market for India's information technology exports get hit — and shares dip — let me use this opportunity to look at India's software boom with five hard facts.

1. The US government is in
trouble, not companies: Okay, you probably heard about Apple Inc having more money than the Washington government. When the din settles, this is about reviving growth in the US economy with the right fiscal policies and taxation. As long as individual companies can cut costs or boost efficiency through information technology, spending on IT is likely to bounce back.

2. The cloud is going to grow: Cloud computing may get a big boost from the US crisis. Companies will want to spend less on real estate, data centres and internal hires if the economy is in trouble. This may hasten the switch to computing power rented over the Internet. Indian firms will get demand linked to that.

3. The mobile economy is global: With 800 million mobile phone connections in India alone, Asia is as much a part of the global IT economy now. Companies and consumers alike will need “apps” or applications to drive the mobile economy, with matching services.

4. E-governance is a global thing: The Internet has reached a pervasive stage where governments worldwide can — and will — use technology to cut costs. Remember when a Hyderabad judge used video-conferencing first? Remote linkages can help cut costs for deficit-hit governments. Fiscal deficits are a business opportunity for IT companies.

5. India has scaled: Last week, someone at the office of industry association Nasscom said Indian companies no longer really bother about certifications like SEI-CMM because they are getting product development work. In terms of quality and quantity of work that can be done, India has clearly become the biggest IT centre outside of the US and thus, demand is not an issue.

True, wages have gone up in the sector and cost issues need to be addressed. Also, in any crisis, clients hold back some expenses that affects the outlook for the industry. But the facts mentioned above tend to show that the pace may be a bit slower but the scope and direction for India's IT industry remains firm.